Apple's Demands of Vodafone

[gnasher729]

I'm really, REALLY doubting that AT&T was hurting that bad for customers. Before the iPhone was even announced they were out pacing all the other guys in terms of new subscribers and have been the largest network for a while now. What's more likely is that AT&T realized that the cell phone market is becoming extremely saturated and the # of people out there that want a cell phone but don't have one is evaporating very quickly (in the US at least) and they saw a way to get a bunch of people to switch. This is what the industry is going - they are going after the switchers (that should sound pretty familiar to people on this board ).

Assuming that 700,000 iPhones have been sold, say 400,000 to existing customers (probably increasing their plan by $20 on the average) and 300,000 to switchers ($60 per month), that along makes it $26 million per month, that's $624 million over 24 month. Not bad for a week of sales.

 

[nbs2]

AT&T might have bent to some of Apple's demands but they know they are gonna end up in the black, easily, in the long run. They got 10's of thousands (if not more) to switch carriers just for 1 phone - that's a feat in and of itself and they know whatever concessions they made to Apple they are gonna get more money because of all those switchers.

I think you are short-changing ATT here. Now, most people aren't going to switch carriers mid-contract just to get an iPhone. Also, I think it is safe to say that most folks that don't like cell phones, and don't currently have on, didn't bother to get an iPhone. So, you have to figure that no more than 15% of the activations were from switchers (either in or out of contract with another carrier). That's (reportedly) an easy, and conservative, 150,000 new contracts.

 

[slffl]

These mobile carriers are so stupid. So instead of making $30 billion, they would only be making $15 billion. Why turn down profit for your company? Stupid corporate egos.

 

[JPark]

Is this place going to become iphonerumors.com or telecomrumors.com? It seems like Macs are becoming a forgotten item around here.

The iPhone is an entirely new product so of course it's going to get the majority of the attention. If there was any mac-worthy news right now, I'm sure they'd still tell us about it. Or at least I think they would. Hmm...

 

[SilentPanda]

Is this place going to become iphonerumors.com or telecomrumors.com? It seems like Macs are becoming a forgotten item around here.

Stop whining. Not just you but all the other people that post this junk. The site was named MacRumors back when Macs were about all Apple made. People that come here are interested in all things Apple including iPhones, iPods, and iUmbrellas. Maybe you'd be happier if the site was called AppleRumors? Hey I have an idea... why don't you go to AppleRumors.com instead of MacRumors.com. Then you'll know they're covering Apple as a whole instead of just Macs. At this point MacRumors is also a "brand". Changing the site name would be silly but the content has evolved appropriately.

If there are no rumors about Macs to post, none can be posted. Arn and Co aren't hiding any rumors behind the scenes to be posted later. So you're not missing out on Mac stuff. But hey there is stuff about Apple to be posted!

Go find another site... seriously. Or make your own.

 

[GreasyWeasel]

hey news flash, if i want an LG chocolate... i go to vzn, LG doesnt sell it to att or sprint or tmobile.. if i want a T-mobile Dash (HTC Dash), i go to tmobile, because HTC didnt want to sell to anyone else... If i wanted an iPhone, which i did and purchased, then i go to At&t for my carrier. This is nothing new, its just that many people fail to realize this is standard practice. The Razr was a cingular only device for 1.5 years, so lets not all get our panties in a bunch here... (I'm a guy, so i guess we say boxers in a bunch)

Not entirely true, you could also go and buy any of those phones, unlocked, direct from the manufacturers for their full, unsubsidised cost. Now I don't mind that and am happy to pay full price for a phone I want because I won't be tied into a artificially high priced, long term contract. In fact that's exactly what I've done with my HTC S620 (better known as the T-mobile Dash). I don't mind paying the full price for the iPhone but I don't expect something I pay full price for to be locked to a specific mobile carrier.

In my opinion it would be a much better system if mobile carriers didn't supply phones and only provided the mobile service. That way I'd be free to buy whichever phone I wanted and decide who I want to provide my mobile service based on the best deal/customer service. My ISP doesn't provide my computer and hide the cost of it in my broadband bills and lock it so I can't access the internet via any other providers. Why do we accept this situation for mobile phones?

 

[Much Ado]

I am just disappointed there isn't any news on the Macs and it seems like the iPhone is taking over Apple as much as all the news sites focused on it.

