In a major coup, Sprint the 3rd largest Mobile carrier in the US, has struck a deal to begin selling Apple’s iPhone 5 in mid October. Sprints stock jumped by 10% on the news. While on the surface it looks like a super deal for Sprint, it could be a double edged sword. While Sprint caters to lower income customers, and derives a good percentage of total revenues from it’s Pre-Paid services Virgin and Boost Mobile. The higher end iPhone is a little out of it’s target market.
Yet another hidden downside, is the “Subsidies” that it will have to give to be competitive. Apple charges $650 each for iPhone. Sprint will have to subsidize the difference between that cost and the $199 – $299 retail cost. They could be looking at a loss of $300 – $400 per sale.
Sprint would hope to make up the difference over the course of a two-year contract the customer signs to get the subsidy.
It’s estimated that Sprint could sell 1 million iPhones this year, and as much as 5 million in 2012. So overall it appears to be a good deal for Sprint. But of course, the real winner will be Apple!