iPhone remains a best-seller, despite -- and to spite -- carriers

By Rene Ritchie
last updated

Carriers have a love/hate relationship with the iPhone. They hate Apple's control (because they want that control for themselves) but love the money and customer-retention having the iPhone on their network brings them. Sprint's willingness to pay damn near all the money in their pockets, and delve into whatever passes for a corporate second mortgage, proves that that point.

AT&T, Verizon, and Sprint sell Android because they want to. They sell iPhone because they have to.

Apple isn't exactly easy to deal with. Android gives carriers far more control, generally requires far less up front investment (in terms of subsidies), and promises a thus far inexhaustible cornucopia of new devices to thrust at consumers on a seemingly weekly basis. It just doesn't generate the revenue or reduce customer churn the way the iPhone does.

They tried. They really did. Verizon pushed the Droid and Sprint pushed the Palm Pre and the EVO. They had successes to be sure, especially in sheer volume of units sold. But they never came anywhere near iPhone levels of profit or customer loyalty. And at the end of the day, even for carriers, that's what matters.

Not that you'd know it by looking at their websites. Go to Verizon.com or AT&T.com or Sprint.com and iPhones have little to know home page presence and remarkably little wireless site presence.

Verizon's home page features the eye of Sauron the Droid. Their wireless page does have the iPhone in the first of three small blocks at the bottom, but the massive feature boxes are filled almost entirely by Android. There's even a token BlackBerry thrown into the mix. But no iPhone.

This despite Verizon selling 3.2 million iPhones last quarter, accounting for more than half the smartphones they sold (i.e. the iPhone outsold all Android and other smartphones combined.)

AT&T's home page is all about Windows Phone and Android, with Nokia grabbing one of the hero slides and HTC and Samsung getting the other two. On their wireless page Nokia repeats in the spotlight, with Android and cheapy phones playing backup. There's no iPhone in sight.

Yet AT&T sold 4.3 million iPhones last quarter, which was 75% of all the smartphones they sold, and 60% of all the on-contract phones AT&T sold period (including feature phones).

Sprint's home page has the iPhone in the third of four feature spots, and the fourth of four bottom blocks. They don't have a separate wireless page, so their home page does double duty.

Still, Sprint managed to sell 1.5 million iPhones last quarter. They don't break out how many smartphones in general they sold, however, so there's no way to calculate the iPhone's percentage of total sales.

And that's just in the U.S. Internationally, Apple sold over 20 million iPhones. Rogers in Canada reported 35% more iPhone activations, year-over-year, compared to just 20% more smartphone activations overall. (And their home page features Android and Windows Phone, and iPad, and their wireless page shows an iPhone only in a block advertising their Find my iPhone-like Phone Finder service.)

So with little attention, ad spend, and product placement, Apple's iPhone still accounts for most of the carriers smartphone -- if not all phone -- sales, and reduces their customer churn. And that probably drives them up-the-wall crazy.

Apple, who doesn't let them festoon the iPhone with their revolting logos, clog it up with their dodgy crapware, allow them to delay or refuse software updates, or arbitrarily alter casing designs, and charges them among the highest up-front prices of any manufacturer in the industry, is increasingly responsible for their financial and customer success.

And it doesn't even have LTE (yet) or a ginormous screen (likely ever).

If carriers had their druthers, manufacturers -- including Apple -- would be little more than dumb assemblers (much as, if customers had their druthers, carriers would be little more than dumb pipes). Yet as much as Verizon, AT&T, and Sprint would far, far prefer to sell the always amenable Android, customers, increasingly, want iPhone. So carriers increasingly have to deal with Apple. Even if they continue to try to find viable alternatives.

That's why carriers will never go all-in on iPhone promotion. They don't want to become entirely dependent on Apple (or any one platform). It's in their best interest to have several, highly competitive platforms on the market that they can hedge with, and against.

