Thursday, January 31, 2013

iPhones rack up the highest carrier bills, but carriers don't necessarily profit the most from them

Carriers that have the iPhone in their catalog (and that will include the Nation's fourth largest, T-Mobile, sometime soon), make more per month on carrier fees for those devices, as shown by new data shared with AllThingsD by Consumer Intelligence Research Partners (CIRP). That said, it doesn't necessarily mean that iPhones add more to carrier bottom lines than other devices do.

How, exactly, does that work out? The figures are as follows:

Nearly 60 percent of the iPhone users CIRP polled during Q4 2012 spent more than $100 per month on their wireless plan, with 10 percent of those users spending $200 or more. 36 percent spent from $51 - $100; 6 percent spent from $25 - $50, and none spent under $25 (go figure).

Compare that with Android users: 53 percent of Android users polled by CIRP during Q4 2012 spent more than $100 per month on their wireless plan, with seven percent of those users spending $200 or more. 32 percent spent from $51 - $100; 13 percent spent from $25 - $50, and one percent spent under $25.

Meanwhile, how about BlackBerry? 40 percent of BlackBerry users polled by CIRP during Q4 2012 spent more than $100 per month on their wireless plan, with 10 percent spending $200 or more. 30 percent spent from $51 - $100; 20 percent spent from $25 - $50, and 10 percent spent under $25.

For Windows Phone, the data showed that 56 percent of WP users polled by CIRP during Q4 2012 spent more than $100 per month on their wireless plan, but none of them spent $200 or more. Ouch. 44 percent spent from $51 - $100, and none spent $50 or less.

Between iOS and Android, the usage differences aren't that big, but every penny counts, particularly when you consider the millions of smartphones all these carriers are activating.

Why is this happening? CIRP co-founder Michael Levin explained:
We think it has to do with their data plans and carriers, rather than their usage habits. They are all on expensive data plans, unlike Android users, some of which are on prepaid or unsubsidized plans with regional carriers.
To be clear, there are now some prepaid iPhones, which was missed by Levin. Still, the majority of iDevices are not on prepaid carriers.

More importantly though, is the fact that the iPhones generous subsidies mean that carriers have to work hard to make their money back over the course of the contract, something that happens to a lesser extent on Android, CIRP’s Josh Levitz said:
Given the subsidies on iPhones, the carriers are working hard to make their money back during the course of the contract. With the exception of perhaps the hottest Android phones, we think the subsidies on Android phones are lower, so the carriers make more money even with slightly lower per-subscriber revenue.
In other words, don't assume that increased carrier fees mean increased profit.

CIRP also examined platform loyalty. For the survey period (Q4 2012), 88 percent of the iPhone activations it charted were from prior iPhone users and 64 percent of Android device activations were from prior Android owners. For BlackBerry, only seven percent of BlackBerry device activations were from prior BlackBerry users, while only nine percent of Windows Phone users had Windows Phone for their prior device.



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