iPhone Could Reach 2.8 Billion New Customers
Apple's (NASDAQ: AAPL) iPhone could reach nearly three billion new customers worldwide -- but only if it is willing to change its policies.
According to Bloomberg, 2.8 billion potential iPhone customers continue to go untouched as international cellular service providers fight against Apple's current policies.
China Mobile (NYSE: CHL), the world's largest mobile carrier, has yet to ink a deal with Apple to sell the iPhone. NTT DoCoMo (NYSE: DCM), the largest carrier in Japan, has also chosen not to carry Apple's prized smartphone.
While App Store revenue has been cited as a barrier (ex: China Mobile reportedly wants a cut of all apps sold), iPhone subsidies continue to be the most troubling feature.
In February, CNNMoney reported that Sprint's (NYSE: S) margins fell significantly after it started carrying the iPhone. Without it, however, customers were willing to walk away from the carrier. This left Sprint with no option but to give in to Apple's demands.
On Friday, the Los Angeles Times reported that U.S. Cellular (NYSE: USM) has been experiencing the same problem. To prevent further losses and to lure old customers back to the company, U.S. Cellular will begin selling the iPhone later this year.
While Apple's high subsidies may be good for the company, they may not be good for the consumer, as they are being blamed the monthly rate increases from both Sprint and AT&T (NYSE: T). The increases apply to all smartphones, however, not just those manufactured by Apple.
By the end of 2013, the Cupertino, California-based tech giant will sell the iPhone through virtually every carrier -- postpaid and pre-paid -- in America.
International carriers have more options. Consequently, they have been less willing to accept Apple's terms.
Samsung, which offers dozens of phones in hundreds of markets, has made it very easy for some carriers to ignore Apple. The South Korean tech giant -- which produces the Galaxy S IV, Galaxy Note II and other popular Android-based smartphones -- has been more lenient in negotiating fair contract terms with carriers.
Since Apple can get away with its policy in America, the company is unlikely to loosen its terms overseas. In doing so, domestic carriers may see this as an opportunity to negotiate better terms as well, which could put Apple in a very difficult position.
Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ
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