Apple must address operator resentment

Caroline Gabriel/Wireless Watch
15 Jul 2013
00:00

The markets are becoming accustomed to churning stomachs ahead of Apple results these days, and once again there is considerable nervousness about the next set of quarterly figures, due July 23.

The once invincible vendor needs to produce something dramatic, and that does not only mean an impressive next iPhone, but also major changes in the way it deals with its main channel, the carriers. With MTS dumping iPhones in Russia - enabling Windows Phone to overtake iOS in share - taking a more flexible approach to cellco deals is becoming urgent.

Operator resentment of Apple's famously tough contracts and high handed approach has been mounting for some time, to the extent that some major players, notably China Mobile, have refused to sell the iPhone. Most, however, have felt unable to pass on such an iconic handset, and operators have continued to sign deals with eye-watering sales commitments, even when the age of exclusives was over.

However, if the iPhone continues to lose its magic, and cellcos can make a similar impact with other devices with lower subsidy and marketing costs, Apple will see its partners melting away.

In Russia, for instance, MTS stopped selling the iPhone altogether at the end of 2012 and is majoring on Windows Phone devices, which has helped enable the Microsoft OS to overtake iOS, gaining 8.3% of smartphone sales compared to 8.2% for Apple.

“Apple wants operators to pay them huge money, subsidizing iPhones and their promotion in Russia. Now it's not beneficial for us. It's good we stopped selling the iPhone as these sales would've brought us a negative margin,” MTS CEO Andrei Dubovskov told Bloomberg.

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