Sprint Nextel Corp., the third largest wireless and telecommunications network carrier in the U.S., has recently signed a multi-billion dollar deal with California-based Apple Inc. to purchase 30.5 million units of the iPhone 5, over the next four years.
However, the jury is still out on whether this deal will prove profitable for Sprint or result in a whole lot of trouble for itself in the near future. Put simply, Sprint might just fall into a grave that it is digging, on its own volition.
In layman's terms, for the current scenario to prove profitable for Sprint, they will have to sell more than $20 billion worth of iPhone 5s to save itself from any trouble in the future.
Expert opinion is divided, with some calling it a massive gamble and others believing it to be a smart step on Sprint's part, to want to be associated with largest publically-traded company in the world, as well as one of the largest, in terms of revenue, profit. product sales and brand value.
Wall Street analysts have already predicted that the iPhone 5 will break all of Apple's prior launch-day sales records. All in all, looking at evidence of demand and the general craze among its users in the U.S., it is expected that Apple's iPhone will make way more than $20 billion worth of sales.
On the flip side, despite the fact that Sprint is the U.S.'s third-largest carrier, with 52 million subscribers, experts still believe that $20 billion gamble is not a wise step and caution that the company will have to increase its customer base in order to make reasonable profits.
In addition, Sprint would do well to not forget its biggest competitors - AT&T and Verizon - are already ahead and rumored to be the other two national carriers of Apple's iPhone 5.
The next generation of Apple's ever-popular iPhone series is expected to be launched on Tuesday and eager customers are already lining up to purchase the phone.
A recent study by InMobi shows that 41 per cent of mobile users in the United States, Canada and Mexico are eager to buy the iPhone 5. An astonishing 52 per cent would love to unload their Blackberries and 27 per cent their Android-based phones, in favor of Apple's new device.
The demand is so huge that Apple could sell as many as 1.7 million units on the first day when the device is made available in stores, according to Ticonderoga Securities analyst, Brian White.
Apple (could) push 84 million iPhone units through the end of 2011 and up to 107 million in 2012. Apple is well positioned to capture an enormous profit pool as mobility and content worlds converge, said Janney Capital Markets analyst, Bill Choi.
For the record, in 2010, Apple crossed 1.7 million units of iPhone 4 in the first three days of the product hitting the market, making it the most successful product launch ever. These figures quite evidently indicate the real possibility of record-breaking success with the release of its next-generation iPhone, which is rumored to be far ahead of its previous incarnations, in terms of both software and hardware specifications.
The demand and brand value of Apple's products, especially the iPhone is always high and the sixteen month gap between the release of iPhone 4 and now, possibly, the iPhone 5 has definitely increased the cravings of all techies across the world.
Tim Cook, Chief Executive Officer (CEO) of Apple Inc., is believed to have mentioned that the total sale of iOS devices in the third quarter was 33 million.
The company is, however, expected to sell at least $20 billion for Sprint, leading to speculation that, despite all doubts, what is believed to be Apple's smartest device ever will not disappoint Sprint.