Sure, and that's a fair complaint. We've all thought about it since they dropped 'computer' from the name (to varying degrees of alarm/calm). Just don't bash MR for reporting on Apple's current baby when it is the only thing worthy of attention at the moment

After all, i think we can all agree that Leopard wasn't delayed until October simply because it 'wasn't ready': Apple knows about hype, and how to stagger product launches to take advantage of it. The glut of iPhone news at the moment is part of that, and Leopard fever will doubtless take over come October (we hope).

 

[jholzner]

Apple comes to them with an offer. If it doesn't make business sense, then it's not worth it. Obviously AT&T was hurting for customers and was willing to "pay" for them upfront.

I hate when vendors demand that I change my business rules to accommodate them, especially when the "them" isn't even a proven player in the market.

Verizon is already a major cell phone player and to adjust your entire business model for one company just isn't really smart. It costs a lot of extra dough to make that happen. If you think about it, Apple has basically bypassed AT&T completely on this deal. If tomorrow Apple wasn't happy with AT&T, they could change the activation process to another provider in a snap.

That's why it makes the cellphone companies nervous.

Yep, and then Apple would get their a** sued off for breach of contract. It's an exlusive contract with ATT. Apple can't just switch. Oh, and ATT is a retailer for the iphone so they are making money on each one they sell. They don't do that with other phones.

 

[12thgear]

I'd love to see more freedom of choice here. Tying phones to contracts just seems so needlessly anti-consumer.

Are phones more expensive in Europe in general and are less often subsidized? Also, what's a SIM-only plan?

That may be so in the US, but in Europe it certainly is not, it's even illegal in certain countries. You either get a phone with a contract (usually at discount); whatever phone you want with whatever provider you'd like, or you buy the phone yourself and get a SIM-only plan from whatever provider you'd like (which usually is cheaper)

People will not accept otherwise.

 

[Jefe]

This is big news.

At an average of $7.50 a month from each iPhone user Apple is making 100% profit on top of the iPhone profit.

Who knows what the actual percentage Apple negotiated is, but if this guess is correct, it would equal $180 per iphone user over the 2-year contract. Since AT&T wasn't required to eat up the cost of a phone subsidy as it does with most other phones, I think Apple is somewhat entitled to this. they are basically saying, we have created a device that is so desireable that people will buy it without subsidy. So this way, apple gets rewarded for more people buying the iPhone. It's probably a break even for the carrier.

 

[heisetax]

No iPhone No iPod

Is this place going to become iphonerumors.com or telecomrumors.com? It seems like Macs are becoming a forgotten item around here.

I agree with you. But remember if we eliminate the iPhone rumors we should also include the iPod ones as well as the Apple TV ones. Get rid of all of those we would only have ones for the Intel Mac Pro, Intel Mac Book Pro, Intel Mac Book, Intel iMac, Intel Mac Mini, Mac OS X & other Mac hardware & software once a year or less often. At any other times we'd know that the rumors are only, "we wish this would happen now" items. This would leave us with only a new post about every other week or less often.

We have to choose whether we want knew rumors enmass as we have now, eliminate the non-Mac ones & keep the hope fors to give us a few each week or go with reality & have to wait a week or two between each new post. I'd go for the second option so that we'd at least have something to read while we're waiting th year to 2 years for even a minor change ora 6-9 month delayed OS update.

Bill the TaxMan

 

[Lancetx]

One of these days these clueless wireless companies will figure out that Apple is the one carrying the hammer in this thing and not them. Particularly when they see just how much money that AT&T, T-Mobile and O2 are going to make off of the iPhone. Just like with the music labels, their world is changing, and they can either hop on with Apple for the ride, or get left behind in the dust.

 

[Porchland]

Apple comes to them with an offer. If it doesn't make business sense, then it's not worth it. Obviously AT&T was hurting for customers and was willing to "pay" for them upfront.

Absolutely. Companies loss-lead all the time to drive up their market share or their traffic for other products. AT&T is a new (actually old/new) brand that needed some excitement to boost its launch, give it some brand equity and boost its U.S. market share. AT&T doesn't necessarily have to make a ton of money on each iPhone subscriber for this deal to make sense.

