How Apple single handedly saved AT&T and Sprint

When the first iPhone was sold back in 2007, Apple’s market cap was at $104 billion, and today, four and a half years down the line, it stands at a staggering $480 billion.

Nearly 200 million iPhones have been sold in the last four and a half years, 37 million of them in the last three months of 2011 alone. This shows how the Apple iPhone have been one of the most successful product in the mobile industry history as we’ve seen.

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The iPhone Business Model that “clicked”

The Apple’s business model was initially received with a lot of criticism. But the visionary behind the company, Steve Jobs was never wrong with his objectives. The revenue sharing plus open business model caught on like fire with Apple fans and others alike and there was no stopping it.

And he was pretty damn right with his vision. The iPhone is a revenue machine today. Last quarter, it generated $24.4 billion in revenue for Apple, outdoing Microsoft with its revenue from all verticals.

Not surprising is Apple’s contribution to the mobile industry. With Apple’s revenue soaring, the mobile industry, app developers and the companies in between too benefitted and is looking good today. One of the companies to benefit the most from Apple was AT&T.

How Apple helped AT&T

And how exactly is Apple saving AT&T? Standard feature phones, are primarily used for phone calls and text messages. That’s where the revenue is for most of the carriers. But iPhone users also pay for wireless data connections, and gladly. This was a huge revenue source exclusively “given” to AT&T (forgetting the occasional hiccups) and got the profits rolling in. And research shows us that as time went by, iPhone users started to use more mobile data than they were expected to plus, paying more for them as well.

How Apple helped Sprint

Sprint got in late to the party. Precisely last fall when the iPhone 4S was introduced. But the iPhone has been a life saver for them ever since. In the fourth quarter of 2011, the iPhone helped Sprint see a net gain of 161,000 new subscribers, well below AT&T’s net gain of 717,000 and Verizon’s 1.2 million but the first quarter of net gains in a year. Sprint mentioned that 40% of its customers buying iPhones were new, perhaps drawn by its unlimited data plans. And they were probably right. The excitement in the market when Sprint unlimited data plans were introduced, was amazing! And rightly so, the company made the profits.

But all is not well today

We might never know the reason, or could speculate over many reasons but the reality is that both for AT&T and Sprint, the numbers have come down drastically. AT&T is down 26% from the day it started selling the iPhone. Sprint is down 52% since it began selling the iPhone. It might sound natural, as the initial sales are always high, but the down hill ride is scary.


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