Still, it's interesting to imagine a market where carrier manipulation didn't influences the market. Free to compete strictly on customers and merits, would smartphones be more like tablets, and would the iPhone have the same relative positions as iPad does to Android tablets, BlackBerry PlayBook, and the like? The same position the iPod had in the carrier-free MP3 space?

Rene Ritchie
Rene Ritchie
Contributor

Rene Ritchie is one of the most respected Apple analysts in the business, reaching a combined audience of over 40 million readers a month. His YouTube channel, Vector, has over 90 thousand subscribers and 14 million views and his podcasts, including Debug, have been downloaded over 20 million times. He also regularly co-hosts MacBreak Weekly for the TWiT network and co-hosted CES Live! and Talk Mobile. Based in Montreal, Rene is a former director of product marketing, web developer, and graphic designer. He's authored several books and appeared on numerous television and radio segments to discuss Apple and the technology industry. When not working, he likes to cook, grapple, and spend time with his friends and family.

20 Comments
  • "Still, it’s interesting to imagine a market where carrier manipulation didn’t influences the market. Free to compete strictly on customers and merits,"
    that's called Europe
    goto three.co.uk, iPhone on front.
    Goto T-Mobile.co.uk, iPhone on front.
    goto o2.co.uk, iPhone on front.
  • I was about to ask "When the hell did Bill Hader get desperate enough to do cell phone commercials?"... then saw the NBC bug. Almost got me.
  • Apple’s loves dictatorial control and love the money of the customer...
    So. It´s business.
  • I work for an authorized retailer, and up until this month we got $0 for selling an iPhone, and still if we sell it with the lowest package we lose money on the sale, they hate the iPhone but have to carry it. And Apple just found out the right people to screw. Iit was the middle man the carriers, the customer pays $199 they don't know the store is taking a hit on the rest of that $700. Where an android phone that's $199 the carrier will pay around $400 for making the profit huge. So basicly Apple is putting consumers first and making friends of them, because we see with Blackberry how bending to carriers demands, and making them friends gets you no where.
  • The retailers may be losing out on the rest of that $700, but how much are they making up over the next 2 years in contract prices? They make that $500 back within 3 months and still have another 21 months to recoup more money. So these carriers ain't hurting at all! They're just trying to be greedy. It costs money to make money! If they gotta spend $500 on me today to earn $2400 from me over the next 24 months, I don't see where their problem is! Out of the average $100 monthly smartphone bill, how much on average does it actually cost the carriers to provide the actual service to you each month?!
  • Interesting article. As a former Android User, current iPhone user I never understood the grief between the two OS's, both with fanbases that are solid, both with interesting features.
    While i somewhat enjoyed your article, its a perfect example of the elitism on both sides of the debate.
    I know this really has nothing to do with the article, Im just amazed at the obvious and overly condescending tone(yes, it is posted on imore.com, so i guess if there was to be a bias, it would be here)the article author has regarding Apple and its dealings with the Carriers.
    This is why i hide my iphone in my pocket
  • Its kinda like Toyota. Not the best cars but people have it set in their heads they are. Its brand washing. They more dumb people see ads for a certain company they'll believe they must be best.
  • The vehicle landscape has changed much since 2008. Your comments were valid then but aren't now.
  • This is what I've been telling clients/friends for a while now. If they go in to a store and listen to only what the salespeople say, they'll probably walk out with something other than an iPhone. I heartily recommend that they do some research outside the store, and when they go to the store, to handle the devices. If real devices aren't available, find a friend with one you can hold/type/etc. Everyone has different needs, and listening to just the salesperson's pitch will not show the whole story. Also, I HATE that smartphones other than the iPhone are loaded with all the carrier crap. My thought is I pay the carrier enough for less than perfect service (regardless of which carrier - none are perfect); I don't need to have their wares shoved down my throat as well.
