Apple and AT&T iPhone Revenue Sharing Estimates

[MacRumors]

Gene Munster estimates the AT&T/Apple iPhone revenue sharing at "$3 per month (over the life of the 24 month contract) for every iPhone customer already with AT&T and $11 per month for every new subscriber."

Apple has been rumored to get some form of monthly revenue sharing from AT&T for iPhone customers.

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[stagi]

$3 month can add up to some fat cash for apple if the iPhone takes off.

[KingofAwesome]

Where do these numbers come from? If I'm not mistaken, this is a new idea and we therefore don't have anything to base these numbers on.

But even a dollar a month per customer will be be great for Apple.

[matthewHUB]

nice that they get more for new subscribers

[Sun Baked]

Originally Posted by matthewHUB

nice that they get more for new subscribers

Look at all the money Howard Stern got for new subscribers ...

We had to expect some sort of payola to get the exclusive, if it is this high it'll make the next few 10-q filings interesting.

[JonHimself]

Originally Posted by Sun Baked

Look at all the money Howard Stern got for new subscribers ...

We had to expect some sort of payola to get the exclusive, if it is this high it'll make the next few 10-q filings interesting.

Wooo Howard Stern!

[matthewHUB]

Originally Posted by Sun Baked

Look at all the money Howard Stern got for new subscribers ...

We had to expect some sort of payola to get the exclusive, if it is this high it'll make the next few 10-q filings interesting.

who the hell is Howard Stern? forgive me... i'm british.

[fixyourthinking]

Originally Posted by KingofAwesome

Where do these numbers come from? If I'm not mistaken, this is a new idea and we therefore don't have anything to base these numbers on.

But even a dollar a month per customer will be be great for Apple.

I can only assume that the numbers are based on what AT&T employees get - they get 1.5% of the sale and 3% of the contract if the contract is $75 or more + 25% of any extra services (DATA/Insurance/Text) per month for the first year. Then it drops off the paycheck.

These rates may be lower for the iPhone - but know that there IS a split that AT&T employees are receiving for every phone sold with a plan.

I'll have to disagree with you. I used to have a SE 710A, best rated phone at it's time of release. Sure it got on the web, not like the iPhone though. Sure it could play music through it's shoddy playlist, but not like the iPhone. No pocket .

iJon I too had this phone. It was also awkward to slide it and had proprietary headphone adapter. The only advantage it had over the iPhone was the bluetooth data exchange and syncing.

[Irafas]

Hmm these numbers sound really low... In Australia mobile phone dealers typically get an upfront commission of some multiple of the monthly subscription (eg with $100 plan over 24 months they might get $1000 commission) plus a trailing commission of some single digit percentage of the monthly bill for a period of time.

Dealers use this to subsidise handsets (mostly give them away for free), and if Apple is acting like a mobile phone dealer (signing up new customers for long contracts) and NOT giving away a phone they'll just be pocketing everything (good work if you can get it)

As a former employee of a mobile phone company I'd say with near certainty that Apple will be getting a higher commission than AT&T employees, and it's probably higher than the numbers quoted.

[dongmin]

Originally Posted by stagi

$3 month can add up to some fat cash for apple if the iPhone takes off.

$11 a month for new customers = $264 over a 2-year contract

Now THAT is a real significant chunk. If you say Apple sells 20 mil iphones a year and 25% are "switchers." That's $1.32 billion in additional revenues. Cha-ching!

[arkitect]

Originally Posted by dongmin

20 mil iphones a year

I don't think even Steve Jobs has those kind of dreams…

[Yankees 4 Life]

11 dollars per new subscriber???!!! damn, apple just took att and forced 'em to bend over. Thats crazy cash. No wonder they are making the revenues accrue over two years instead of at purchase.

[Peace]

Originally Posted by Yankees 4 Life

11 dollars per new subscriber???!!! damn, apple just took att and forced 'em to bend over. Thats crazy cash. No wonder they are making the revenues accrue over two years instead of at purchase.

If AT&T is bending over it's only to pick up that extra 1.3 billion dollars they're getting from switchers.
($48X24 months) X 1 million new subscribers..

[mkrishnan]

Originally Posted by arkitect

I don't think even Steve Jobs has those kind of dreams…

There are projections out there of even more than this...

http://www.appleinsider.com/articles...says_firm.html

It's not totally unreasonable, based on examples of, say, the RAZR in the cell phone world or the iPods outside the cellphone world. I think it pretty much requires though that Apple is as aggressive with iPhone product development as they are with the iPod. If they aren't willing to pump out small enhancements on a yearly + basis as well as a broader set of phones with different kinds of capabilities and price point, yeah, they'll never get into the tens of millions of units. But if they do both of those things, it seems very feasible.

[kcroy]

I am really looking forward to the actual numbers being released. Sounds good, but I too am curious where these numbers come from.

[indigo144]

US Carriers had a business model where they routinely hand over $200+ to 3rd party vendors like Amazon for bringing in new subscribers.

In the old model the 3rd party vendors passed on most of that to the customer in the form of a phone subsidy.

In the new model, where the drooling customer is willing to fork up all the dough, and then the (already accounted for sum) is rightly passed on Apple as the source of the drool. The carrier's bean counters have already accounted for a similar practise.

All that changed is in who'se hands the dough ends up in.

[reallynotnick]

Well with about a 50% profit margin and this on top of it, I am surprised at how little storage the iPhone has. At the VERY least it should be 8GB/16GB if not 16GB/32GB.

Oh well, I can't buy an iPhone (no AT&T) and if this makes Apple richer I guess I am all for it.

[scu]

Originally Posted by indigo144

US Carriers had a business model where they routinely hand over $200+ to 3rd party vendors like Amazon for bringing in new subscribers.

In the old model the 3rd party vendors passed on most of that to the customer in the form of a phone subsidy.

In the new model, where the drooling customer is willing to fork up all the dough, and then the (already accounted for sum) is rightly passed on Apple as the source of the drool. The carrier's bean counters have already accounted for a similar practise.

All that changed is in who'se hands the dough ends up in.

Bingo

Lets do a little math. If Apple sells 45 million phones in 2009 and they get an average of $9 per month from each customer that would mean $405 million a month or $4.8 Billion a year for 2 years. That folks is $4.8 Billion of 100% pure profit. If Apple sells 45 million phones, aapl is very cheap even at $205 a share.

We are not even taking into account the huge Halo affect from the iPHone, the Apple TV revenue, and the Leopard release.

Now I should caution that Munster prediction is world wide of 45 million phones so only a part is related to the ATT deal. But I think Apple can sell 40 million phones in 2009 in the US alone.

Everyone I talk to would love to own an iPHone, the problem is the price. But give it time, they will come down. In the mean time Apple is making a killing on the profit margin of this baby selling for $600 bucks a pop.

[CalfCanuck]

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[CalfCanuck]

One thing that many here are forgetting is that ATT is saving money on equipment costs compared to their normal customers.

Ususally they have to give free phones to lock in 24 month contracts. Granted, this "free phone" subsidy may ony average to $100 a year or so, but that almost equals the revenue sharing with Apple.

Plus they probably make a small margin on each iPhone sold through ATT stores.

So the net "shared revenue" loss to ATT is not really as much as it appears compared to their other non-iPhone contract customers.