Iphone nightmare is Rim opportunity

[bitek]

Apple greed just might be opprtunity for rim to come back. Rim just needs the new phones to come out faster.

I see many people switching from blackberry to iphone. As much as I like 9810 os7 still feels slow and although it is improvement over os 6 apple delivers smooth experience something something that bb os7 cannot deliver.

I think that if rim comes out with good strong well done os10 phones some users will go back to blackberry and carriers will help them with that given apple greed


NEW YORK (CNNMoney) -- The iPhone may be great for consumers, but takes a nasty toll on wireless carriers' bottom line.
The price of Apple's (AAPL, Fortune 500) iconic smartphone is heavily discounted by carriers. Those subsidies almost single-handedly devastate profit margins for Verizon, AT&T and Sprint.

Since Apple's iPhone debuted on Verizon's network in February 2011, Verizon's "EBITDA service margin" -- a closely watched metric that carriers use to measure their core profit as a percentage of their sales -- has tumbled.
Between 2009 and 2010, Verizon (VZ, Fortune 500) averaged EBITDA service margin of 46.4% per quarter. In the first quarter that the iPhone went on sale, that fell to 43.7%. Last quarter, when Verizon sold a record 4.2 million iPhones, its margin plunged to 42.2%.
Verizon had just one "good" stretch this year: the third quarter, when its margin bounced back up to a record 47.8%. That's the same quarter in which iPhone sales stalled, as customers waited for Apple to unveil its heavily anticipated new model.
AT&T (T, Fortune 500) and Sprint suffered an even worse fate. AT&T posted a stunning 28.7% EBITDA service margin last quarter, compared with 37.6% a year earlier. One contributing factor: AT&T sold nearly twice as many iPhones as Verizon last quarter.
After selling nearly 2 million iPhones last quarter, Sprint's adjusted wireless margin fell to 9.5%, down from 16% a year ago. The company said Wednesday morning that its margin was nearly 9 percentage points lower than it would have been due primarily to the iPhone.
Those swings are a big problem in an industry where tiny, fractional changes in margin can cause investors to either throw temper tantrums or ticker-tape parades.
"A logical conclusion is that the iPhone is not good for wireless carriers," says Mike McCormack, an analyst at Nomura Securities. "When we look at the direct and indirect economics that Apple has managed to extract from the carriers, the carrier-level value destruction is quite evident."
Other analysts agree. Kevin Smithen of Macquarie Securities said that he expects iPhone sales to continue to grow beyond Wall Street's expectations this year.
"We think the subsidies from these sales will continue to impede margins," Smithen said, who expects AT&T's EBITDA service margins to fall for the fourth straight year.
All smartphones weigh on carriers' margins, since wireless carriers pay a hefty subsidy up front to buy the phones from the handset manufacturers. They make up the difference over the life of a two-year contract.
But the subsidies on the iPhone -- roughly $450 per device -- are the highest in the industry. AT&T's subsidies are even more exacerbated because it gives away the iPhone 3GS for free.
Sprint (S, Fortune 500) revealed in October just how onerous those subsidies can be: The company said it has committed to paying Apple roughly $15.5 billion in up front costs over the next four years, and the carrier does not expect to make money on the deal until 2015.

CEO Dan Hesse said he expects that, eventually, the iPhone will be "our most-profitable device."
But Verizon and AT&T's results have shown how tricky that math is.
Carriers' financials were particularly bad last quarter, after Apple had its biggest product launch ever with the iPhone 4S.
So why do carriers insist on selling the iPhone? Verizon, AT&T and Sprint all declined to comment directly on that question for this article, but the companies have said in the past that having the iPhone is a major selling point for their brands.
In an interview with CNNMoney in October, just after Sprint announced it would begin selling the iPhone, Sprint CEO Hesse said the No. 1 reason why customers had left Sprint prior to October was because it had no iPhone.
"It comes down to, 'Do you want to be with them or bet against them?'" he said. "Apple is arguably the best global brand in the tech space."
Apple did not respond to requests for comment on the issue.
Nomura's McCormack said carriers feel the need to have the iPhone to maintain their market share. But to make money on the devices, he thinks they will have to raise rates or get tough with Apple on reducing the subsidy.
The latter is practically impossible. So carriers have been gradually hiking prices. Over the past year, Sprint increased its smartphone rates by $10 a month, Verizon ended its unlimited data offering and New Every Two deal, and AT&T ended its unlimited plan and raised its prices by $5 a month.
Apple isn't the only factor, of course. Carriers are also raising their rates to offset the cost of expanding their network capacity and upgrading to more efficient 4G technologies. But that, too, is tied up with the iPhone boom: Smartphones are data hogs, and they're one of the prime reasons carriers need to sink billions into improving their infrastructure.
It's a delicate balance, but carriers are betting that the iPhone will remain a must-have device -- even if the cost to customers is a cell phone bill that keeps going up.
"The iPhone in the long term will turn out be profitable for carriers once they raise their price points," said Samir Sakpal, analyst at Frost & Sullivan.
"People will be willing to pay if they feel like they're getting a good user experience," he added. "Apple is a brand that carriers and consumers want to have."

