iPhone is a worldwide money-loser for carriers, report says

September 7, 2009 | Paul Boutin | Comments |
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monopoly-bankruptThe iPhone is great for Apple, but to wireless network operators it’s a money-losing device whose benefits just haven’t materialized, says a new report from Denmark research firm Strand Consult.

The report lists what Strand says are 10 myths about the iPhone:

1. The iPhone drives data traffic into mobile operators networks
2. The iPhone helps operators attract new customers
3. The iPhone is good business for mobile operators
4. The iPhone is dominating the mobile services market
5. App store is a huge success that has revolutionized the services market
6. There is money to be made by developing applications for the iPhone
7. It is iPhone customers that are generating the majority of online mobile surfing traffic
8. The iPhone has a large market share
9.The iPhone was the first mobile phone with a touchscreen
10. The iPhone is a technologically advanced mobile phone.

While I’m waiting for my copy of the full report, here’s a prepared statement from Strand:

“Many of the conclusions that the media have published about the significance of the iPhone for mobile operators are not documented in the operators’ — or other key market players — financial statements. We can also conclude that the closer a relationship is between an operator and Apple, the larger negative influence it has on the operator’s overall business case from a shareholder’s viewpoint.”

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About the Author, Paul Boutin

Paul (paul@venturebeat.com) covers Apple & the iPhone, social networks & social media, digital music & video, and any crazy Internet story. Paul wrote and edited for Valleywag from 2006-2008, after several years with Wired magazine and Slate. He writes regularly for The New York Times' technology section and sometimes for Wired and The Wall Street Journal. He studied computer science at MIT in the early 1980s, and worked as a software developer and network administrator for 15 years before becoming a professional writer. Follow him on Twitter at @paulboutin, and follow VentureBeat on Twitter at @venturebeat.

  • everploeg
    I too am awaiting my copy of this report. Thanks for flagging it.

    It will be interesting to see how they were able to tease these sorts of detailed conclusions from the mobile operator's financial reports, which rarely report all three of the key operating metrics--CPGA, Service Margin, and Churn--on even an aggregated basis, let alone on a device by device basis. We'll see what other data sources they bring to bear.

    Re the "myths". I don't think anyone is seriously positing 8, 9, or 10; these seem like filler to round out the top ten. 4, 5, 6, and 7 depend on definitions used; with the "right" definition, the pro or con position can easily be argued. 1, 2, and 3 will be interesting to see the data on. My own conversations with knowledgeable folks in the US and Europe suggests a huge difference in operator reaction to the iPhone on the two sides of the pond, based largely on prevailing pricing schemes, and differences in internal costs of carrying data over the air.
  • tony123456
    iPhone is really a mom's phone, showing kids' photos to other moms during soccer games. That's about it. iPhone is a toy for adults.
  • Oh yeah? So most iPhone owners are soccer moms? What an intelligent comment.
  • I'm curious as to who actually paid for this ;)
  • "says a new report from Denmark research firm Strand Consult"

    New report? This Strand thing is at least nine months old -- and age has not improved it. See here:

    http://brainstormtech.blogs.fortune.cnn.com/200...
  • Beltway Greg
    This is such unadulterated BS. File this under exploding IPhones, discolored IPhones, exploding IPods, etc. Nokia and RIMM will do anything to take down Apple and unfortunately they just can't. Back in 2007 the whole IPhone thing was supposed to be a joke and they scoffed at my own personal Jesus Steve Jobs when he said that the IPhone could sell 10 million copies in a year. Apple caught the entire industry flat footed. Sit back and relax as Apple gobbles up market share and the other companies continue to shoot at a moving target. What Apple has done in these troubled economic times is nothing short of remarkable and will be studied for decades. But what did they do? They produced a superior product, marketed it perfectly, and provided customer service that is both user friendly and astounding. How incredibly boring and successful. See you at $200.
  • primate
    A user above, Philip Elmer-DeWitt, found a reference about 9 months ago -- for what it is worth I found another dating this report to December 2008
    http://www.itworld.com/mobile-amp-wireless/5966...

    Can I ask how VentureBeat picked up this thread again? Was it a press release from Strand?
  • bvolk
    The Nokia Fan-Bois who repeat this nonsense would be more effective if they would pressure the Execs from Espoo to get the hint and make Ovi into a competitive App Store.

    Nokia builds very impressive phones, has a commanding market share and is making a huge strategic error in not taking the VELOCITY of Apple's success seriously. Apple App Store success on a ARPU basis is unmatched by Nokia, Google, or RIM.
  • Ron
    Classic Innovator's Dilemma data set. VentureBeat needs to ensure staff reads up on the book until they understand it. It's why Techcrunch is better.
  • Niels
    @ Philip Elmer-DeWitt & Primate

    learn to read, the links to the press releases you post arent the same of the report

    iTards
  • everploeg
    I just got the report. 105 pages in all, so I've only had a chance to skim it. They collected a heroic amount of data, and it is very current--through 2Q '09.

    When it comes to attempting to really construct the operator business case, and seeing how the iPhone performs with respect to CPGA, Service Margin, and Churn, they were able to collect a few anecdotes, but I didn't see a complete view of these three metrics for any one individual operator.
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