updated 10:50 am EDT, Tue July 29, 2008
Rogers on iPhone 3G demand
Sales of other phones on Rogers Wireless' network virtually ground to a halt the day of the iPhone 3G announcement in late April, company president Nadir Mohammed said today during a call discussing the company's latest quarterly results. Although the cellular business helped drive Rogers' year-over-year quarterly revenue increase of 11 percent to $2.8 billion without the iPhone on sale, the company executive notes that demand for other devices "slammed on the brakes" the same day as Rogers announced it would launch the Apple device during the summer.
Demand for devices remained cool roughly up until the launch of the iPhone itself, according to the report. Nokia and Rogers significantly halved the N95 8GB's price to $200 on contract less than a week after the iPhone 3G release in a bid to stimulate sales versus the iPhone, which has most of the same hardware features at the same price.
Mohammed also reveals that Rogers was completely taken by surprise with the opportunity to launch the device, regardless of whether it used Apple's original model of sharing monthly revenue or the new device subsidy approach. "We didn't anticipate that we would launch that device under any model this year," he says.
The company nonetheless believes Apple's current approach is "highly, highly attractive" to Rogers. Although the up-front discount on the device is the largest the company has ever had, the higher average revenue per user is expected to more than offset the initial price of the phone as nearly all customers are likely to sign up for a data plan and potentially extra features. Mohammed declines to specifically identify its user behavior, however, and notes that most phones of the class have a "honeymoon period" of between 90 to 120 days where service usage is extremely heavy.
Rogers has committed to buying at least $150 million in iPhones and will spend more as necessary.
The Canadian provider further adds that non-disclosure agreements prevent it from discussing the ratio of customers upgrading versus new additions, but says that it would be "premature" to provide any kind of definite answer. AT&T in the US has said that a significant minority of new iPhone 3G subscribers are conversions from competing networks.