[abwan11]

BlackBerry 10's most powerful allies: iPhone hating carriers

BlackBerry 10′s most powerful allies: iPhone hating carriers


While no one outside of the 519 area code expects the BlackBerry 10 handsets to outsell the iPhone 5, the devices could potentially be a body shot in a battle plan designed to bring the balance of power between US carriers such as AT&T and Apple back in line.

In late July, when AT&T reported its Q2 numbers, Forbes ran a headline that might have seemed curious to the casual observer.

�AT&T Profit Beats Street, No New iPhone Means Improved Wireless Margins�

The story explained that the telco giant�s net income, which at $3.9 billion or $.66 cents a share, exceeded analysts estimates of $.63 cents, was higher because AT&T subsidizes the sales of iPhone by making payments to Apple. �The more new iPhones AT&T sells,� explained writer Abram Brown, ��the more harm done to its margins.�

Over at AT&T competitor Verizon there�s a similar story on bottom line. Verizon�s EBITDA margin in 2010, before it began to sell the iPhone, was 46.4%. That number dropped to nearly 42%, before rebounding recently to 49% because the company, like AT&T, was selling fewer iPhones in advance of the iPhone 5 launch this fall.

And Sprint is the most highly levered to Apple of all; signing a $20-billion dollar deal to buy about thirty million iPhones over the next four years, which means it will subsidize the cost of each device by as much as $500. Sprint CEO Dan Hesse reportedly told the company�s board it would lose money on the deal until 2014.

Apple is using the remarkable consumer demand for the iPhone to carve out sweetheart deals with carriers. It�s own financial reports reveal that the average price it receives for an iPhone is $660. Carriers, of course, subsidize the cost of an iPhone because consumers want it, and they will sign lucrative long term contracts to get one. The difference is largely made up on data plans.

But the relationship is contentious, and is growing more so, according to experts.

�A logical conclusion is that the iPhone is not good for wireless carriers,� Nomura Securities analyst Mike McCormack told CNN Money writer David Goldman recently, �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.�

In her assessment, Yankee Group analyst Katie Lewis is even more plain:

�Mobile operators are sick of taking orders from Apple�iPhones are occupying an increasingly dangerous share of mobile operators� smartphone sales. In 2011, iPhones represented half of AT&T�s smartphone sales, and now that Verizon has recently voiced a similar shift in sales, the companies� fears of an Apple takeover are growing stronger.�

Enter the beleaguered, beaten down BlackBerry. Could the timing of RIM�s new BlackBerry 10 phones actually be an important factor in its success? While no one outside of the 519 area code expects the BlackBerry 10 handsets to outsell the iPhone 5, the devices could potentially be a body shot in a battle plan designed to bring the balance of power between carriers and Apple back in line.

In Q1, 2012 AT&T sold 5.5 million smartphones, 78% of which were iPhones. Are they happy with this? Some say the answer is a resounding �No�. Earlier this month, the website BGR ran a story that said multiple sources had reported that AT&T retail staff had been ordered to sell �anything but the iPhone� and that they themselves were no longer allowed to use iPhones as their company-owned device. Around the time the story was being denied by AT&T, CNN was reporting that Verizon was doing the same thing.

RIM CEO Thorsten Heins is currently on the road with him two beta versions of BlackBerry 10 smartphones, one is a touch device similar in appearance to the iPhone. The other, which will be released soon after, has both a physical QWERTY keyboard and a touchscreen. Heins is looking to convince carriers to support the devices, which will ultimately total six.

�The carriers want us to keep that installed base [of BlackBerry users],� Heins told the Wall Street Journal recently. Early indications are that the BB10 will be given a fighting, front-of-the-store chance.

One unnamed wireless network exec told the paper that BlackBerry 10 is �marked improvement� over previous BlackBerry devices, and that he is confident of their market viability.

In May, rumours emerged that T-Mobile would carry BlackBerry 10 devices. And AT&T spokesman Mark Siegel said recently: �We value our relationship with RIM and look forward to working with them on existing and new products.� As for Verizon, CrackBerry.com�s Kevin Michaluk is reporting that it too will back BlackBerry 10. Sprint is predictably cagey. A spokesman for the company said the carrier doesn�t think BlackBerry will return to its former glory, but that he wouldn�t count RIM out.

