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Carriers vie for iPhone 5 business

posted 21 Sept 2012, 15:32 by Mpelembe   [ updated 21 Sept 2012, 15:32 ]

The iPhone 5 ramps up the rivalry among the big U.S. mobile phone carriers, even as they take a hit to the bottom line in a bid to sign on iPhone customers.

USA-IPHONE 5 CARRIERS - The iPhone 5, Apple's latest and greatest rollout, was greeted with the typical fan frenzy Friday around the globe.

For mobile phone carriers AT&T, Verizon Wireless and Sprint Nextel, it means big business.

All three carriers ramped up their 4G LTE networks, used by the iPhone 5, to handle ultra fast downloads and high definition video.

Jim Moorman, S&P Capital IQ Equity Research:


"I think a lot of people are trying to drive home the importance of LTE and the speed that comes with it, I think beyond that and the coverage that Verizon has, I think Sprint has a little bit of a competitive advantage as well as Sprint is one of the last carriers to be offering the iPhone 5 along with an unlimited data plan."

But AT&T, the first to sell the iPhone in its infancy, offers technology the others do not: the ability to be on a call and search the internet at the same time.

What all three carriers do have in common is a margin squeeze as they cut the cost of the $600 iPhone 5 to attract customers.

Weston Henderek of Current Analysis:


"Generally speaking people are paying $199 for the entry level iPhone 5 and up from there but they are certainly not paying the full retail price so the carrier even when you sign your contract has to kind of give the difference over to Apple, if you will, so it costs a lot of money upfront for the carriers to lock you in but then once they've got you there they've got you locked in for 2 years."

AT&T has locked in the greatest number to date:

Apple had a 38 percent market share at AT&T in the second quarter of this year, a 28 percent share at Verizon and 27 percent share at Sprint.

Of all the smartphones shipped: Apple had a 56 percent share at AT&T, 44 percent at Verizon and 32 percent at Sprint.


"Here in the U.S., Apple was number one in the mobile phone market in the second quarter, according to Strategy Analytics. And while Apple may be king in North America, Samsung has taken a bite out of it everywhere else."

Still, some analysts expect Apple to sell up to 10 million iPhone 5 models in September alone. JP Morgan estimates it could provide a 3.2 billion boost to the U.S. economy in the fourth quarter.

Jill Bennett, Reuters