Verizon Wireless and AT&T are hoping that smartphones powered by Windows Phone will be able to kick off in the US, mostly to gain some leverage against the sizable concessions and subsidies levied by Apple for selling the iPhone. Fran Shammo, the Chief Financial Officer at Verizon has told Reuters that the company is looking forward to the release of the Windows Phone 8 platform as it is likely to be a key player. AT&T has already kicked off its line of Windows Phone devices with the recent release of the Nokia Lumia 900 which runs on the Windows Phone 7.5 operating system.
Despite the solid sales of the iPhone, carriers have suffered from low profit margins thanks to the subsidy and other related costs levied by Apple and in order for the companies to be able to sell smartphones at a higher profit margin, they need a strong competitor; which could be Windows Phone, say analysts.
Katie Lewis, an analyst at the Yankee Group has said in a blog post on Wednesday that the iPhone has become a dangerously large part of mobile carriers’ smartphone sales and that carriers like Verizon and AT&T are sick of having to take orders from Apple and hence backing the new Windows Phone. Lewis noted that a total of 16 million iPhones were sold by AT&T in 2011, which accounted for more than half of the total smartphone sales by the company. Verizon too has seen a recent surge of iPhone sales. She further asserted that these carriers were almost ‘dummies’ of Apple as they were virtually controlled by the company.
Jack Gold, an analyst at J. Gold Associates said that with each new iPhone sold, Apple gets a payment as royalty as a part of the deal to put the iPhone on the carrier’s network. Though Apple argues that in the long run it is profitable for the carriers as most of the iPhone customers will remain loyal and hence contribute to the overall revenue, other smartphone competitors such as HTC and Samsung do not charge a similar royalty.
According to many analysts, Apple charges as much as $600 per iPhone as royalty though the figure has not received any official confirmation from either carriers or Apple.
April 30, 2012 at 3:15 pm
If they would just make all phones it unlocked, that would “right” the ship of the whole problem. People who can AFFORD cell phones will only buy those. People who can AFFORD smartphones will buy those. The fact that carriers think they are victims when it comes to subsidies is bewildering to say the least. I don’t see them in any way deserving of lower subisidy rates from any OEM, as Apple is NOT the only OEM charging north of $400 per model. See HTC’s Rezound and Motorola’s Razr, and Samsung’s Galaxy Nexus on Verizon. The CARRIERS set the up front costs to customers for contract devices, not the OEMs. All this crap combined plus the fact that people who DO buy at full retail can’t count on updates or lower monthly bill reflecting they aren’t contracted shows why plans like Wal-Mart’s Straight Talk affiliate are growing and unlocked devices from overseas are becoming more appealing.