Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
This week’s Mobile World Congress event showed that while there may be some stagnation in terms of phone design, there is still a lot of innovation to be had when it comes to what operating system those devices run.
Sure, Google’s Android continued to dominate affairs, and if I were a betting man I would put my money on that continued domination for at least the next five years. But, the continued evolution of Microsoft’s Windows Phone OS, BlackBerry’s attempt to reinvent its OS and the various new entrants into the market show that variety is the spice of smartphone life.
But, back in the real world that is the day-to-day operations of wireless carriers, Apple remains the device and OS that keeps life spicy. Just this week alone saw a handful of announcements from operators showing the range and impact Apple’s mobile devices continue to have.
First up was the news from Leap Wireless that perhaps it has not sold as many iPhone’s as it seemed to allude to. For those that forgot, Leap noted last week that it was comfortable with the sale through rate of iPhone devices to its no-contract customers. This is the device that the carrier is asking people looking to shave a few bucks on their monthly service plans to fork over $500 for a device that can be had down the street at any number of competitors for less than $200.
(Don’t throw the long-term costs at me here. We all know that what matters most in the retail environment is what I am paying for a device today, not what some algebraic equation says I will pay for that device 17 months from now.)
“We are not concerned about in terms of meeting the Apple commitment,” the carrier told analysts during a conference call following the release of its fourth quarter results. “We think that’s going to be fine. So we’re not going to give a blow-by-blow update on exactly where we stand on the total commitment but we’re not concerned about meeting those obligations over the lifetime of that contract.”
This week, Leap indicated to The Wall Street Journal that it was on pace to sell half as many iPhones as it committed to selling through the first year of its contract with Apple. Doh!
For some operators, sitting on some inventory would not be a huge deal. But, for Leap, which is already having to count pennies, this would seem to be a disaster. Even more so as Apple devices tend to have a higher upfront cost to carriers than just about anything else in the universe, and word is that Apple is not much for financing terms.
Next up was news from T-Mobile USA that while it continues to not officially sell Apple products, it was currently supporting 1.8 million iPhones on its network. Let me break that down for you with some real-life numbers: despite not officially offering the device for use on its network, more than 5% of devices running across its network are iPhones.
So, while Leap can’t seem to give away iPhones (though at the prices they are charging, “give” might not be the right term), T-Mobile USA seems to be attracting those devices to its network like flies. Well done … someone?
Sure, T-Mobile USA has in place a process in which it’s actively reaching out to current iPhone users on AT&T Mobility’s network in hopes of luring them over with lower-priced services, but for the most part T-Mobile USA has spent next to nothing on Apple products and managed to attract nearly two million to its network.
That next-to-nothing is about to end though, as T-Mobile USA has said it plans to offer “Apple products” later this year. (Anyone else a bit curious when T-Mobile USA parent company Deutsche Telekom said “Apple products” and did not in fact mention the iPhone? Could there be something else up Apple’s sleeve that T-Mobile USA will be launching? Will the “Apple products” be iPads or perhaps the Newton? Maybe it’s just German conservatism at work.)
In connection with the “Apple products” launch will also be the billions of dollars T-Mobile USA is investing in rearranging its network in order to more fully support the current spectrum bands and technology running inside of current iPhones, but what’s a couple of billion dollars between friends?
The final bit of iPhone-related nonsense this week was from regional operator Ntelos, which announced it has sold 66,000 iPhones – with contracts – since it began offering the device last April. It must be acknowledged that the carrier is selling the device for $50 cheaper than larger rivals, and several hundred dollars cheaper than what Leap is asking for its no-contract version, but Ntelos noted that a solid 22% of its postpaid customer base were using an iPhone at the end of 2012.
Now, those strong sales and increased subsidy did pinch Ntelos’ bottom line, but that seems to be just a short-term dilemma compared with having those hole-in-their-pocket iPhone users tied to a lucrative contract for the next two years. It’s sort of nice to see a smaller carrier pulling off – at least initially – a risky decision.
I know Apple has become a bit of a punching bag for the industry over the past several months, but to deny the impact that company and its i-devices have on the industry would be wrong. I know the holiday season has been over for a couple of months, but if anything, Apple seems to be the company that keeps on giving-(it) to the wireless industry.
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
–While Palm has become a name attached to the history of wireless, the company’s achievements continue to haunt as this week Hewlett-Packard said it has sold the source code, documentation, engineers, and websites of the Palm-developed WebOS platform to LG.
LG noted that it planned to use the assets to power smart televisions, but that’s cool. As long as something WebOS-related is out there functioning, the world is a better place.
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