Here’s Verizon’s Love Song to Apple
There has been a lot of buzz about wireless operators getting rid of mobile subsidies in the near future and how that may potentially hurt Apple (NASDAQ:AAPL), but if the Verizon (NYSE:VZ) chief financial officer is to be believed, the iPhone maker has nothing to worry about.
Fran Shammo said at the Deutsche Bank Annual Media, Internet & Telecom conference that Apple’s free-on-contract iPhone 4 had produced a lot of volume for his company, and the operator had no plans to offer incentives to sales staff to push low-cost alternatives despite the Apple smartphone’s high subsidy costs.
In its fourth-quarter earnings report last month, Verizon said 6.2 million of its total 9.8 million smartphone activations were the iPhone. And while the new iPhone 5 helped drive sales, the free iPhone 4 also proved to be a major factor. “This past fourth quarter you had a couple — you had really one thing happen that never happened before, especially with Verizon Wireless, and that was for the first time ever, because of the iPhone 5 launch, we had the 4 at free,” Shammo said.
“So it was the first time ever you could get a free iPhone on the Verizon Wireless network and that produced a lot of volume for us. We had a lot of new customers come into Verizon who took that free phone, and that was great for us because again if you think about — we sold a lot of LTE product in the fourth quarter. We sold a lot of 3G product from the iPhone products in the fourth quarter”…
Shammo added that the company had no plans to incentivize employees to sell non-Apple devices.
“The answer is, no, we don’t and it is critical that we don’t do that,” he said. “The reason for that is because what is more important for us is when a customer walks into a store that customer walks out with a phone that they will be happy with and not return under our 30-day guarantee. Because the worst thing that can happen for us is for me to incentivize a salesperson to get you into a phone that you walk out the door with thinking you are going to like and in three days you come back because you don’t like it. Therefore, now I’ve just subsidized two smartphones because that phone you used I can’t resell as a new phone.”
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