One of these days these clueless wireless companies will figure out that Apple is the one carrying the hammer in this thing and not them. Particularly when they see just how much money that AT&T, T-Mobile and O2 are going to make off of the iPhone. Just like with the music labels, their world is changing, and they can either hop on with Apple for the ride, or get left behind in the dust.

Apple is in the phone business for the longterm. When I first heard that AT&T's exclusivity was five years (instead of the usual one year for a high-profile new phone), I thought they were unnecessarily limiting their market for too long. But the more I look at it, Apple has set up a renegotiation where it will hold all the cards.

Five years from now (according to Apple's business plan, at least), the iPhone will be a juggernaut, AT&T will be the leading U.S. mobile carrier, and Apple will be able to choose between naming its price to maintain the exclusivity or going to the other carriers to increase its market share.

 

[GreasyWeasel]

I'd love to see more freedom of choice here. Tying phones to contracts just seems so needlessly anti-consumer.

Are phones more expensive in Europe in general and are less often subsidized? Also, what's a SIM-only plan?

As a general rule its usually the free phone with tied in contract for 12 or more recently 18 months. I believe this is wrong and choose the second option myself because I don't mind paying for a non-crippled version of the phone (which I will take care of) and don't want to be tied into an expensive long term contract. Some providers have even started giving away free ipods or games consoles as well as phones in order to get people to sign up to expensive long term contracts.

The problem is, the majority of the general public now actually believe phones are free and therefore expect this to be the case. I simply don't understand how they don't realise they are being ripped off because of their inflated months bills.

 

[GreasyWeasel]

what's a SIM-only plan?

A sim-only plan is just a sim card from the mobile provider to put in your own phone. They are generally cheaper because they aren't having to subsidise a "free" mobile phone and they don't require you to sign up for long contracts.

 

[peharri]

I'd love to see more freedom of choice here. Tying phones to contracts just seems so needlessly anti-consumer.

Are phones more expensive in Europe in general and are less often subsidized? Also, what's a SIM-only plan?

A SIM-only plan is a plan where you don't buy a phone at all from the carrier, just a SIM card. You then plug it into a phone you already have (or buy separately, unsubsidized.)

US carriers don't generally encourage their customers to buy phones direct from the manufacturers, but the GSM carriers (T-Mobile and AT&T) both have no problems with it (as well they wouldn't, given they don't have to subsidize the phone then.) IS-95 carriers like Sprint PCS and Verizon tend to be a little weirder on the whole "You mean a customer bought his own phone?" thing.

Either way, US operators don't reward customers for purchasing unsubsidized equipment. For people like me, who do it anyway, the advantages are the phones haven't been crippled by the carrier, and roaming in an area not covered by a roaming agreement is just a matter of using a prepaid SIM from a carrier that actually covers the area. (I'm a T-Mobile customer, but some areas around have Cingular coverage only, and for some reason T-Mobile users can only use some Cingular towers, not all of them. So I carry a PAYG GoPhone card for situations where I need that.)

On a separate note, I really disbelieve all the nonsense that Apple is trying to foist a consumer-friendly contractless regime on the carriers, and this initial lock-in is just a way to get a foot in the door. Apple's exclusivity with AT&T is for five years. That's a long time to be standing at the door.

Truth be told, I think Apple just wants the expense of the phone to be part of its appeal. It's something special, something that costs a little bit more, but is "worth it". They know they'll never gain a majority market share, but they can ensure the iPhone is perceived to be more valuable, and that the money will come in for many years, as the iPod's sales slowly decline against an onslaught of slowly more credible MP3 playing phones.

 

[Stella]

<deleted>

 

[defeated]

I say it as I see it
"unconventional"="greedy"

 

[panamajack]

That may be so in the US, but in Europe it certainly is not, it's even illegal in certain countries. You either get a phone with a contract (usually at discount); whatever phone you want with whatever provider you'd like, or you buy the phone yourself and get a SIM-only plan from whatever provider you'd like (which usually is cheaper)

People will not accept otherwise.

Well ... people seemed eager to accept shortcomings like AT&T's crappy network and EDGE in order to get their hands on this device. Don't underestimate the power of consumer lust !

Correct if I'm wrong, but isn't Europe nearly entirely GSM ? Would this fact play into how the iPhone can be made exclusive ? It certainly makes hacking an unlocked copy much more relevant than in North America, with CDMA and GSM still battling it out.

