The iPhone, Amazing For Users While A Nightmare For Carriers
The iPhone is an amazing device and Apple has made a lot of money off of it, especially with the release of the iPhone 4 S. That iPhone was a big hit from the first weekend after launch. But, while the device is amazing for users, this doesn’t go the same for carrier. It seems that the iPhone devastated the profit margins for carriers like AT&T and Verizon and Sprint will probably have the same fate. The iPhone debuted on the network in 2011, precisely on Verizon’s network in February. After that period, the EBITDA service margin (this is a metric used by carriers to measure the core profit) tumbled.
Up until 2010, the carrier had the EBITDA at 46.4% and after the 1st quarter that dropped to 43.7%. Even more, after record sales recorder by Verizon, more than 4 million devices that margin went down to 42.2%. For the 3rd quarter, Verizon managed to go up again up to 47.8%, but that happened only because the iPhone sales dropped as users waited for the new model to show up. So, what does this all mean? Well, the conclusion is that the iPhone “is not good for wireless carriers”, at least that’s what the Nomura Securities analyst Mike McCormack says.
Source: channel3000.com
