Just how important is the iPhone to U.S. carriers? Verizon’s financial chief provided some insight Wednesday, announcing the provider sold 4.2 million Apple smartphones during the holiday fourth quarter. While the October launch of the iPhone 4S likely spurred many of those purchases, the cost is a smaller profit in exchange for hefty data contracts and a piece of the Apple halo.
Verizon Chief Financial Officer Fran Shammo told a conference that the figure is more than twice the number of iPhones sold in the previous quarter, which observers chalked up to increased demand for Apple’s fifth-generation handset offering the popular Siri voice-recognition system.
Offering the iPhone is a doubled-edged sword for carriers, however. Because of the huge number of iPhones sold, Verizon’s profit margin is cut in order to subsidize both the iPhone 4S and the iPhone 4, which Apple marked down to $99. The belief is that carriers can recoup some of their losses through the dataplans and other services sold to smartphone owners. Shammo suggested Verizon will recover some of its iPhone profits, however provided no time period, according to reports.
Analysts predict around 30 million iPhones will have sold during the holiday period. UBS analyst Maynard Um told investors Wednesday night he expects AT&T will sell 8 million Apple handsets with Sprint providing 1.2 million in sales. Altogether, U.S. sales will account for around 45 percent of iPhone purchases during the fourth quarter.
“The strength from Verizon mirrors similar strength seen from AT&T last month in which the company said it had already sold around 6 million smartphones through the first two months of the fourth quarter,” Um wrote. The analyst expects Apple on Jan. 24 to announce “its best holiday quarter in history” helped by the iPhone 4S, as well as faster international rollouts and strong MacBook Air demand.