iPhone is poisoned chalice for mobile operators, says report

The iPhone is really bad news for network operators, according to a Danish consultancy firm.

After evaluating network operators’ financial statements, Strand Consult claims that, far from generating new traffic and attracting customers, the device is damaging their bottom line.

“We can… conclude that the closer a relationship is between an operator and Apple, the larger negative influence it has on the operator’s overall business case from a shareholder’s viewpoint,” says Strand.

Apple demands heavy subsidies from network operators, and revenue share in some markets. Combined with the company’s replacement cycle, this means the iPhone is far from being a money-spinner.

In addition, operators are spending far too much management time on the iPhone, says Strand, ignoring the bread-and-butter customers who bring in the real revenue.

The report, The Moment of Truth – a portrait of the iPhone, says: “We have not found one operator which has created shareholder value with iPhone. A lot of competitors are actually doing better.” Indeed, Strand claims that a number of operators have already issued profit warnings connected to their iPhone ventures.

Strand also believes that there is no real money to be made by developing apps for the device.

The report isn’t deterring the network operators, however. A spokesperson for 02, which has an exclusive deal for the iPhone in the UK, said: “The iPhone is our fastest selling handset ever and has been a phenomenal success for our business. Customer demand for both the iPhone 3G and iPhone 3G S has been outstanding.”