[ColdSunshine]

I saw a similar article. I doubt people will switch back to BB because iPhones hurt carriers like Verizon's bottom line.

[xandermac]

Rut-Ro! Carriers aren't making as much! I'm really sad for them

Seriously though, neither carriers nor customers are dropping the iPhone any time soon and as sprint show, they're willing to take a hit just to get it on their shelves.


Sent from my iPhone4s using Tapatalk

[Palmless]

Originally Posted by bitek

Apple greed just might be opprtunity for rim to come back. Rim just needs the new phones to come out faster.
-snip-

CEO Dan Hesse said he expects that, eventually, the iPhone will be "our most-profitable device."

-snip-
In an interview with CNNMoney in October, just after Sprint announced it would begin selling the iPhone, Sprint CEO Hesse said the No. 1 reason why customers had left Sprint prior to October was because it had no iPhone.
"It comes down to, 'Do you want to be with them or bet against them?'" he said. "Apple is arguably the best global brand in the tech space."

-snip-
"People will be willing to pay if they feel like they're getting a good user experience," he added. "Apple is a brand that carriers and consumers want to have."

Read more here: Sprint's iPhone sales attract new customers - KansasCity.com

"Sprint Nextel Corp. sold 1.8 million iPhones late last year (Should say last QUARTER - palmless)– 40 percent of them to new customers"


op·por·tu·ni·ty noun \ˌä-pər-ˈtü-nə-tē, -ˈtyü-\

1- a favorable juncture of circumstances
2 - a good chance for advancement or progress

You keep using that word. - YouTube

[BB10FTW]

I believe what the OP is trying to say is that in his opinion when the BB10 devices hit the carriers they will happily market and sell them because the margins are much higher. Like with Android flagship phones, the margins are higher because the phones don't sell for a ridiculously high price like all of Apple's overpriced merchandise.
I have to agree as well, if RIM can create a device that is as amazing as they claim it to be (and I for one believe it is) then carriers will have arms wide open. RIM has a great relationship with the carriers and with Jim still on the board he can help out in different ways if need be.
Apple's greed is clearly starting to show with carriers and with the horrible things going on at Foxxconn but that however means nothing to the average consumer because face it they want an iPhone whether carriers suffer or innocent workers do.

Thats my $0.02

[Economist101]

Until RIM's "opportunities" flow from the products RIM releases, and not potential competitor issues, nothing's going to change. Besides, I'm not sure screwing carrier bottom lines wouldn't be considered a feature by many smartphone users.

[bitek]

Originally Posted by Palmless

Read more here: Sprint's iPhone sales attract new customers - KansasCity.com

"Sprint Nextel Corp. sold 1.8 million iPhones late last year (Should say last QUARTER - palmless)– 40 percent of them to new customers"


op·por·tu·ni·ty noun \ˌä-pər-ˈtü-nə-tē, -ˈtyü-\

1- a favorable juncture of circumstances
2 - a good chance for advancement or progress

You keep using that word. - YouTube

i was typing this on the phone ...

[bitek]

Originally Posted by BB10FTW

I believe what the OP is trying to say is that in his opinion when the BB10 devices hit the carriers they will happily market and sell them because the margins are much higher. Like with Android flagship phones, the margins are higher because the phones don't sell for a ridiculously high price like all of Apple's overpriced merchandise.
I have to agree as well, if RIM can create a device that is as amazing as they claim it to be (and I for one believe it is) then carriers will have arms wide open. RIM has a great relationship with the carriers and with Jim still on the board he can help out in different ways if need be.
Apple's greed is clearly starting to show with carriers and with the horrible things going on at Foxxconn but that however means nothing to the average consumer because face it they want an iPhone whether carriers suffer or innocent workers do.

Thats my $0.02

that exactly is what i meant.

[Economist101]

Originally Posted by BB10FTW

I have to agree as well, if RIM can create a device that is as amazing as they claim it to be (and I for one believe it is) then carriers will have arms wide open.

