iPhone Subsidies Not An Issue For The Carriers

There has been much talk about iPhone subsidies lately, and their impact on the smartphone market. SeekingAlpha has come up with another side to this story. According to the report, iPhone subsidies are not a real issue, not for the customer nor for the carrier.

Back in 2007, when the first iPhone was released, Steve Jobs managed to secure a good deal with AT&T in America, after 18 months of negotiations. At the time, he was supposed to award the revolutionary phone exclusively to AT&T, for five years.

Even if that didn't happen, AT&T and other carriers have benefited a lot from the iPhone's huge commercial appeal. Consequently, AT&T saw its market share boosted. In the first year, the number of customers on the network increased by 15 per cent, data service grew by 50 per cent - compared to 2006.

This trend continued for the following years, but the iPhone has remained the most popular product in AT&T's offering.

The big winner was still Apple, selling around 74 million units with AT&T between 2007 and 2011. That's why, AT&T is a good example of how profitable the iPhone was for them, despite the subsidies.

Last year, when Verizon and Sprint Nextel both joined the iPhone frenzy, they agreed to make significant purchases from Apple - in order to remain competitive.

For the same reason, a few regional carriers decided to support more of the iPhone costs in order to appeal to the clients hoping for future gains.

Source: SeekingAlpha