The Apple iPhone 5, is set to be released in October, and Sprint Nextel will be one of its carriers, a report citing unnamed sources published in the Wall Street Journal says. Sprint shares have been falling lately but the latest announcement helped its shares rise by 10%.
The positive response from the market also indicates that the scenario will be very positive when the iPhone 5 will be released.
According to rumours circulating about the new phone, Apple will release a phone in mid-October that will be similar to the iPhone 4, albeit a thinner and lighter one with a better digital camera and a more sophisticated version of its ‘iOS’ operating system.
Sprint Nextel is the third largest wireless carrier in the US. It will also be the third carrier in America to distribute the Apple iPhone. Analysts reckon the arrival of iPhone 5 will help Sprint expand its base and gear up its competition with AT&T and Verizon, the other two iPhone carriers. Unconfirmed reports suggest Sprint will also be carrying the iPhone 4, the best version of iPhone to date which is still in demand. Rumors suggest Apple plans to launch a low-end version of iPhone to give Nokia and Samsung a run for its money and expand the Californian company’s consumer base.
AT&T, the second largest U.S. wireless carrier, enjoyed its sole iPhone provider status when it launched the first ever phone in 2007. The launch was one of the most successful in the history of AT&T and helped the US carrier post record profits until its exclusivity ended in February this year when Verizon Wireless began selling the iPhone 4.
Based on sales reports, Sprint had more than 52 million subscribers at the end of the second quarter; a strong figure but far from those of its competitors – Verizon with 106 million subscribers, while AT&T with almost 99 million.
Undoubtedly, the effect of the iPhone 5 on Sprint is already obvious. Its shares have already soared and existing customers showing interest in getting hands on the new iPhone. It?s competitors, Verizon and AT&T, have banked on the high-end smartphone sector to boost sales. The new announcement will only intensify the race.
?There are a lot of families that will embrace the iPhone,? according to Richard Doherty, director of the research firm Envisioneering Group. “Many Apple fans are always on the look for upgrades, and by catering to their wishes, Sprint has given itself an upgrade,” he added.
Sprint has been finding it difficult to expand its customer base. After its merger with Nextel it did manage to improve customer service but failed to add new subscribers as quickly as its competitors. Another reason for the struggle is that the previous versions of the very phone it plans to be a carrier for, had skewed competition among other smartphones.
Marc Ostrau, a partner and co-chair of the anti-trust and unfair competition group at Fenwick & West said the outlook might not be all that positive for Sprint, as its acquisition of the deal would boost AT&T?s chances of winning regulatory approval for its $39 billion acquisition of T-Mobile.
Smartphones pull the strings in the cell phone business nowadays. Apple has a great upper hand in the market, commanding an average of more than $650 (AED 2388) for its iPhones in the last quarter. Carriers can make profit out of this, by subsidizing the difference between the cost and the phones $199 or $ 299 retail price and hopefully, make up the difference the data plans they sell over the course of their two-year contract with customers.
Sources: International Business Times, Wall Street Journal