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English: Apple iPhone 3GS

Apple iPhone 3GS (Photo credit: Wikipedia)

Why do people buy Apple products?  For some, it’s the status they get from having one of the most Chic products available on the market.  Turns out that they’re not the only ones. According to Boston-based Yankee Group, the Chic status also rubs off on the companies that sell iPhones.

“From a financial perspective, the device—or, more precisely, the relationship with Apple that goes with it—carries significant challenges,” said Rich Karpinski, Yankee Group senior analyst and author of the report. “But it also brings subscribers in droves as well as significant improvements in how those users view operator brands. With the latest iPad focused strongly on 4G, and an LTE iPhone likely to appear later this year, U.S. operators that find ways to successfully manage the ‘i-challenge’ will win.”

Carrying the iPhone creates a heavy burdon for cell phone companies due to the high “Apple Tax” along with the high costs of the phone itself.  AT&T was hit hard when it decided to enter an exclusive deal with Apple and ended up having to pay a portion of every customer’s monthly phone bill directly to Apple.  Apple has also priced their iPhones at the high end of the spectrum. So, the question remains if the iPhone is a huge drag on profits at Verizon, AT&T and Sprint, or if it ends up helping.

According to this latest report:

  • AT&T boasts the largest iPhone halo effect. Among Apple users, AT&T ranks No. 7 out of 20 top mobile brands. Among all users, it ranks No. 14.
  • Sprint registers immediate gains. While the impact on AT&T’s brand grew over time, Sprint’s impression scores nearly doubled just in the first quarter selling the device.
  • Verizon sees little brand impact. Verizon does not see a corresponding boost in its brand among core Apple users. Overall, customers seem to value Verizon’s brand highly, regardless of the device they use.