Ina Fried

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Sprint’s Chief: iPhone Was Worth the Billions

Sprint CEO Dan Hesse says the opportunity to sell the iPhone was too good to pass up.

Even though the company has had to spend billions to get that privilege — more than $15 billion in commitments over four years — the company couldn’t afford not to have the devices its customers want.

“You really don’t want to be on the outside,” Hesse said, adding that the company had a lot of longtime customers who stuck with Sprint on the assumption that the company would eventually get the iPhone.

Speaking to a group of reporters touring Sprint’s Kansas headquarters, Hesse said the key was just a willingness on Apple’s part. After years of wanting the iPhone, Sprint’s chance came in a phone call from Apple last year.

“I think the No. 1 thing was getting the call from Apple that they were interested in at least having the opportunity,” Hesse said. Of course, the company and its board had to take a hard look at the economics.

Selling the iPhone is good for the long term, Hesse said, noting that customers are more valuable in the long term. But, in the short term, it is costly, as the company spends more in subsidies to attract those iPhone buyers.

Making that investment was extra hard, as the company also had to invest at the same time as it worked to revamp its network.

“We committed to $15.5 billion over four years in purchases,” Hesse said. “That’s a large commitment.”

He said Sprint looked at Apple and its popularity, and “we saw no reason to bet against Apple.”

The other bet that Hesse said made sense was the company’s move to WiMax, even if it did turn out to be the Betamax of 4G technologies. Hesse said that the company had only two choices — be first with WiMax or last among the majors with LTE. That’s because Sprint didn’t have enough free spectrum to launch LTE when Verizon did.

“Today, looking back, I think it was the right decision,” Hesse said.

As for whether Sprint would like to see an iPad in its lineup, Hesse has clearly learned the right Apple answer.

“I can’t comment on that,” he said.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work