T-Mobile: iPhone’s price is too damn high

by: AdrianNovember 23, 2012

Even with a financial climate that’s proven extremely tough on a lot of businesses, it seems to still be profitable to provide telecommunications services in the United States. Verizon and AT&T’s customer portfolios have topped 100 million people recently, while struggling Sprint is set to be financially resuscitated via Japan’s SoftBank.

But wait, wasn’t there another major wireless carrier in the mix as well? Why yes there was, but T-Mobile’s recent financial streak has been anything but promising.

Magenta has lost out hugely following the 2011 failed acquisition by AT&T and is now seeing its revenue, income, assets, equity and customer numbers shrinking by the day. The carrier’s problems have led Deutsche Telekom, its parent company, to seek a merger with MetroPCS, but before that can happen, there’s a lot of soul-searching going on in Bellevue.

At a recent Barcelona conference, Jim Alling, COO of T-Mobile USA, touched upon a very delicate subject for T-Mo and an issue that’s thought to have been a major contributing factor to the company’s decline – Apple’s iPhones.

T-Mobile is not carrying Apple’s iPhone, nor does it plan to do so in the near future, as it feels it can’t bring any profit to the firm. “Make no mistake about it. We would love to carry the iPhone. However, we want the economies to be right for us.” said Alling.

Wait, what? What’s he talking about? The iPhone is the world’s best sold smartphone, so bringing it on T-Mobile can only drive sales and profits up, right? Well, we’re afraid it’s not that simple, because Apple doesn’t just hand out its products to carriers, but asks big money for the “privilege” to sell its iPhones.

Sprint, for example, which has started carrying the iPhone late last year, is said to have agreed upon a four-year, $15.5 billion deal with Apple. And while that has proven beneficial for the carrier as far as sales are concerned, actual profit is only expected after 2015.

T-Mobile’s radical view regarding the iPhone seems to be shared by the company’s future partner, MetroPCS, another carrier that’s currently hesitant in picking up Apple’s flagship. “It would be harmful to MetroPCS to have cut out part of our handset portfolio to accommodate one phone from one provider that the economics could be at risk.” said Tom Keys, COO at Metro back in August.

Turning back to Alling, he insisted that iPhone users are welcomed and nicely accommodated on T-Mobile, where the SIM-only Value Plans have attracted around 1.5 million unlocked iPhones. That’s not too shabby, but is it really enough?

Don’t get us wrong, we’re definitely not advocating for Apple’s profit margins, which are outright obscene in some cases, but can really T-Mobile survive and battle at the top without the most popular smartphones around? What do you guys think?

  • Smitten Saint

    Wish them all the best. I wish they succeed without iPhone.

  • Andrew Wilson

    iPhone is overpriced and under-smart. Consistently so. When more and more people realize that, VZ, T and S will start to hurt as iSuck product sales start to wane. With HTC, Samsung, others producing ever-smarter, ever-affordable phones, I think Apple’s near a long term (if not lifetime) top as a revenue-generating company. And I for one will be happy to see them experience a little market humility. Best wishes to T-Mobile (my new service provider).

    • On a Clear Day

      Well put Andrew.

      I too expect to see Apple begin its (well deserved) downward spiral sooner rather than later. Studies going all the way back to the 50’s point out that when a company that was run by a charismatic “genius” ultimately loses the leader who was actually the only one who had the vision and the real brains to make it work, well, within about 48 months the beginning of the end begins.

      Couldn’t happen to a nicer bunch of guys and gals.

  • MasterMuffin

    iFags in Apple Inc. are too damn high if they think that iPhone is worth that!

  • It’s all good..I love T-Mobile and Android phones do well for the carrier.

  • Mike

    I would not by anything apple there products suck and cost way to much i will stick to android all day long.

  • Tim Cook

    I agree with something I saw in another article. I think T-Mo is trying to pretty up the company for the short-term… meaning I think they are only merging with Metro so that they can get the ball rolling on LTE and make the company more attractive for future offers. I don’t think Deutsch Telekom plans to stick it out and compete in the US market at all… this is their exit strategy.

  • Steve Jobs

    Love all the Apple haters on this thread… keep on running your mouth, and Apple will be laughing at you all the way to the bank!

    • Andrew Wilson

      Interesting position. I wouldn’t rule that out of course, but whether your a fan if iProducts or not, it’s hard to argue that they haven’t come up with much in over a year. The iPhone 5 is finally 4G (really good upgrade, it’s best feature), but it’s hardly a leading feature (lagging). The iMini Pad is insultingly expensive (I looked at it and the Sammy 10.1 before I went to Sammy). The new connector socket design made my blood-boil as none of my domestic devices work without a stupid, kludgly looking cable cum dongle which I have to pay extra for (so my treadmill, clock, all kinds of docking units etc. now look much more lame with this “new generation”). Totally unnecessary; all about Shareholders. The balance has clearly tipped. The iPads and phone differ only in size in terms of capability, and they are not very capable. If you have one, you almost have them all de-facto. I have a 4S from work, it’s all I will ever need to be in iOS. Privacy management on an iProduct is easily the worst on ANY platform (any idea what data you share, with whom? Very hard to know unless you really dig for it. Compare with Android). Apple need a major product innovation (probably across a number of product “sizes” in 2013). If they do that, they can resume their pole-position. The legal battles however are consuming brain-time at the top. I lack faith in their ability to fight major strategic initiatives on multiple fronts. So I vote with my purchases. If I am wrong, Ok. But one thing is certain I actually save more money by NOT buying iLame today. If they get their act together, when I upgrade in 2 years or so, I will have more choices. Presently, I predict Android and Samsung, HTC, LG etc. will gain more and more share over the Apple. IMHO it’s self evidently the best strategy for affordable hi-tech products today. Good luck waiting for an Apple turnaround. I have more respect for my money today. Have a great Thanksgiving “Steve”.

  • Chris Harpner

    “The iPhone is the world’s best sold smartphone,”

    I thought the Samsung Galaxy S3 was the best selling smartphone?

    • bleeew

      It was until for a few months. Then the iPhone 5 came out. They barely beat 4S sales the month before the iPhone 5.

  • E. B.

    Apple is a corporation of thugs and they’ve proven this over and over again. They make Microsoft look like angels. I’m glad Samsung has the balls to sue them back and I hope it continues for many, many years to come.

  • Takethat

    A lame ass carrier like T-Mobile doesn’t deserve the 1st gen iPhone let alone iPhone 5 and Google picked them to be the Nexus 4’s main carrier-GET YOUR HEADS OUT OF YOUR ASSES. LOL :)

  • bleeew

    They don’t need the iPhone. They need better devices, and better coverage, and less 2G, and more HSPA+ and LTE.