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Sprint iPhone Deal: Big Gamble or Smart Choice?

Since today is the big iPhone/iOS announcement day, it seemed like we need to post something on that topic. And events haven’t failed to produce something of interest.

Monday, the Wall Street Journal reported that Sprint/Nextel has made a deal to purchase 30.5 million iPhones over the next four years. The deal’s value is estimated at $20 billion dollars based on the average selling price of an iPhone. The article has some behind the scenes information from the board’s discussion of the matter and Sprint CEO’s contention that this is a “bet the company” strategy. So just how much of a gamble is it for Sprint to sell 30.5 million iPhones?

Horace Dediu at Asymco has an answer: not much of a gamble at all. Dediu looked at iPhone sales as a percentage of a carrier’s subscriber base and found that it’s entirely plausible for Sprint to sell 30.5 million iPhones over four years. So the numbers themselves don’t appear to be a gamble. It may have been a bigger gamble not to make the deal with Apple.

 

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