T-Mobile Gives Apple Another Big Win

TheStreet.com

NEW YORK ( TheStreet) -- Almost lost amid the hubbub concerning T-Mobile's "Simple Choice" plan is that it's a big win for Apple .

What the Los Angeles Times headlined as the dropping of contract plans and the end of phone subsidies is really nothing of the sort.

You still have to sign a contract. You still have to get a credit check. You still pay a monthly service fee, with an additional fee for each phone line you use.

What's changed is your legal agreement is tied to the phone, rather than the service. Cancel the service and you'll pay for the phone, with the cost of the phone added explicitly to your monthly bill. Pay off the phone and you can take it with you. This is a 24-month payment plan, so the contract length has not changed.


The big deal here, as the T-Mobile press release printed at 9to5mac.com makes clear, is how this is all tied to the iPhone, specifically iPhone 4, iPhone 4S and iPhone 5 units.

In the plan all these phones are being priced at $20/month, plus a down payment similar to what other carriers charge. The T-Mobile plan is designed to get buyers over the iPhone's biggest problem, its high cost relative to Android models.

The service prices are also no threat to AT&T , Verizon Wireless or Sprint , the contract lengths are identical. It's just a slight tweak similar to plans already available in Canada, as TechCrunch notes.

Again, it's all built around the iPhone. T-Mobile is now willing to give you an iPhone at near its cost in order to get your business. All U.S. carriers now carry the Apple line.

Apple stock has yet to get any credit for the win. After popping to near $470/share, Apple stock opened Thursday at about $450. Apple is also not getting any stock market love over the iPhone's increased market share, which, according to StatCounter, has been growing steadily since December and now stands at 25%, while Android share has leveled off.

Analysts seem to be ignoring all this good news in their earnings estimates, as shown at Yahoo! Finance, expecting earnings of $10.18/share for the quarter ending Sunday. Estimates range from a low of $9.23 share to a high of $12, an extremely wide range, with an average sales growth of 9.2% year-over-year.

The problem, we're told, is the iPad Mini, which was introduced last year and aimed at the Samsung Android "phablet." A phablet can act as both a phone and a tablet. The Mini, while about the same size, is just a tablet. Apple's online store is currently promising to ship one of these units within 24 hours when you pay the retail price. Apple is also offering quick shipments on the main iPad, adding a unit with 128 Gbytes of storage whose price tops out at $929 with cellular data service.


These don't sound like the moves of a company in trouble. They sound like the moves of a company executing on plan, expanding channels and getting supplies balanced with demand. I would identify trouble as the discounting of product and displays of it piled high in stores.

I suspect Apple's next earnings release may surprise on the upside, and the market reaction to such a surprise will be fun to watch.

At the time of publication, the author was long AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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