Insight: Apple's grip on carriers, suppliers loosens

Mon Jan 28, 2013 4:24pm EST
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By Poornima Gupta and Noel Randewich

SAN FRANCISCO (Reuters) - Apple Inc's shareholders have been hit by one of the bloodiest weeks in the history of the stock, but wider fallout from such weakness might be more important to the long-term value of their investments.

While Apple's iPhones, iPads and Macs remain gold standards, signs the company is losing some of its edge in the smartphone market suggest its clout with business partners could wane.

Recent comments from executives at phone carriers and component suppliers show they see room for at least some shift in the balance of power.

In particular, a move by No. 4 US mobile service provider T-Mobile USA to stop subsidizing smartphones around the time it starts selling the iPhone in three months time may put pressure on Apple, especially if other carriers follow the example.

U.S. phone companies mostly subsidize handsets in return for two-year contracts. If customers start paying the full price for an iPhone they might look for cheaper alternatives.

Asked whether carriers are now in a better position to negotiate lower prices with smartphone makers such as Apple, Fran Shammo, chief financial officer of Verizon Communications, said having four strong platforms - Apple, Android, Windows and BlackBerry - is leading to more competitive pricing.

"The more operating systems we have to compete in this area the better the competition," he told Reuters.

Verizon Communications Inc is the majority owner of Verizon Wireless, the biggest U.S. mobile provider.   Continued...

A man talks on a mobile phone in front of an Apple logo outside an Apple store in downtown Shanghai September 3, 2012. REUTERS/Aly Song (CHINA - Tags: BUSINESS) - RTR37FDN