Jul 13 2013, 6:07am CDT | by Deidre Richardson
Within the last year, we’ve seen a number of carriers agree to carry the iPhone in their retail stores in hopes of attracting new customers and retaining old ones. It is no secret that the iPhone is one of the most coveted smartphones of all time, having started the smartphone revolution as we know it in America as well as the world. Apple has a name, a brand, and customer loyalty. Even when the iPhone seems to be behind in terms of technology such as the lack of 4G LTE on its iPhone 4S, customers still purchase the iPhone in large numbers.
Carriers, however, have not been as kind to Apple’s iPhone. Perhaps it has something to do with the nature of Apple/carrier agreements, as it has been told to me personally by a few carriers (who shall remain nameless here) that Apple makes it impossible at times for carriers to even like doing business with the Cupertino company. At other times, it may just be carrier stubbornness that is responsible for it all. I think the answer lies, as do most disputes, somewhere in the middle.
What is indisputable, however, is that carriers who refuse the iPhone for some time are later forced to change their tune by customer demand. Either customers will stay or go, and oftentimes, have walked out of contracts and prepaid agreements to show their disapproval.
Take T-Mobile US, for instance: prior to its agreement to sell the iPhone, the Deutsche Telekom company lost 700,000 customers in the 2012 Fall Quarter. Regional carrier US Cellular lost some 200,000 customers in a recent quarter due to its refusal to carry the iPhone, and has lost hundreds of thousands of customers over the last six years since the iPhone’s introduction.
Eventually, we saw T-Mobile change its tune and bring in the iPhone earlier this Spring. What is the result of T-Mobile’s decision to bring the iPhone to its stores? As of June 30th, it has been reported (though there has been no explicit confirmation by T-Mobile) that the nation’s fourth-largest carrier has sold 900,000 iPhones in Q2 2013. iPhone sales accounted for 40% of all smartphone sales in the three-month period. Adding nearly 1 million smartphones means that the company also added a large, new customer base to its numbers. There are those faithful T-Mobile customers who opted out of the Android world for an iPhone, but there seems to have been new customers that joined the T-Mobile family.
T-Mobile’s success hasn’t been all about the iPhone, according to CEO John Legere. While the iPhone has had its success with the carrier, no doubt, T-Mobile US has also ditched its contracts for Value Plans, and just this week added a JUMP (acronymic for “Just Upgrade My Phone”) plan that, for $10 each month, allows you to “jump” to two new phones each year. The $10 fee also covers phone protection insurance so that you can get your smartphone replaced if needed.
While T-Mobile has been the new kid on the block to rise in the carrier wars, Big Red phone carrier Verizon Wireless has not been as fortunate. Recent reports suggest that Verizon Wireless may owe Apple up to $14 billion for iPhones it has not sold this year. This means that Verizon Wireless has only sold about $9.5 billion worth of the $23.5 billion iPhones it received, or 40%.
With results such as these, one wonders if there is a rocket science to selling iPhones. The answer, in a word, is no; maybe the answer boils down to carriers and is not an issue of whether or not Apple has crafted an iconic product.
Verizon’s contract plans and prepaid plans may not be what customers are looking for, whereas T-Mobile’s new Value Plans that provide affordable calls, texts, and data every month have lured customers in. It’s easy to bring the iPhone into a network that has affordable services, but harder to do the other way around.
One area in which Verizon must improve in order to compete nationally with the other major carriers (throw in T-Mobile these days) is its prepaid service. Verizon will only allow prepaid customers to have 3G speeds, and only on its iPhone 4 and iPhone 4S models. Prepaid customers are kept out of the iPhone 5 camp, and Verizon could most likely sell its iPhone 5s to the one customer base it prevents from using them on its LTE network.
This is the reason why the iPhone 5 has not sold in large numbers with Verizon. There are a number of individuals I know who would love a prepaid plan with Verizon that comes with the iPhone 5 and provides 4G LTE speeds. Until the carrier gets serious about prepaid services and luring customers with its 4G LTE network, Verizon will remain behind in this game.
Deidre Richardson is a long-time Apple fan and reports passionate about the latest Apple news and rumors.
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