Whole Lotta Hate

Other than Fandroids, who hates the iPhone? iPhone carriers:

Wireless carriers trip over themselves to offer Apple’s iPhone, especially in the United States. Sprint wanted the handset so badly it was willing to guarantee Apple $15.5 billion over four years for the privilege of selling its sleek smartphone, and it certainly didn’t help matters much in the fourth quarter when Sprint posted a $1.3 billion loss. T-Mobile is still sour over failed negotiations with Apple, and the carrier has resorted to offering up free microSIM cards to iPhone users willing to come aboard and forgo 3G data speeds.

“A logical conclusion is that the iPhone is not good for wireless carriers,” Nomura Securities analyst Mike McCormack told CNNMoney. “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.” The site notes that Verizon Wireless’s EBITDA service margin has dropped from an average of 46.4% per quarter to 42.2% since the carrier added the iPhone to its lineup one year ago.

But the iPhone is a necessary evil for carriers that some expect to pay off in the long run.


The real reason carriers hate the iPhone, is that the customer relationship goes through Apple and not the carrier. It doesn’t do AT&T or Verizon any good that the nearly-three-year-old iPhone 3GS can run still the latest version of iOS. That’s a big reason why Apple can still sell new 3GS’s by the millions, and why millions more are using old 3GS hand-me-downs instead of buying new phones.

Try getting Android’s Ice Cream Sandwich on an even six-month-old phone. Carriers would rather you just pony up for a new phone — and a new contract.


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