Why Telecom won't be selling the iPhone & iPad

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corksta

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Topic # 59742 11-Apr-2010 10:18

I came across an article on Stuff this morning. It's mostly about e-readers, but this one paragraph was interesting:

"As for Apple, local market conditions will influence how the iPad is sold in this country. Telecom's inability to offer iPhone bundles, for example, comes down to Apple's insistence on certain minimum order sizes and insistence on no discounting to move old stock. For all its size, Telecom is still not big enough to fulfil those terms because it can't shift stock internationally like Vodafone."

It doesn't say the source of this information, and I can't recall ever hearing this reason being offered before for why Telecom doesn't sell the iPhone.

So just how correct is this statement?

http://www.stuff.co.nz/business/3569669/Will-ereaders-save-the-newspaper-business

freitasm

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Reply # 316960 11-Apr-2010 10:28

Vodafone NZ and Telecom NZ pretty much share the same market 50/50. The problem is that Vodafone NZ comes on the back of Vodafone Group - and that's a lot of iPhones around the world...

Vodafone NZ by itself would be small too...

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nitrotech

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Reply # 316966 11-Apr-2010 10:47

I don't really agree with the article, at the end of the day yes NZ is small but if apple are selling ipods and iphones etc in this country and no doubt making a profit on that, i'm sure it's just a drop in the bucket compared to the rest of the world but as they say evey little bit helps.

I think the reason that telecom isn't carrying the iphone at the moment is basically down to dollars, they want bigger margins in selling the iphone however we know that apple simply stick to their guns on price.

I'm sure telecom can strike a deal for the iphone/ipad and i'm sure they are currently working hard on it, so we wait patiently.......

MikeyPI

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Reply # 316967 11-Apr-2010 10:54

nitrotech: I don't really agree with the article, at the end of the day yes NZ is small but if apple are selling ipods and iphones etc in this country and no doubt making a profit on that, i'm sure it's just a drop in the bucket compared to the rest of the world but as they say evey little bit helps.

I think the reason that telecom isn't carrying the iphone at the moment is basically down to dollars, they want bigger margins in selling the iphone however we know that apple simply stick to their guns on price.

I'm sure telecom can strike a deal for the iphone/ipad and i'm sure they are currently working hard on it, so we wait patiently.......

Wether or not you agree doesnt charge market dynamics...

sbiddle

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Reply # 316976 11-Apr-2010 11:59

It's a reason I've heard numerous times before. Whether it's true or not is something only a few people would know.

robbyp

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Reply # 316997 11-Apr-2010 13:34

I would say that is likely true. Apple are control freaks, and they make all the rules. Telecom are actually a very small company, compared to international comapnies, and compared to Vodafone. People love to beat telecom up due to them being one of NZs largest companies (the tall poppy syndrome at its worst), but there current share price shows that they are an example of being very badly affected by government regulation. They are between a rock and a hard place, and if they don't ge the fibre to the door work, they are in big trouble. Apparently the current share price has priced in that they won't get the job, so it may jump if they do.

Ashka

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Reply # 317014 11-Apr-2010 14:47

Plenty of outlets for the iPad, USA, Aussie in a couple of weeks and the WiFi Models are already available in NZ if you want one.

I would really like to know when Telecom are going to be able to supply the 3FF Micro SIM cards for the 3G iPad.

Please, does anyone actually know?

SteveON

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Reply # 317081 11-Apr-2010 19:13

I know that a lot of people are drawn into the iFad, and I hate to see how people complain that Telecom does not offer any of the products. But really it is a surprise that not many other companies have come out with anything that really competes as much.

Some of the HTC products a very nice and the whole android movement is cool, but why are they taking so long to market? Especially in NZ. I would have thought by now that touch-screen mobile phones would have been way bigger by now. Yet the iPhone still dominates.

Really the technology used in the Apple products is not revolutionary, but the technology is packaged in a way that everybody and their dog wants one. Honestly I was about to get an iPad from US but then I realised it's not that great.

Anyway, ill stop my ramblings that have little to do with this conversation.

