Carriers desperately seeking Windows Phone
Alternatives to iPhone seen as giving AT&T and Verizon leverage with Apple
Computerworld - AT&T and Verizon Wireless want Windows Phone smartphones to succeed in the U.S., partly to provide leverage against Apple's demands for subsidies and other concessions required for selling the popular iPhone.
AT&T recently began selling the Nokia Lumia 900 with the Windows Phone 7 operating system for a competitive $99.99 price. Meanwhile, Verizon Chief Financial Officer Fran Shammo recently told Reuters that Verizon is "really looking at the Windows Phone 8.0 platform because that's a differentiator."
Both carriers need a strong competitor -- like Windows Phone -- to go up against the iPhone and Android phones, analysts said. The wireless carriers could then tell Apple that they can sell quality smartphones that don't cost the carriers as much as the iPhone to subsidize. The iPhone sells well but also eats into carrier profits because of the subsidy and related costs.
"Mobile operators are sick of taking orders from Apple, [which is one] reason why carriers like AT&T and Verizon are backing Windows Phone," said Yankee Group analyst Katie Lewis in a blog posted Wednesday. "IPhones are occupying an increasingly dangerous share of operators' smartphone sales," she wrote.
In 2011, iPhones were half of AT&T's smartphone sales -- totaling about 16 million iPhones -- while Verizon has seen a strong surge recently in the same direction, Lewis noted. "The companies' fears of an Apple takeover are growing stronger," she added, partly because customer surveys show an increase in future buyers interested in owning an iPhone.
Apple's demands for subsidies in order for a carrier to sell an iPhone are legendary. U.S. carriers heavily subsidize all smartphone hardware, primarily to entice new customers to buy a two-year service contract that costs more than $1,700 over that period. The iPhone 4S with 16GB sells unlocked from Apple for $649 (useful on many GSM carriers with a separate contract), but Verizon, AT&T and Sprint sell it for $199.99 with a two-year contract.
Apple also gets a cut, or royalty, of the carrier's revenue realized from each new iPhone user. This royalty "is part of the negotiations to put iPhone on a carrier's network," said analyst Jack Gold of J. Gold Associates. "Apple argues it's worth it to the carrier, since their users are loyal and generate more revenues due to the popularity of the iPhone." Other phone makers, such as Samsung and HTC, don't get a similar cut.
Apple collects as much as $600 per iPhone user in royalties from the carriers on top of the hardware profits from the phones, according to several analysts, although Apple and the carriers have never confirmed that amount.
- Microsoft exec doesn't rule out Intel-based Windows Phones
- LG backs off Windows Phone for now, report says
- Carriers desperately seeking Windows Phone
- Review: Nokia Lumia 900 puts Windows Phone back in the race
- Microsoft spins Android malware into Windows Phone giveaway
- Microsoft pursues webOS devs, offers free phones
- First Windows Mango Phone unveiled
- Windows Phone OS Mango sent to manufacturers, carriers
- Ballmer: Windows Phone 7 not successful yet
- Microsoft offers developers early access to Windows Phone Mango
- Path Selection Infographic Path Selection Infographic
- Hyperconvergence Infographic A wide range of observers agree that data centers are now entering an era of "hyperconvergence" that will raise network traffic levels faster...
- Preparing Your Infrastructure for the Hyperconvergence Era From cloud computing and virtualization to mobility and unified communications, an array of innovative technologies is transforming today's data centers.
- How WAN Optimization Helps Enterprises Reduce Costs If you wanted to break down innovation into a tidy equation, it might go something like this: Technology + Connectivity = Productivity. Productivity...
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All Smartphones White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!