Sprint guarantees Apple it will take 30 million iPhones ?

A Wall Street Journal article (Oct 4, 2011) describes a guarantee by Sprint that it will buy at least 30.5 million iPhones in return for the opportunity to offer those phones on its network.  Such volumes in turn enable Apple to guarantee volumes to its suppliers and thus reserve capacity and lower component costs.  Sprint claims that not having the iPhone was causing customer losses, and that its superior service coupled with the iPhone can enable the company to attract customers back.  Given the different revenue and cost impacts of the volume guarantee, did Sprint have a choice regarding this decision or was it a forgone decision ? Given that future cheaper iPhones could decrease Sprint’s cost, is there a logic in volume (units) commitment rather than a dollars of sales commitment ? Will the Apple demanded volume commitments from phone companies ensure stock pressure on the downstream market and a focus on selling Apple products rather than Android or Microsoft powered phones ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Service Operations, Supply Chain Issues and tagged , , , , , , , , . Bookmark the permalink.

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