The Carriers Hate the iPhone (And Love Android)

February 8, 2012
7 823 5 13

That carriers love Android is not really a surprise. Go to any carrier, anywhere in the world, and you’ll notice that most of their smartphones are now based on Android. They even have their best promotions and marketing campaigns around Android smartphones. Android phones are a great way for carriers to also hook customers that have never used a smartphone before and never needed data, on their data plans, and get them to sign more expensive contracts. The conclusion: carriers make more money with Android.

But is the same true about the iPhone? Do carriers love the iPhone, too, and are they making money from it? Apparently not, and this is why it’s a nightmare for them. The iPhone can bring them some extra customers, but at what costs? Some carriers are even forced to subsidize the most of iPhone’s price, as we’ve seen with the Sprint deal, where they’re paying $650 to Apple for every iPhone. That would be $450 subsidized by the carrier.

Considering other manufacturers charge the carriers from $400 to $500 for their high-end phones, that means the carriers are giving Apple an extra $150-$250 for every single phone. That also means that for every 1 million extra customers, it costs them an extra $200 million. That’s a lot of money, and it really puts a dent in the carrier’s profitability.

This also explains why Apple is able to make so much profit compared to everyone else in the industry. Apple can make several times the profit on their phones compared to other manufacturers because the carriers are still willing to pay Apple a lot of money. If only they would realize that Apple is at a point where losing a big carrier would not be acceptable to them anymore, which means the carriers could  have the power to bring Apple down a notch in their negotiations.

I don’t think anyone should watch out for the “poor” carriers. They can take care of themselves. But these negotiations that are heavily favoring Apple are also hurting all the other manufacturers. If the other manufacturers would be able to charge the carriers more because Apple is doing it, then it would be fine, but I think the opposite is happening. The carriers are giving in to Apple, and then try to recover their losses by squeezing all the profit from all the other manufacturers, which is bad for all of us, because our favorite manufacturers get less money to work with for future devices.

Comments

  • Maurooo23

    No. They love Android because Google allows the carriers to load our phones with crap ware. Google should do exactly what Apple does: remove control.of the platform from manufacturers and carriers. All the reasons why the carriers benefit from Android are negative to us,consumers.

    • http://twitter.com/MysteriousDiary Leif

      People just need to do the math and buy unlocked phones without any contract which should be much cheaper at the end. Here in Germany it happened in the last years. People stopped signing those overpriced contracts letting you pay for things you don’t use and got their unlocked phones together with prepaid cards or better and cheaper contracts. Since then carriers changed also their behavior – offering phones on monthly rates without any contract and also contracts with 6 months or 1 year instead of 2years before.

      • AppleFUD

        In the states it really isn’t cheaper to buy an unlocked device. You will still pay the same to have data so you might as well get a discount on the device–the only way it’s a benefit is if you don’t use data. About the only thing an unlocked device does for you here is allow you to change carriers, but there isn’t much choice in that either.

        • Jerry

          Verizon charges 600 plus retail for a branded Nexus phone. Google sells it unlocked and crapware free for 350 on the Play Store. Unlocked devices would put a hurt on the carriers. Subsidies have to go, and with smartphones poised to become cheaper, we may see it not too long from now.

    • AppleFUD

      While I don’t disagree with your statement, the major reason Android is so popular is because OEMs and carriers can do whatever the hell they want to it–sucks for most users.

  • Anonymous

    Evil is as Evil does. In the US…carriers will eventually ban together and deal with Apple, they will have no choice. Costs of Apple phones outside the US, where most people pay full price, will take care of Apple there. Patience Grasshopper.

    • Jerry

      Then Apple could influence cable companies to build out free wifi hotspots, and with Lightradio tech coming in the near future, I wouldn’t be surprised to see cable companies doing just that. Putting it to the carriers for gaining customers.
      Cable will have to reinvent its services to survive. If I can pay for my broadband service without stupid caps anf absurd pricing and also connect to this same service for free outside of my home, I’d drop cellular in half a heartbeat. No question about it. Better yet, keep a look at Google and that white space spectrum they’re sitting on and done nothing with yet. Might just be a new kid on the block for mobile services down the road….

  • http://www.facebook.com/people/Piyush-Rathod/100001258203837 Piyush Rathod

    But ultimately customer has to decide which smartphone they want to buy its not on carriers hand.

  • Brad

    I agree with buying mobiles outright and havnig them unlocked with no carrier bloat on them.

    I bought my Galaxy 2 II from the UK when it came out in April last year for $720 and i’m on a $15 a month contract which gives me more data/talk than a $50 plan that includes the mobile (i’m unsure how much on top of that the mobile would have cost at the time but you could add that on). So over 2 years i save $35 x 24 months = $840 which is less than the cost of the mobile saving me $120 as well as the convenience of not being locked in to a contract which means i can sell my mobile and buy a newer one without being locked to a carrier or paying out my contract.

    Do the math next time you buy a mobile and you won’t be a slave to the carriers.

  • http://twitter.com/GamerJunkdotNet Mike Madden

    You do realize that carriers see the growth in smartphone use and the Apple iPhone grabs a lot of customers?

    Apple also handles all of their tech support which relieves a lot of costs to the carrier as they do not have to support the service & repair like they do for other phones. HTC & Samsung pretty much wash their hands after they sell you the device and refer you to the carrier.

  • GrahamB

    Good article, but I have to call out this part: “Go to any carrier, anywhere in the world, and you’ll notice that most of their smartphones are now based on Android.”

    That’s kind of obvious, since there are only a few iterations of the iPhone, whereas the Android market is quite saturated.

    • http://www.facebook.com/people/Micah-Madru/100001151887665 Micah Madru

      WP7, Android, iOS, Blackberry, Symbian, Meego, Bada OS, Some form of Linux, Web OS, etc. They just don’t do well.

  • Nelly Melyo

    ?(•??~•~)? ClevaCom hides SMS and calls that you exchange with some contacts : https://play.google.com/store/apps/details?id=com.androidbyedgard.clevaCom