NonprayingMantis

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Reply # 317115 11-Apr-2010 20:56

It's probably true IMO.

back when the iPhone 3G was launched Apple was able to exert it's power to force even AT&T to pay a huge subsidy. I've also read that they forced AT&T to offer unlimited data to it's customers (and we all know how well that has turned out.)and that they had to pay Apple an ongoing monthly fee too.

I've also read that other manufacturers (Nokia, LG, RIM etc) were not happy with Apples deal with AT&T (and massive promotion of the iphone over all other devices), and so have subsequently offered better terms to other operators, and given how big android is in the US now, that might well have worked out better for Verizon et al.
AT&T are basically now stuck with Apple - since other OEMs have given them the finger, and so must continue to accept pretty much whatever terms Apple offers them. I bet they are going to be losing money hand over fist on the iPad.

From what I have read AT&T have taken a huge bath on the iPhone, and I would not be surprised if Telecom (being orders of magnitude smaller than AT&T ) were offered a considerably worse deal than that. If that was the case then theywere probably better off not bothering with the iPhone and all the apple baggage that comes with it, and just offering a subsidy to customers willing to switch. (and from reading posts on this forum, it would seem many have indeed taken their iphone to XT)

Kyanar

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Reply # 317116 11-Apr-2010 20:56

SteveON: Some of the HTC products a very nice and the whole android movement is cool, but why are they taking so long to market? Especially in NZ.

The cynic in me speculates that it's because the HTC products are cheaper than the iPhone, and Vodafone wants to sell expensive phones, not cheap ones.

I finally have fibre! Had to leave the country to get it though.

MikeyPI

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Reply # 317161 11-Apr-2010 23:18

Kyanar:
SteveON: Some of the HTC products a very nice and the whole android movement is cool, but why are they taking so long to market? Especially in NZ.

The cynic in me speculates that it's because the HTC products are cheaper than the iPhone, and Vodafone wants to sell expensive phones, not cheap ones.

uh no, VFNZ high high range has shrunk of late, and its not the handset price telcos care about its your ARPU. - Annual Revenue Per User, how much your worth per year..

NonprayingMantis

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Reply # 317232 12-Apr-2010 09:42

MikeyPI:
Kyanar:
SteveON: Some of the HTC products a very nice and the whole android movement is cool, but why are they taking so long to market? Especially in NZ.

The cynic in me speculates that it's because the HTC products are cheaper than the iPhone, and Vodafone wants to sell expensive phones, not cheap ones.

uh no, VFNZ high high range has shrunk of late, and its not the handset price telcos care about its your ARPU. - Annual Revenue Per User, how much your worth per year..

ARPU usually stands for Average Revenue Per User and is quoted per month in most cases, not per year.

It is a bit of a misleading acronym too, since technically it is actually Average Revenue Per Connection.

Historically it has been the same thing since Telcos assumed (for the purposes of external reporting) that each user will only have one connection with them and this was largely true - but this is becoming less and less true with the advent of people having data cards and USB modems as well as their handset.

It will be interesting to see if they decide to change their method of reporting in the next few years - either reporting true ARPU (i.e. adding together revenue for the multiple devices an individula user might own) or reporting as they do today, but calling it ARPC or similar.

SteveON

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Reply # 317241 12-Apr-2010 10:07

Interesting article about the true cost of the iPad.http://www.theinquirer.net/inquirer/news/1600268/apple-magical-rip-formula-discovered

However you need to take into consideration the cost of software development, licensing and marketing

Kiwipixter

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Reply # 317266 12-Apr-2010 11:35

NonprayingMantis: It's probably true IMO.

...

From what I have read AT&T have taken a huge bath on the iPhone, and I would not be surprised if Telecom (being orders of magnitude smaller than AT&T ) were offered a considerably worse deal than that. If that was the case then theywere probably better off not bothering with the iPhone and all the apple baggage that comes with it, and just offering a subsidy to customers willing to switch. (and from reading posts on this forum, it would seem many have indeed taken their iphone to XT)

If AT&T are taking a huge bath then why are they are still in exclusivity contract with Apple? If anything Apple would benefit most going non-exclusive, as they have done in other markets, not AT&T. If the switch offer from Telecom was successful why is it not available anymore? And why didn't Vodafone respond to the offer if there were lots of people switching? Unlike other phones, its not just simply switching SIM cards for the iPhone.

