Sprint Nextel is betting big on the iPhone: $20 billion big, according to The Wall Street Journal. Apple is unveiling the latest version of its blockbuster smartphone on Tuesday, and under Sprint's reported deal with the tech giant, the No. 3 U.S. cellphone carrier has agreed to buy 30.5 million iPhones over the next four years — a high-stakes gamble that may very well lose Sprint money until 2014. Sprint CEO Dan Hesse has listed the lack of the iPhone as the biggest reason customers are leaving his company for Verizon and AT&T. But is betting the company on one smartphone really a smart idea?
Sprint's big bet could pay off: This audacious deal could launch the "come-from-behind victory" Sprint sorely needs, says Doug Aamoth at TIME. Verizon and AT&T have a big head start, but with the iPhone in its lineup, "Sprint would have a key advantage" in winning back customers: Unlimited data plans. Verizon and AT&T no longer offer customers such an option. And if Apple rolls out a cheaper iPhone option — which might reduce the $20 billion price tag — the deal's potential to make the No. 3 carrier a contender again "arguably makes it a risk worth taking."
"Report: Sprint could be on the hook for $20 billion iPhone order"
No way. This deal is pure "crazy": "For Sprint's bet to work, it will have to sell nearly 8 million iPhones a year," says Larry Dignan at ZDNet. Considering that Verizon sold just 2 million in its first two quarters with the iPhone, that's a "staggering number of iPhones" to commit to. And even if Sprint somehow meets that target, add in the costs to its network — and the threat of total collapse if the gamble fails — and it sure looks like "the carrier is making a bet with the devil."
"Sprint's huge bet on iPhone is a potential disaster"
This just proves how powerful Apple is: The clear winner here is Apple, says Christian Zibreg at 9to5Mac. The iPhone is obviously an "iconic product everybody’s still lusting after." And the message to cell carriers is clear: "Either you pay through the nose and get the phone that can turn your fortunes around or risk getting left behind."
"Sprint bets the farm, ponies up $20 billion to get the iPhone"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- 43 TV shows to watch in 2014
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- How our botched understanding of 'science' ruins everything
- 6 things the happiest families all have in common
- How to be the star of a cocktail party where you don't know anyone
- 13 Urban Outfitters controversies
- Russia is stealthily threatening America with nuclear war
- Why so many Christians won't back down on gay marriage
- California's epic drought
- What would a U.S.-Russia war look like?
Subscribe to the Week