 

[bigmc6000]

I think you are short-changing ATT here. Now, most people aren't going to switch carriers mid-contract just to get an iPhone. Also, I think it is safe to say that most folks that don't like cell phones, and don't currently have on, didn't bother to get an iPhone. So, you have to figure that no more than 15% of the activations were from switchers (either in or out of contract with another carrier). That's (reportedly) an easy, and conservative, 150,000 new contracts.

By switcher I didn't mean to imply people breaking their contract. There were tons of people whose contracts have expired in the last 3 months or so and just waited for the iPhone. Now of course we're talking about people who have the dough for a 500/600 dollar phone. These people are the Holy Grail of cell phone companies. People who will give up their corporate discounts (assuming they have one) to have the phone.

But by switcher I simply mean a person whose last phone was with someone other than AT&T - combine that with all the increase dough they are getting from AT&T users who are now paying 20+ more a month just to have it...

 

[codo]

Are phones more expensive in Europe in general and are less often subsidized? Also, what's a SIM-only plan?

Phones are more expensive, yes, if you buy them without a contract. Everything is more expensive in the EU though, thats just the way it is.

SIM-Only = Pay as you go. Purchase your phone, top up your credit, but have no contractual agreement with the provider. This type of system is extremely common and popular in Europe. > e.g. http://shop.orange.co.uk/shop/payasyougo

But with contact plans, phones are usually heavily subsidised, practically free with many contracts. e.g. http://shop.orange.co.uk/shop/show/handsets/pay_monthly/all/all

 

[Fletch2]

What's more likely is that AT&T realized that the cell phone market is becoming extremely saturated and the # of people out there that want a cell phone but don't have one is evaporating very quickly (in the US at least) and they saw a way to get a bunch of people to switch.

Basic cell phone voice service is rapidly becoming a commodity market, the cost differences between operators will soon not be a selection criterior for subscribers because there will be no difference. For their revenue to grow operators need to be able to offer new services that customers will be willing to pay for. The problem is that the current cell phones are still essentially phones, they are built around providing basic phone services and not value added content. To be able to develop new products and services to sell the operators need a more capable handset, one that deals with thing like video and rich content. The iPhone is that class of device.

Once you have a large enough subscriber base with more capable handsets you can start rolling out new revenue generating services. That is why grabbing a big market share for your first new generation handset is important, it means you will be ahead of your competitors offering services that use the new devices.

 

[heisetax]

Is it rally a Mac

that's because the iphone is a mac! It's better than my Powerbook G3

You say that the iPhone is better than your Mac. That would mean that an appliance is greater than a computer. An appliance needs outside items (that must be paid for on an ongoing basis) while your computer is a stand alone item that can be used with no additional chages if you so choose.

An iPhone is only the beginning. With it's cost yu culd purchase a new Intel MacBook Pro ever 2 years. We could call it a new Intel MacBook Pro every two, or would we get sued because we used someone elses ads.

My old 17" PowerBook is paid for & can be used anywhere I want to operate it at no additional charge. Can yur iPhone render a 10 GB image in PhotoShop? Can it do everything that my $100 Palm can do. Is it really anything other than a glorified wireless iPod nano. Even Apple gave me my iPod nano free with a purchase of an Intel Mac.

I'm for eliminating or separating th iPhone & iPod from the MacRumors site. Make a separate iPhone - iPod rumors website. They all could be one common wite with an easy to choose branch to the one(s) we each want. Everyone here is not waiting for the next great iPhone or cell phone carier decision.

Actually if your iPhone is better than yur G3 PowerBook, your PowerBook must be dead & needed to be recycled.

Bill the Taxman

 

[scu]

I think you are short-changing ATT here. Now, most people aren't going to switch carriers mid-contract just to get an iPhone. Also, I think it is safe to say that most folks that don't like cell phones, and don't currently have on, didn't bother to get an iPhone. So, you have to figure that no more than 15% of the activations were from switchers (either in or out of contract with another carrier). That's (reportedly) an easy, and conservative, 150,000 new contracts.

Actually on Monday a report came out that showed 35% of iPhone activations was from new people to AT&T

So if the numbers are correct and Apple sold 1 million phones in the first week, that would mean 350,000 new subscribers to AT&T. That number will increase as people wait for their contracts to end with present carriers and more iPhone are sold.

 

[Multimedia]

Greed Is Good...

Not !