Wild Rumor – Sprint commits to buy 30.5 million iPhones; iPhone 5 will be Sprint 4G WiMAX exclusive

Mon, Oct 3, 2011

News, Rumors

As is typically the case, iPhone rumors are flying in furiously now that we have less than 24 hours to go before Tim Cook introduces the latest updates to Apple’s iPhone line.

Earlier we remarked on an analyst report indicating that the iPhone 3GS will be available for free with contract, and now we have a doozy of a story that might blow your mind. The Wall Street Journal is reporting that Sprint is effectively betting the entire company on the iPhone.

In the ongoing battle for cell subscribers, the iPhone is the weapon of choice amongst cell carriers and you’d be hard pressed to find a device that carries as much clout and exerts as much leverage as Apple’s iconic smartphone.

So with Sprint already occupying the third spot behind AT&T and Verizon, the Overland Park based company clearly has its work cut out for it as it attempts to steal away subscribers from rival carriers. And given that AT&T, for example, has had a 4+ year head start with the iPhone, Sprint is desperately engaged in a game of catch-up.

So to even the playing field as best it can, Sprint is betting the farm on the iPhone.

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.

And in order to keep prices low, Sprint will be heavily subsidizing these devices in order to attract new customers and keep current subscribers. As a result, Sprint CEO Dan Hesse reportedly told Sprint’s board of directors that they won’t see a return on their enormous investment until 2014. The affect on Sprint’s operational income in the interim was described as “staggering.”

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.

The board ultimately signed off on what the company internally called the “Sony” project, concluding Sprint couldn’t compete otherwise. Directors figured, “How can we pass this up? We have to have it,” the person familiar with the matter said.

Dan Hesse has previously explained that the iPhone is the number one reason why subscribers have left Sprint over the past few years so it would make sense that the company would do all it can to get in bed with Apple and pin its hopes on the iPhone.

But the story just gets stranger from there.

In conjunction with the WSJ report, the boy genius himself – Jonathan Geller – relays a wild rumor from one of his rock solid contacts in the industry.

The story goes that there will be an iPhone 5 with a larger form factor announced tomorrow, but that it will be a 4G WiMAX device available exclusively on Sprint for a few months until LTE iPhone 5’s become available on both AT&T and Verizon.

Here’s what BGR’s source says to expect with this now mythical iPhone 5.

  • Faster CPU.
  • Larger 4-inch screen, similar to LG’s NOVA display but with a higher resolution.
  • 1GB of RAM.
  • Slightly larger design overall, but thinner and with a larger battery.
  • 32GB of storage.
  • iPhone 5 exclusive software and APIs (Assistant).
  • Dedicated Assistant button, possibly integrated with the new home button, “think gestures or a two-stage button like a camera shutter key).

Tomorrow is going to be a doozy!


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