Ever notice how all the "RIM comeback" arguments are loaded with ifs? When is the last time any of those "ifs" became an "is"?

Originally Posted by BB10FTW

RIM has a great relationship with the carriers and with Jim still on the board he can help out in different ways if need be.

I'm sure Jim B's relationship with carriers is why AT&T was quick to support Bridge and Sprint was all over the 4G WiMAX PlayBook.

Originally Posted by BB10FTW

Apple's greed is clearly starting to show with carriers

Starting to show when? January 2007? News flash: this is all information the carriers have known since the beginning. It's not like they read this for the first time today and went "a ha! That's it! Apple is a greedy corp!" Hint: they're almost all greedy corps, even RIM. Always assume they will assert their own interests over yours, and you'll be right 99.999% of the time.

[Palmless]

Originally Posted by Economist101

Always assume they will assert their own interests over yours, and you'll be right 99.999% of the time.

Just as I would assert mine over theirs. You would assert yours over theres, etc.

Rational self-interest is the basis of Capitalism. A system that works every time we let it, and generally only fails when we can't resist the urge to step in and "right wrongs", which is simply our desire to pick the winners and the losers.

[app_Developer]

I agree this is an opportunity. This is also why carriers push Android so hard. Apple has them in a losing position and they know it. Despite the heavy subsidies, they have to sell the iPhone because a certain percentage of the population demands it. Apple's whole strategy, which was unique among manufacturers, was to go over the carriers heads and build the relationship directly with the consumer. That worked.

It didn't get Apple the marketshare they would have gotten if they played along like every other phone manufacturer. But that decision is why their minority share is worth 75% of the entire industry's profits.

So, yes, if RIM builds a phone that carriers have confidence in, I think they will promote it. This is of course assuming RIM sells it to them for less.

[Economist101]

Originally Posted by Palmless

Just as I would assert mine over theirs. You would assert yours over theres, etc.

Rational self-interest is the basis of Capitalism. A system that works every time we let it, and generally only fails when we can't resist the urge to step in and "right wrongs", which is simply our desire to pick the winners and the losers.

Exactly. We (in the U.S. at least) behave in the same self-interested the same way most of the time. As with anything, there are issues, but despite those issues as a country we're accepting of these principles. And, based on the number of people trying to move here, many people around the world are accepting of these principles, regardless of what they may claim on Internet forums.

[bitek]

Originally Posted by Economist101

Ever notice how all the "RIM comeback" arguments are loaded with ifs? When is the last time any of those "ifs" became an "is"?



I'm sure Jim B's relationship with carriers is why AT&T was quick to support Bridge and Sprint was all over the 4G WiMAX PlayBook.



Starting to show when? January 2007? News flash: this is all information the carriers have known since the beginning. It's not like they read this for the first time today and went "a ha! That's it! Apple is a greedy corp!" Hint: they're almost all greedy corps, even RIM. Always assume they will assert their own interests over yours, and you'll be right 99.999% of the time.

1. of course is loaded with ifs. no one has crystal ball.

2. Apple is EXTRA greedy corp. Just read the article from NYT about Apple and its suppliers in China. It says clearly in the article that for example HP and many others let their suppliers have bigger margins if this for example improves workers quality and safety. Something that Apple does not do. Have you heard about accidents where people burn to death in Hp plants ?

[bitek]

Originally Posted by Palmless

Just as I would assert mine over theirs. You would assert yours over theres, etc.

Rational self-interest is the basis of Capitalism. A system that works every time we let it, and generally only fails when we can't resist the urge to step in and "right wrongs", which is simply our desire to pick the winners and the losers.

that is why it makes sense to assume that IF RIM comes out with strong phone and strong os and it will give better margins to carriers they in turn will be willing to push out BB over Iphone. In my opinion many ex-bb users who have iphone/android phones now will switch back to bb if the new phones will be as good as iphone/android. In fact i just had talk with one lady yesterday who has iphone and she said that she switched to iphone because of better web experience but she misses keyboard. she said she would be glad to go back to bb if new bb phone will have keyboard and as good as iphone web experience.

[ADozenEggs@aol.com]

Originally Posted by bitek

1. of course is loaded with ifs. no one has crystal ball.

2. Apple is EXTRA greedy corp. Just read the article from NYT about Apple and its suppliers in China. It says clearly in the article that for example HP and many others let their suppliers have bigger margins if this for example improves workers quality and safety. Something that Apple does not do. Have you heard about accidents where people burn to death in Hp plants ?

I don't know if anyone here ever had a career in sales, but one of the rules of thumb was "You never make your product look good by bad-mouthing your competitors."