Apple’s iPhone is not the profit-generating must-have that cellphone companies assume it to be, but is turning into a worldwide loss-leader, research indicates.
The research, from Denmark’s Strand Consult, comes as Orange and T-Mobile are believed to be in talks to try to wrestle the Apple device from the exclusive grasp of O2 in the UK. The two companies — both of whom supply the phone in other European markets — are hoping to try to break into O2’s deal in November, which will mark two years since the phone went on sale in Britain. Owned by Spain’s Telefonica, O2 has always maintained that it has a “multi-year” exclusive deal with Apple, but in most countries — the US being a notable exception — the phone is available from more than one network.
The iPhone is seen by many in the industry as having given some operators an “edge” over the competition. In July, Vodafone finance director Andy Halford admitted the company is keen to supply the iPhone across more of its empire.
But in its report, The Moment of Truth: A Portrait of the iPhone, Strand Consult says that iPhone hype hides the heavy subsidies that operators have to pay to Apple, coupled with the company’s replacement cycle and the revenue share it demands in some markets. This means it is not the money-spinner many assume.
Certainly in terms of actual sales, the iPhone is a small percentage of the global market. In the three months to end June, Apple sold 5.2 million iPhones compared with 268 million handsets sold worldwide.
“We have not found one operator which has created shareholder value with iPhone,” Strand says. “A lot of competitors are actually doing better.”
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