Also voda doesn't have exclusivity, not anywhere, in fact the original iPhone deal was for only a small handful of voda markets. Its very evident that Apple's interest is in non-exclusivity agreements and wanting their products available from as many carriers as possible.

There are many reasons why Telecom doesn't have the iPhone, but the explanation of large minimum orders for the iPhone is definitely right up there. Remember, NZ haven't seen many other popular devices here either, e.g. N900, Motorola Droid, Palm Pre etc..., to compete against the iPhone. At the end of the day, we are just a drop in the ocean of the mobile market.

NonprayingMantis

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Reply # 317298 12-Apr-2010 12:48

Kiwipixter:
NonprayingMantis: It's probably true IMO.

...

From what I have read AT&T have taken a huge bath on the iPhone, and I would not be surprised if Telecom (being orders of magnitude smaller than AT&T ) were offered a considerably worse deal than that. If that was the case then theywere probably better off not bothering with the iPhone and all the apple baggage that comes with it, and just offering a subsidy to customers willing to switch. (and from reading posts on this forum, it would seem many have indeed taken their iphone to XT)

If AT&T are taking a huge bath then why are they are still in exclusivity contract with Apple?

well it's only a hypothesis, but it could be because the other manufacturers have since deserted them for Verizon and Sprint, giving them little choice but to continue with Apple.
Or it could be because the AT&T execs are so blinded by the iPhone's 'pull' that they really believe that "this time we will make money"

If anything Apple would benefit most going non-exclusive, as they have done in other markets, not AT&T.

if they went non-exclusive in the US they wouldn't be able to force AT&T to accept such egregious terms, and so might be worse off that way (again, just my hypothesis)

If the switch offer from Telecom was successful why is it not available anymore?

who knows? maybe they got enough customers on board from it. maybe they don't want to overload their network with more data hungry customers. could be any number of reasons

And why didn't Vodafone respond to the offer if there were lots of people switching? Unlike other phones, its not just simply switching SIM cards for the iPhone.

they did. they put their early temrination fees right up, making the Telecom subsidy effecitvely smaller (at the time of the offer, people worked out it was actually cheaper to sign up with Voda, then immediately switch to XT becaquse the voda ETF was lower than the credit Telecom was offering. Voda stopped that pretty quick by increasing their ETFs

Also voda doesn't have exclusivity, not anywhere, in fact the original iPhone deal was for only a small handful of voda markets. Its very evident that Apple's interest is in non-exclusivity agreements and wanting their products available from as many carriers as possible.

probably true now. exclusivity was an initial drawcard for carriers to get them to give substantial subsidies, but is not needed anymore because the iPhone is so well known that people are more willing to pay a premium for them.

There are many reasons why Telecom doesn't have the iPhone, but the explanation of large minimum orders for the iPhone is definitely right up there. Remember, NZ haven't seen many other popular devices here either, e.g. N900, Motorola Droid, Palm Pre etc..., to compete against the iPhone. At the end of the day, we are just a drop in the ocean of the mobile market.

presicely. My point is about what sort of price Telecom would be forced to pay if they brokered a deal (exclusive or otherwise) with Apple.
If even AT&T, at their scale, were subsidising the iPhone considerably even when buying millions of units, imagine what sort of insanely high cost price Apple would be charging Telecom for their few tens of thousands of units they would want to buy. Presumably a cost level where Telecom could not make any money. That being the case, Telecom would decide not to bother with the iPhone and wait for some Android devices instead.

savag3

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Reply # 317320 12-Apr-2010 13:39

The no discounting bit is illegal. Its called Resale Price Maintenance (RPM) and is a serious breach of the Commerce Act. I am sure the Commerce Commission would be very interested if this is in fact true. Maximum fine is $10 million.