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T-Mobile: iPhone's price is too damn high
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?