Apple Makes $831 On Each AT&T iPhone 547
Ponca City, We Love You writes "The NYTimes reports that Gene Munster, an analyst at Piper Jaffray, has studied Apple's financial statements and come to the conclusion that AT&T is paying Apple $18 a month, on average, for each iPhone sold by Apple and activated on AT&T's network — up to $432 over a two-year contract. This shows how much incentive Apple has to maintain its exclusive deal with AT&T rather than to sell unlocked phones or cut deals with multiple carriers. Last week Apple disclosed that 250,000 iPhones had been purchased but not registered with ATT that Apple thinks are being unlocked so Apple has now taken action to curb unauthorized resellers by limiting sales of the iPhone to two per customer and requiring that purchases must now be made with a credit or debit card — cash will not be accepted." The latter article links to a US Treasury page explaining the incorrectness of the widely-held belief that cash cannot be refused for any transaction.
They make money. So what. (Score:4, Interesting)
I just find it amusing that some people get upset that a hardware manufacturer makes money or a lot of it. Maybe they are so accustomed to the subsidized Xbox model where MS supposedly loses money on each sale only to try to salvage it later (MS couldn't afford it if Xbox was their business like Windows/Office is anyway). It is no way to say that Apple has to be doing things that way and there is a lot of competition out there for these devices if you don't like their way of business.
I still think Apple is being rather silly about the cash issue. Many people I know don't have credit cards because that's how they control their spending. This isn't to say that they don't have money though.... their probably more affluent than average and can afford these gadgets.
Comment removed (Score:3, Interesting)
Apple, the corp that would be M$. (Score:1, Interesting)
Maybe Apple should made a sub-company called Apple Telecomm, join with AT&T, drop a 'T' between the two, and be called...
AT&AT.
More forces for the darkside. Rebels beware!
Re:They make money. So what. (Score:5, Interesting)
- A better product value (this includes technical specs, service quality, license agreement, and of course price) than any other competitor can offer;
- A NET gain for the customer for purchasing the product (in other words, no matter how objectively "crappy" the product is, the customer will be more satisfied buying the product than not buying it.
Out of the whole range of options which satisfies the above two points, a business will always choose one that is best for the BUSINESS, not the customer.
E.g. If more people cared about carrier lock-in and less about the flashy buttonless display, then they wouldn't buy iPhone in particular, would they? Can't say I'm terribly thrilled by Apple's tactics, but I find it perfectly fair that in a free market society where competition to Apple DOES exist, Apple has the full right to say "either take our products how they are and with all strings attached, or take a hike".
If you don't like this business model, then you do not support free market in principle (not preaching whether that is good or bad, just stating the fact).
Hard to believe. (Score:3, Interesting)
"cash will not be accepted" (Score:3, Interesting)
Re:Freeing the Hardware (Score:5, Interesting)
The legislation says that "linked sale" (vente lie'e) is forbidden: if you offer some good for sale, you are not allowed to force the buyer to buy a service together with this good.
There has been a debate in the press about whether Apple would renounce selling iPhones in France or find a workaround.
The trick Orange will use is to propose the iPhone at a prohibitive price (1000 euros?) and offer a massive discount for any plan purchased with it. But consumer watch organizations are quite powerful here, and they could sue if they show the price is too high and the scheme is actually a disguised "vente lie'e". The consumer watch organization are allowed to use surveys and statistical analyses to show this, so Orange and Apple will have to play tight at this game.
BTW. I'm surprised so many of you in the US have plans around $60/month. I pay 14 euros/month for basic service, but it's plenty enough airtime.
Re:It's the network. NOT. (Score:2, Interesting)
That wouldn't solve a thing in the states. There's a difference between locking your phone to a carrier and making a phone that's actually compatible with other carrier technologies. Apple has no reason to make anything other than a GSM phone, which means in the US an unlocked iPhone would still be good nationwide on a grand total of two carriers. Then look at the numbers themselves. If Apple is expecting this mythical $831 per phone in revenue, how expensive do you think an unlocked iPhone would be? Prohibitive is my guess, and it isn't like you can force them to make it cheap without grossly overstepping the bounds of what a government should be able to do when it comes to product pricing.
All things being equal, I don't like carrier lock-in any more than you do, but people act like it's some brilliant solution ("faster and better for our economy") when in reality all it does for US customers is increase the number of options you have to two. The far better option is for those who want the iPhone, but "can't" have it for whatever reason, to wait for competing products and buy those. The market can settle this one without government interference if people just purchase accordingly. I stand by my original assertion: if you have to jump through hoops to get and use an iPhone in the manner of your choosing, you aren't part of the target market and you can and will eventually be served by products better suited for you.
Re:that math is wrong (Score:5, Interesting)
Getting to within 10% of the cost of goods sounds fantastic to me. Within 20-25% still sounds not bad. It's a lot better than a total guess, which seems to be what you're suggesting. (gross margins of between 20 and 50 %).
Incidentally, on the whole matter of Apple making money:
I'm not a big fan of the iPhone -- it's simply not the product for me. Part of that's price, much of that's the lockin -- on apps and to a carrier if you want stable seamless firmware upgrades.
But I'm delighted to see it succeed and delighted to see Apple making lots of money off it. I doubt Apple's going to take 70-90% of the smartphone market, and if they do, it'll be because they deserve to. People like RIM and Nokia will have manifestly failed to execute.
Apple making lots of money off of smartphones means, ultimately, cheaper and better smartphones for everyone.
I have a fantastic Samsung media player. It plays Ogg Vorbis. Terrific features. Inexpensive, too. And an absolutely horrible interface. The iPod's wiping out players with horrible interfaces. Great. That's good for us all. The latest Samsungs are immeasurably better.
Smartphones will get better and cheaper because of the iPhone. That's good for everyone.
Re:Nonsense, fuzzy math (Score:3, Interesting)
Re:They make money. So what. (Score:3, Interesting)
Making money doesn't automatically make the business behind the money acceptable to the consumer, regardless whether the consumer is happy in their purchase or not. If the consumer knew they were being violently ripped-off by their latest purchase, no matter how great it was, they'd be upset.
This is getting ridiculous (Score:4, Interesting)
Most phone makers get a kickback from the carrier because the consumer never paid the manufacturer directly, but this is not the case with Apple.
Re:Cingular/AT&T doesn't get my phone purchase (Score:5, Interesting)
LOL. Yes, and they also don't take out zero-down mortgages, make car-buying decisions based on the monthly payment rather than the total cost, or rent extra-fancy furniture/tvs/etc when they could buy cheaper versions.
Average number of credit cards per U.S. household: 12.7 [harpers.org]
Just because you and your few closest buddies have some clue about financial planning, doesn't mean 99.9% of people do.
Re:Getting around the cash thing.... (Score:4, Interesting)
Bad post (Score:3, Interesting)
Story #2 (or non story I should say) is that Apple makes money from AT&T. Story #3, slashdot fools come out in droves to complain about a phone that they don't even own, because they feel they have some sort of 21st century pirate credo to stick to and would never buy anything that is supposedly "locked in". Because having tightly integrated, well produced hardware that works great is always a "bad thing" and the geek in them could obviously do/know better when it comes to Technology than an artsy little computer company from California.