By Jimmie Geddes email: firstname.lastname@example.org | Jan 11, 2013 05:34 PM EST
T-Mobile's CEO, John Legere has officially confirmed that T-Mobile will begin selling the carrier's first iPhone in three to four months along with no subsidies. Is it really a wise move to gamble on the iPhone with an unproven business model?
T-Mobile is the last of the four major US carriers to offer the iPhone. Late last year Apple and T-Mobile announced that they had made an agreement allowing T-Mobile to sell Apple products. T-Mobile is going to try a new tactic in the US market - it's going to remove subsidies customers usually pay carriers for devices sold at a discount in exchange for signing a 2-year contract. Most carriers around the world offer this kind of deal and T-Mobile is hoping it will take off in the U.S.
Reuters recently spoke to T-Mobile's CEO about the plan:
The company hopes to attract customers from bigger rivals like AT&T Inc (T.N) and Verizon Wireless (VZ.N)(VOD.L) with the combination of selling iPhones and removing subsidies, which would be a first for the U.S. wireless industry.
The executive said he could possibly increase T-Mobile USA's market share by 5 percent or higher from bigger rivals who still depend on subsidizing phones to give their customers a device discount in exchange for tying them into a two-year contract.
"If the old industry structure chooses to ignore what we do," he said, "That's a potential."
T-Mobile knows it's taking a gamble with removing subsidies, as that's how most carriers ensure 24 monthly payments from customers in exchange for a lower price at checkout. It'll be very interesting to see if launching the iPhone with this type of gambles pays off.