iPhone 5 4G LTE: Will Launch of New Apple Smartphone Kill Sprint?

 
on March 23 2012 9:06 AM
iPhone 5 4G LTE May Make Sprint Go Bankrupt
iPhone 5 conceptphone | Sprint

2012 is going to be the year of quad-core-powered, 4G LTE-enabled smartphones. Android phones like Motorola Droid Razr Maxx and Samsung Galaxy Note are already packed with LTE radio chips. So it's not surprising to see rumor mills buzzing that the next iPhone, dubbed iPhone 5, will also be 4G LTE-compatible.

4G LTE on the next iPhone is almost a done deal. And if that happens, U.S. networks service providers will need a complete 4G uniform access around the country to give boost to sales of the next generation iPhone. Verizon Wireless is almost a complete 4G network provider. AT&T, on the other hand, has covered more than half of the country.

However, Sprint, despite being the third largest mobile network service provider in the U.S., does not offer any serious LTE access to its users. So far, Sprint has failed to release any true 4G smartphone. Hence, the launch of the new iPhone is expected to kill Sprint, as users will lean towards Verizon or AT&T for purchasing the upcoming iPhone.

According to the $15.5 million contract signed between Sprint and Apple, the former has to buy minimum 25 million iPhones from Apple in the next four years. If Sprint fails to upgrade its network to LTE at a nationwide level, then these iPhones will go unsold and could cause Sprint to incur huge debts.

Bernstein Research analyst Craig Moffett reported than 4G network support can be the downfall for Sprint when Apple launches its 4G LTE-enabled iPhone 5. Following the report, Sprint shares dropped by 4.5% on the same day.

To be clear, we are not predicting a Sprint bankruptcy. We are merely acknowledging that it is a very legitimate risk. And notwithstanding a recent rally in Sprint shares, we believe that risk is rising, said Craig Moffett in the report. We believe an LTE iPhone will likely be badly disadvantaged on Sprint's network, potentially impairing sales ... at a time when Sprint is subject to a punishing take-or-pay deal with Apple.

Sprint is just upgrading its network to 4G from scratch. According to an official note on Sprint Web site, 4G LTE is coming to Sprint in mid-2012 and Samsung Galaxy Nexus and LG Viper will be the first 4G smartphones from the company. Backstage talks are also there that HTC One X 4G variant is coming to Sprint on June 10.

Competition is on a whole new level with big player - AT&T and Verizon - offering a more promising 4G network and attracting more and more users towards them. Sprint needs to bring 4G network access across the U.S. before the new iPhone is launched. But that looks like a very difficult task. And if the new iPhone gets released early i.e. in the summer, instead of fall, Sprint might face ruin.

(reported by Johnny Wills, edited by Surojit Chatterjee)

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