Why Mobile Is Doomed

By Ilan Moscovitz | More Articles
February 12, 2012 | Comments (2)

The following video is part of our "Motley Fool Conversations" series, in which financial and economics sector head Ilan Moscovitz and consumer-goods editor/analyst Austin Smith discuss topics around the investing world.

In today's edition, Ilan and Austin discuss why carriers are the big losers from the smartphone revolution. They discuss whether there's any hope for carriers or whether handset makers will keep eating their lunch.

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Austin Smith and Ilan Moscovitz have no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend 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.

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Report this Comment On February 12, 2012, at 8:30 PM, krh007 wrote:

Mobile is doomed...Ok I get it...but then I don't...
Yes, carriers subsidize smartphone handsets.
Yes, carriers compete with each other and other technologies (free WiFi, etc.)
Yes, agree carrier profits are much less than Apple's.
But with the (average) smartphone bill being in the $50-60 per month, unless there is some company that can provide this nationwide for much less...most folks will just stay put.
Just like home computers/laptops...eventually users will only replace smartphones when they die, not because the one they have is "not good enough".
So, perhaps, a kind of tortoise vs. hare thing if you ask me...frankly my thinking is the $$/month that smartphone data access carriers charge is not a bad long term investment strategy.
Just some thoughts.
Report this Comment On February 12, 2012, at 10:55 PM, XoriusM wrote:

I disagree with the video. Yes the providers have to heavily subsidize the smartphones like the iPhone, and yes the biggest winner are Google and Apple but only in the short term. For example let's say someone buys an iPhone 4S with Sprint on a plan of $79.99 a month. Sprint pays $650 for the iPhone to Apple. The customer pays $200 for it at a net loss of $450 to Sprint. The customer will be paying $80 a month for 2 years so $80 x 24 months = $1920. subtract $450 and now Sprint is at a net gain of $1470.
In conclusion, the winners in the short term are the smartphone makers and in the long term are the providers.

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