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New details, not previously reported, give a rare look at Apple's closely guarded dealings with carriers, and reveal just how high the stakes are for Sprint.
Mr. Hesse told the board the carrier would have to agree to purchase at least 30.5 million iPhones over the next four years—a commitment of $20 billion at current rates—whether or not it could find people to buy them, according to people familiar with the matter. In order to keep the price people pay for the phone low and competitive with rivals, Sprint would be subsidizing the cost of each phone to the tune of about $500, which would take a long time to recoup even at the high monthly fees iPhone users pay.
Directors debated what they had just heard. Some worried the payoff would be too long in coming. One member questioned whether the multiyear deal might outlast the iPhone's popularity. To sell that many iPhones, Sprint would have to double its rolls of contract customers, convert all of them to the Apple device or a combination of the two.
"This is a bet-the-company kind of thing,'' said a person familiar with Sprint's decision-making. The projected hit to the company's operating income is "staggering," the person said.
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Read more:
http://online.wsj.com/article/SB1000...#ixzz1ZkLoXQFn
Wow, I hope it's worth it! If they fail, they might as well shutter the company up.
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