iPhone Kills Carrier Profits
AT&T, Verizon, Sprint lose out by subsidizing Apple's cell phone
By Neal Colgrass, Newser Staff
Posted Feb 11, 2012 4:00 PM CST
A shopkeeper counts money after selling a iPhone 3G version in Hong Kong on July 12, 2008.   (Getty Images)

(Newser) – Apple's profits are soaring, but at the expense of cell phone carriers who subsidize iPhone sales. AT&T, Verizon, and Sprint all pay about $600 for iPhones that they resell to customers for $200. The carriers figure they'll make up the loss with monthly cell phone bills—but Verizon and AT&T stock have both dropped, and Sprint's losses have ballooned by 40%, since they started selling the coveted iPhone, the Los Angeles Times reports.

"The AT&T wireless model is broken," says one analyst. "AT&T is basically subsidizing Apple's revenues and profit growth." Worse for carriers, competition is forcing them to give customers "early upgrades" and sell iPhones at reduced rates after only one year. One bright spot: Android phones like the Droid Razr and Samsung Galaxy S 4G have sold better after recent ad blitzes. "It depends what you like," says a Verizon clerk in LA. "Do you like the Androids' faster download times, bigger screens, longer battery life and better cameras? Or do you like Apple?"

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Feb 12, 2012 7:35 AM CST
So they can make up a 300% loss on the monthly plans alone? Who is it that is getting ripped off again?
Feb 12, 2012 5:36 AM CST
Apple is a cult that plans on taking over the tech world then making the masses do their bidding financially. Unless the phone can be used as a hammer, it is not worth $600. Hasn't anyone noticed that Apple products are priced far higher than any comparable products on the market? They do this by brand placement on the top T.V. shows, creating the "I have to get me one of those at any cost" mentality. Mothers on welfare and food stamps have their I Phone, who cares if the kids have food, clothes or shoes. The best thing that could happen to Apple and for that matter Facebook would be a worldwide boycott of their products. Once their brand is no longer wanted you will see their prices fall to the level they should have been in the first place, not the inflated "stuff my pockets with money" level they are at now. By the way, this is being written on a 10 year old Compaq computer that still works just fine and has never given me a single problem.
Feb 12, 2012 4:52 AM CST
LOL, yeah those poor carriers... God it must be so terrible for them... Who gives a crap about the suicidal Chinese kids who build these phones and can't move their fingers due to repetitive motion disorders... Didn't one guy die after working 36 hours straight? Oh but boo hoo, I need to have a conversation with a disembodied female who lives inside my phone, and maybe play some Angry Birds... so who gives a crap about human beings, I mean, corporations are the REAL people we should have sympathy for... Right?? Creating all those jobs... Overseas. Oh yeah... it's sad. I SUUUUURE feel sorry for AT&T.