  • Well - its all the "Flavor of the month" all of these websites you mention (verizon, sprint, etc) had the iPhone 4s/4 featured until just recently when the new round of Android phones started to be announced / released (ie. EVO's, Nexus (sprint))... It's all marketing.. the fact is.. The majority of people who wanted to buy an iPhone 4/4s on the networks have done it by now, and now its the Android announce/sales cycle - so now they are going to ride that way.. Alll the way through the S3 and then up until the next iphone is announced, and it will switch back.. Bottom line, Carriers want CONTRACTS, and they will push the flavor of the month to get their current and new customers to jump on board at any cost..
  • "In spite of" is a definition of "despite." As such, the title of this article is stupidly redundant. Typical.
  • That's I more for ya. They do anything for.page hits. Got me since I'm commenting.
  • I think the iPhones aren't featured prominently on the carrier's websites because they don't have to be. iPhone is selling like hell. The carriers also hate iOS 5.0, but since they have little to nothing to do with release of new iOS updates (other than perhaps a verification of baseband software), they are even more frustrated. Why? iMessage. I went from 1000-1500 texts a month to 32 last month…all because I'm using more of iMessage over their data network (which they don't want me to use), and less of SMS messaging (which they want me to use more of).
    But back to my point…they have to push the Android phones to sell them…they push tons of iPhones, so why waste ad dollars or prominent web sales space on a phone that sells on its own? Push the phones that people don't really want but will settle for.
  • I've turned water into Apple products; do you still need more proof?
  • I heard employees got a commission or something when they sold an Android phone. Is this right? None for selling an iPhone.
  • Hi Rene
    I saw a major broadcast TV show state that Samsung sold 44.5m smartphones vs 35.1m for iPhones during a recent quarter. I searched the web and it seemed to agree. Do you have any information about this?
  • crickets
  • I do believe that a person either wants or does not want an iphone or wishes they had an iphone (in the case of t-mobile or if under contract) so in the world of smartphones, it is just a given, a known fact that people know about the iphone and therefore either want one or do not want one. In the ridiculously confusing world of android, where new bigger, better, faster, brighter models come out on what seems to be a dialy basis, there a relativly few models that stand out from the crowd and even fewer models that are going to attain that long lasting fame of the iphone or like the old motorola razr phones. this being said, i think this is why the carriers have to advertise and sell the most models of their new android devices today before a new model comes out tomorrow and further confuses an already overbloated world of android models. I tried android briefly - very briefly - last year prior to buying my first iphone and I will not go back to android or blackberry. Android to me was extremely unstable, with horrid battery life and almost child like features - apple does things with extreme elegance and in most instances, correctly. This is why carriers really do not have to advetise iphones on their websites. peoople already know about the iphone and will seek one out if and when they want one.
  • cell phone carriers lose money on every handset they sell. they may lose more on iphones than others, but the longer they keep that customer theirs a point where they begin to make money off that customer thereby recouping the up front cost of the handset.
    i'm not shedding a tear for any of these carriers or manufacturers. get off of apples jock, people. it doesn't matter. using apple products do not make you smarter or cooler than anyone else. why can't you just enjoy your consumer electronics without dividing into competing camps? and yes, i have an iphone.
  • I have had 2 different Android phones and my wife has had two. She did not have any problems with her 1st one (HTC Hero) but, she is having loads of problems with her new EVO also by HTC. I had the Samsung Moment and soon realized why they call it the Moment, that is about as long as it will last without giving you major headaches. I went from there to the HTC Hero like my wife had and still had problems, though not as many as the Moment. I switched to the IPhone and had basically had not issues. it works!!! The biggest problems I have had with the Iphone are with Itunes and learning how to get personalized ringers on the phone. i bought the IPhone with 32gb of memory. i think this is what is wrong with the Android phones, they don't have enough ram and memory and start to freeze up and act badly when you are trying to do more than a few things at a time or your memory gets low. Of course, that is nothing new, computers have been doing that for years. I am waiting for the first Android phone to offer more than 16gb of memory and a lot more ram. Android works great when it does and has a lot of things that the Iphone doesn't and will probably never have(widgets, flash, etc...).