The iPhone Can't Fix T-Mobile's Identity Crisis

The iPhone Can't Fix T-Mobile's Identity Crisis

Getting the right to offer the iPhone no longer has the power to lift a mobile carrier above the rest of the field. Despite making their pacts with Apple , Nos. 3 and 4 U.S. mobile carriers Sprint Nextel and T-Mobile US , respectively, are still being surprassed by the top two, AT&T and Verizon .

And nowhere is the lost luster of the iPhone missed more than it is with T-Mobile.

As usual, the real beneficiary of iPhone sales is not the carrier, but Apple. The irony in the T-Mobile/iPhone relationship -- as shown by the latest figures from market research company Kantar Worldpanel -- is that while the iPhone on the T-Mobile network has helped boost the iPhone's share of smartphone sales, T-Mobile has actually seen its smartphone share of sales fall.

For the three-month period ending in May, in the U.S. market, Apple saw its share of smartphones sales rise from 38.4% to 41.9% over the same period last year. T-Mobile's smartphone sales share fell from 13.5% to 10.1%.

Of course, T-Mobile didn't get the iPhone until halfway through the period looked at, and we won't get a more accurate picture until we can look at their sales figures for a full three months.

But even with a shortened selling period, the iPhone 5 was the top-selling T-Mobile smartphone. Those iPhone sales were mostly to first-time smartphone buyers, 53% coming from feature phone owners. For the iPhone market as a whole, 45% of iOS buyers came from a feature phone.

T-Mobile realizes that having the 4G LTE-capable iPhone 5 alone isn't going to attract customers away from AT&T and Verizon, especially with those carriers' considerable edge in number of 4G LTE markets. T-Mobile has only just started powering up its 4G wireless networks in a handful of cities. AT&T is already in 300 or so markets, and Verizon is serving about 500 markets .

Instead, T-Mobile is attempting to differentiate itself by posing as the "uncarrier." Where the Nos. 1, 2, and 3 carriers push for their customers to sign two-year contracts in return for a subsidized phone, T-Mobile touts its no-contract plans.

An iPhone 5 on AT&T and Verizon costs a two-year plans subscriber a subsidized $200. On Sprint it costs $100. On T-Mobile, a subscriber would pay the full retail price of $650 ... or have the option of putting $146 down and financing the rest at $21 a month for 24 months.

But wait. Isn't that second option the same as a two-year contract on the other carriers? Even the "uncarrier" has a carrier-like pricing plan.

Also, will the iPhone continue to keep its allure in the U.S.? In Western Europe, it is continuing to lose out to Android phones. According to market researcher IDC, Apple's market share in the first quarter of the year fell from 25% to 20% over the same period last year. Google's Android OS-driven smartphones took a 69% market share, up from 55% in Q1 2012.

And in India, Apple is really taking it on the chin. Android phones have a 90% share there, according to IDC. Lower cost smartphones are the big sellers in India, a segment that Apple hasn't yet addressed.

Bottom line: iPhones still have a large, if not a majority, share of the U.S. smartphone market. But it is obvious, as shown around the world, that Apple doesn't have the same grip. It is also clear that if the iPhone is not the magic bullet for T-Mobile, the company can't rely on its "uncarrier" disguise for more market traction.

As far as Apple not yet taking advantage of the tremendous potential for sales in emerging markets, such as India, which has the need for lower priced products, Apple has shown a readiness to not only crank out revolutionary products, but also to creatively destroy them with something better ... and often cheaper. Read about the future of Apple in the free report "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

The article The iPhone Can't Fix T-Mobile's Identity Crisis originally appeared on

Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published