Handsets featuring the BlackBerry 10 operating system are expected to launch in the first quarter of 2013.

[BBPandy]

hmmm I hope it's true

[playbookster]

it does make sense. Competition is a good thing. The last thing carriers want is to be a slave to Apple.

[falconee]

realy long story ! lot of words here !

[inicophone]

It seems to me that general consumers demand the iPhone, however the price of an iPhone is something they are not prepared to pay. Therefore, enter the carriers who take the loss for a subscription. Somehow, that doesn't seem a very long term viable strategy...

I don't think that's a reason why BlackBerry 10 will be a success, but I think it is very encouraging that the carriers are wanting RIM to succeed. Of course, if a customer comes in demanding an iPhone it will take a killer product (BB10!!!) to change their mind. However, the undecided, the non loyal, and perhaps those who would like to see all of the offerings before making a decision - those are the numbers that will be very important to RIM.

It just needs those all important apps on the platform, that's all it needs to take off.

I wonder but, let's say in fantasy-land if a Bold 9900 could do Skype, Netflix, Angry Birds, Instagram, Temple Run, and all the other popular apps - would BlackBerry have lost their market share...

[zzbsb]

If it is true, it means RIM has to price their BB10 phones lower than Iphones to make the carriers favor BB10. I hope RIM can do this while having a decent profit.

[GTiLeo]

Apple is going to get what's coming to them sooner or later. You can't go around trying to dominate and sue everyone and trying to control what devices everyone uses. Karma a and it'll come to get them

[Sith_Apprentice]

Apple is going to get what's coming to them sooner or later. You can't go around trying to dominate and sue everyone and trying to control what devices everyone uses. Karma a and it'll come to get them

Apple is doing to the mobile market what Microsoft did to the PC market. They have an incredible amount of cash on hand, and make amazing amounts of money off of their flagship products (that keep selling in droves). They aren't going anywhere any time soon.

[trsbbs]

This is why US Cellular decided to not sell the IPhone.

Tim


Sent from my BlackBerry Bold

[Sith_Apprentice]

This is why US Cellular decided to not sell the IPhone.

Tim


Sent from my BlackBerry Bold

It is likely, judging by the Sprint deal, it did not make financial sense for a smaller carrier to do this. If the 4th largest carrier is also not carrying the iPhone, there must be a reason. (Not to say that it made sense for Sprint to pay that much either)

[sleepngbear]

What kind of cracks me up about this is that, even though new iPhone sales are crimping the carriers' margins, the carriers are still making money hand over fist, helped in no small way by all the new subscribers brought in by new iPhone sales (and others, of course). So as much of an Apple fan that I am not, this story reeks of just more carrier greed. I seriously doubt if they manage to get Apple to agree to lower subsidies that we the consumers will ever see it reflected in lower plan rates or shorter contract terms.

[timmy t]

Just read today that they are going to stop subsidizing smartphones.

[joski]

Hey! Suck it! Leave my area code alone!!

[timmy t]

"...One unnamed wireless network exec told the paper that BlackBerry 10 is “marked improvement” over previous BlackBerry devices..."

You think?

[lnichols]

Carriers should just make the subsidy the same across the board, and if that means an iPhone is $300 or $400 on contract, then that is what it is. Let the market decide the device based on even playing field and I think you'd see Apple's marketshare drop quickly. Sure it may cost them some customers at renewal time, but the other carrier that gets them is going to be losing money on the subsidy. Verizon offers the iPhone, but they don't push it hard. It is like these carriers want you to feel sorry for them because they choose to oversubsidize the iPhone to hit the $200 sweet spot.

[hootyhoo]

What kind of cracks me up about this is that, even though new iPhone sales are crimping the carriers' margins, the carriers are still making money hand over fist, helped in no small way by all the new subscribers brought in by new iPhone sales (and others, of course). So as much of an Apple fan that I am not, this story reeks of just more carrier greed. I seriously doubt if they manage to get Apple to agree to lower subsidies that we the consumers will ever see it reflected in lower plan rates or shorter contract terms.

^^^^^ This. The carriers are not victims here.