Sprint gambling $20 billion on iPhone deal?

The Wall Street Journal is reporting that Sprint has landed a huge $20 billion deal with Apple to purchase roughly 30 million iPhone units over the next four years.

Mr. Hesse told the board the carrier would have to agree to purchase at least 30.5 million iPhones over the next four years—a commitment of $20 billion at current rates—whether or not it could find people to buy them, according to people familiar with the matter. In order to keep the price people pay for the phone low and competitive with rivals, Sprint would be subsidizing the cost of each phone to the tune of about $500, which would take a long time to recoup even at the high monthly fees iPhone users pay.

Sprint is calling this an "all-in" gamble as they're essentially betting the farm on the iPhone to keep them competitive with Verizon and AT&T. But this seems to us like a very high risk gamble for Sprint to take.

BGR also claims they have word from an "incredibly solid source" that Sprint has landed an exclusive deal on the iPhone 5 with support for 4G WiMax out of the gate, with AT&T and Verizon only getting the device later next year.

I have been told that Sprint will be getting the iPhone 5 — yes the real iPhone 5, not the iPhone 4S — as an exclusive. And it will be a WiMAX device. AT&T and Verizon would launch the iPhone 4S and get the iPhone 5 sometime in the first quarter of next year as an LTE device. Globally, the iPhone 5 might be available as a 4G HSPA+ device.

Wouldn't it be far more likely, however, for Sprint to get a budget iPhone 4 and offer it at a far cheaper contract than AT&T or Verizon?

Source: WSJ, BGR

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Andrew Wray

Andrew Wray is a Salt Lake City, Utah based writer who focuses on news, how-tos, and jailbreak. Andrew also enjoys running, spending time with his daughter, and jamming out on his guitar. He works in a management position for Unisys Technical Services, a subsidiary of Unisys Corporation.

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Sprint gambling $20 billion on iPhone deal?

46 Comments

Why do I not believe that BGR report? Lets see, Sprint is dropping WiMax (which hasn't been expanded upon in a LONG time) for LTE. Why would Apple make their next iPhone exclusive on a network smaller than Verizon and AT&T? That's just utter foolishness.

TKFox007... That is not entirely correct. Sprint has not said they will drop WiMax, in fact, the current consensus is that they're have both WiMax & LTE for quite some time. Long enough for the current version whether it be 4S,5, or some other nomenclature, to be surplanted by newer version(s) by the time LTE is fully implemented.

I will not be a happy camper if that happens, less than 24 hours, I'm going to try to not look at another tech site until tomorrow after 12:45 pm eastern time.

If this is true I'm sooooo pissed. I switched to AT&T for the iPhone from sprint a year ago. WTF. No iPhone 5 on AT&T. What a damn shame. Guess I'll be going back to sprint

Hmm...may be ok after all. I'm up for upgrade on AT&T in May 2012, sounds like there'll be a LTE iPhone 5 by then.

How is making a deal with a company like Apple considered a gamble ?
I think the colaboration of MS & Nokia is much more of a gamble than this.
Sprint knows that iphone sells. They sign up with a company that has more cash than all phone makers combined.

Sorry but the sheep these days are the robots following android into phone freeze and force close hell.

I am sorry, I love apple products, I have several macs, an ipad, have had iphones, and love them, but your statement is pretty much bull crap. I am currently using an SGSII and it is by far the sweetest phone I have ever used. It doesn't freeze or force close. Grow up.

I hope this is so, all you iTards will have to either break your contract and go to Sprint or wait until next year to get the next iHype.

This will never happen! There will be no more exclusive iPhone deals with US carriers. Apple would never do that to it's loyal and beloved At&t customers. Not even to it's new Verizon customers. And Sprint is going LTE anyway! Sounds like a plant straight from. Hesse to boost Sprint stock! And I bet people are buying Sprint stock somewhere out there right now!

I actually heard this same information about a month ago from a radio shack rep. At that time I thought she was bluffing,now it seems she was right after all. She said Sprint will have the exclusivity until dec. 2011. Sounds about right to me.

There is no way Apple would alienate the customers that made the iPhone, and Apple for that matter, such a success. While sprint may have had to drop some serious dough to get apple to let them carry the iPhone, they will not be getting the ip5 exclusively. A more likely scenario is that they will be getting the only version with wimax.

Sprint couldn't even outbid att for tmobile. So you mean to tell me apple made this deal with sprint without giving another carrier the chance to make a better offer. I know Verizon got way more money and after the mistake they made back in 2007 do you think they would let sprint win this. Well att got their money tied up with tmobile. But really think about it

if I may add my two cents. This MAY be improbable but NOT impossible. Despite Sprint's current standings we MUST realize that Sprint has long since been a pioneering entity. Many advances that we enjoy today would not be so common if Sprint didn't take the risks paving the way for the other players in the game to come behind and "perfect" the art. Sprint was the first National digital carrier, the first to offer a very small clamshell phone, the first to do push to talk, the first to use the PCS spectrum. Sprint was the first to offer unlimited data, first to venture in to prepaid service (way back in the 90's with Sprint APO), first to bring a "giant screen" phone to the masses, first for what America calls 4G, first dual screen phone, the list I'm sure goes on and on... I said that to say this. Despite what Sprint's numbers show, there is a reason why reputable companies turn to it time and time again to be 1st. It could be as cordial as a respect for a company willing to take risks or as sinister as "hey we'll try it on Sprint and if it works we'll polish it up and put it on one of the big boys down the road, if not, no love lost. So in summation, iPhone 5 using ANY American 4G-esque technology would be a great fit for a Sprint first...after all, the rumor years ago was that Apple approached them to Launch the iPhone, but nobody thought it'd be a hit...kiss and make up time maybe?
Just a thought.

This won't happen. Why would Apple screw over loyal fans who helped make the iPhone what it is today. WSJ is just blowing smoke up someone to make them feel better. Tomorrow will be the day all rumors are put to rest.

First of all, I'm pretty sure apple has made that much off the iPhone over the last 4 years, which is what that 20 bil covers. Even if they haven't, that's not the point. 20 billion new income from sprint PLUS all of the revenue from the hoard of loyal iphone upgraders, is way better than making it exclusive.

Actually I just looked it up. At the iPad 2 event in march they said they had sold 100,000,000 units. At 600 a pop (remember 200 is the subsidized price) that's 60 billion over the last four years.......from loyal customers, and that was 7 months ago.

$600 is the price that the consumer pays for an unsubsidized phone. The carriers would pay Apple much less per unit. It also includes iPod Touch and Apple TV sales, which would bring in a lot less profit than iPhone/iPad sales. Your point stands, though.

This is good. Sprint knows in order to sell all those iphones they will have to STAY competitive by keeping their prices low and unlimited data. Lord knows their network cant compete with Verizon's and their data isn't on par with AT&T's.

iPhone 5 exclusive to Sprint?? I think AT&T and Verizon would not let that happen.
Also, where the EFF is T-Mobile in all of this?!?!