Verizon announced during its earnings call today that 15 million Android phones were activated and nearly 11 million iPhones were sold. This news comes after the largest wireless carrier in the United States activated a record of over 4 million iPhones in the fourth quarter.
Apparently these numbers weren’t too impressive as investors punished the company’s stock because costs associated with offering the iOS handset weighed heavily on Big Red’s earnings. Verizon pays a subsidy for iPhone ending up around $400, but the company makes that money back from consumers signing into a two-year contract. This is standard practice for all cell phone providers, as they give customers a “discounted” price tag on phones in exchange for new two-year agreements.
James Ratcliffe, an analyst at Barclays Capital in New York, uttered the same words to Bloomberg.
The average smartphone customer will spend about $2,000 over the two-year contract, if the subsidy is $400, you’re still getting $1,600, and that’s very cash-flow positive.
The reality is, this kind of strategy is the bread and butter for how wireless providers make its money, because most people don’t have over $600 to shell out up front for a smartphone. That said, these iPhone numbers are really impressive, and hard to ignore. The fact that Verizon sold nearly the same amount of iOS handsets compared to Android is remarkable. Keep in mind the little green robot pops up in a new device seemingly every other week, when Apple only sells a single device — very telling.
[via Mashable]