The launch of the iPhone (and iPhone 3G, and iPhone 3GS…) created a well hyped buzz all over the world. Operators were struggling to get exclusivity for offering the devices, and device sales were high. In France, the right to offer the iPhones even got to a legal action, when Bouygues Telecom issued a complaint against the exclusivity agreement that Orange had with Apple, resulting in a court ruling that allowed all the three French mobile operators to sell the iPhone. Only in the last quarter (Q2 2009), Apple sols 5.2 million iPhone devices.
However, a recent report by the Copenhagen-based Strand Consult indicates that none of the operators who sell the iPhone made any profit of this: “According to the research we have conducted on the operators, not one of these have increased their market share, revenue, or their earnings as a result of introducing the iPhone” says the report. “On the contrary, some operators have sent out profit warnings because of the iPhone”
The first operator who offered the iPhone worldwide, the US AT&T, who still have exclusivity in the US, indicated that their second quarter earnings fell 15 percent year over year, as the highly successful launch of Apple’s iPhone 3GS — a phone subsidized by AT&T — affected the company’s bottom line.
On the positive side, not mentioned in the Strand Consult report, AT&T also reported more than 2.4 million iPhone activations in the second quarter, and 37.2 percent increase in wireless data revenues to $3.4 billion, more than double the total for the second quarter two years earlier. The iPhone probably had a positive impact on these results.
In Asia, the SingTel group, which is the largest in South East Asia, has reported falling profits due to iPhone launches, saying the iPhone alone hurt operating profit margin by 3-4 percentage points.
In Northern Europe, TeliaSonera showed no positive progress due to the iPhone sales, and the ARPU in Denmark has declined from 212 Danish crowns to 168 crowns over last two years, a stronger fall than their competitors. In Sweden TeliaSonera had a small market-share loss and a fall in ARPU.
The reports claims that the operators agreed to heavily subsidize the iPhones, hoping to reap benefits later, but this did not happen, and is not likely to happen in the future, as Apple are moving away from exclusivity deals, as happened in France.
The report also indicates that the other handset manufacturers are catching up with the iPhone, offering similar functionalities.
In my view, in addition to the above, the Apple iTunes/App Store model, is another reason for the loss of revenues by the operators, which are likely to create additional discontent by both operators, users and application developers.
Report by Reuters
