Verizon Owes Apple $14 Billion In Unsold iPhones

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Remember how desperate carriers were to get the iPhone on their networks? The billions Sprint and Verizon pledged to Apple in the hopes that they could promise a big enough order that Apple would have no choice but to give them the iPhone?

Looks like the laugh is on them. In fact, this year alone, Verizon might be on the hook for over $14 billion dollars in iPhones they are not likely to sell.

Here’s the deal. In 2010, Verizon pledged to buy $23.5 billion worth of Apple handsets in 2013. The problem? Everyone who has an iPhone already has one, and demand has slowed in the high-range market. In fact, for Verizon to sell that many iPhones, they’d need to sell twice as many this year as last year.

That’s not happening. iPhone growth has slowed to a crawl in the United States, and while the so-called budget iPhone should successfully open up the midrange market to Apple later this year — finally, a free, modern iPhone on contract! — it’s not due to land until September at the earliest.

This is all grim news for Verizon, and Apple is unlikely to back off. They have similar deals in place with other carriers: if they let Verizon slide, they’ll have to do the same for others. But some companies are in a better position to meet their commitments than the big red V. Sprint, for example, is on track to meet the $15.5 billion iPhone commitment they already made.

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  • TechBell

    No wonder since whenever you go into a Verizon store the iPhones are tucked away in the back so they can push the higher margin droids on their typical dolt customers.

  • Whodakat

    What a stupid headline. They don’t owe Apple anything yet, the year isn’t over.

  • brandon

    “Everyone who has an iPhone already has one” wut?

  • extra_medium

    I realize this is the cult of Mac, but it’s still fairly amazing that a story which, at its root, is about iPhones not selling well enough, can be turned around to make carriers look stupid for wanting to offer iPhones.

  • Adrayven

    No wonder since whenever you go into a Verizon store the iPhones are tucked away in the back so they can push the higher margin droids on their typical dolt customers.

    Walked in today.. asked about the iPhone, sales person walked me over to a G4.. serious..

  • nvettese
    No wonder since whenever you go into a Verizon store the iPhones are tucked away in the back so they can push the higher margin droids on their typical dolt customers.

    Walked in today.. asked about the iPhone, sales person walked me over to a G4.. serious..

    At least they were offering you a better phone. It’s not like you were getting something bad.

  • rigit_digit
    No wonder since whenever you go into a Verizon store the iPhones are tucked away in the back so they can push the higher margin droids on their typical dolt customers.

    Walked in today.. asked about the iPhone, sales person walked me over to a G4.. serious..

    At least they were offering you a better phone. It’s not like you were getting something bad.

    Good/bad is not the point. Verizon could lose a bunch of money if their sales people don’t sell more iPhones. This is about money.

  • nvettese
    No wonder since whenever you go into a Verizon store the iPhones are tucked away in the back so they can push the higher margin droids on their typical dolt customers.

    Walked in today.. asked about the iPhone, sales person walked me over to a G4.. serious..

    At least they were offering you a better phone. It’s not like you were getting something bad.

    Good/bad is not the point. Verizon could lose a bunch of money if their sales people don’t sell more iPhones. This is about money.

    I think it is more about reputation. iPhones are supposed to be the hottest selling phones, and if Verizon has to reimburse Apple, then it looks as though the iPhone isn’t so dominate.

About the author

John BrownleeJohn Brownlee is a Contributing Editor. He has also written for Wired, Playboy, Boing Boing, Popular Mechanics, VentureBeat, and Gizmodo. He lives in Boston with his girlfriend and two parakeets. You can follow him here on Twitter.

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