The Carriers and the Indirect 60%Narrow moat

The entities that actually hand most iPhones to most customers are not Apple. About 60% of net sales flow through indirect channels — third-party cellular carriers and other resellers — and Apple's FY2025 10-K carries a dedicated risk factor headed by the plain statement that the company depends on their performance¹. Carriers alone accounted for 34% of total trade receivables at the end of fiscal 2025, down from 38% a year earlier and from 71% in fiscal 2015².

The relationship is one of mutual usefulness rather than affection. Carriers want the iPhone because it attracts and retains the most valuable subscribers, and they have historically been willing to subsidise it heavily — spreading a thousand-dollar handset across a two-year contract is the single largest reason Apple can price where it does. In exchange, carriers get a device customers will switch networks to obtain. It is also the relationship that quietly determines iPhone unit demand: promotional intensity at three American carriers moves Apple's upgrade cycle more than most product decisions do.

The risk is that this is Apple's one large, genuinely negotiated relationship, with counterparties big enough to matter and their own margin pressures to manage. A pullback in carrier subsidies raises the real price of an iPhone without Apple changing its own price list. Watch the carrier share of receivables — the drift from 38% to 34% is the shape of the next page's story — and watch promotional behaviour around each launch. When carriers get less generous, Apple's upgrade rates find out first.