Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
skywotek, thanks for that post. I've said it before, but I appreciate both your insight and your ability to add to the conversation without being argumentative.

That said - WOW! :eek: I'm a little stunned by those numbers. That means that the cost of the iPhone (before subsidies) has gone up significantly (about 20-24 percent?), despite a recent analysis which suggested that the BOM has decreased by 41% ($100 from $170). And a $100 commission on top of that?! If that's all true, then I can definitely see what Apple's getting out of this exclusive and I'd assume that AT&T really believes in Apple's vision for this device.
 
. Today's analyst information surmises that AT&T is subsidizing Apple between $325 and $425 per iPhone handset.

AT&T often gives $250 - $380 off smartphones, which fits with the $325 figure. So that's not unusually high at all.

I'm not sure why an analyst would think that Apple would get an extra $100 for signing up in an Apple store. Not believable.

The iPhone is the iPod of the phone world. Whether or not we think it's true, the mainstream media and iPhone carriers treat it as such.

AT&T doesn't care who/what they sell, as long as it gets old/new customers. The exclusivity only works one way. Apple can't sell to others in the USA, but AT&T is adding just about every new cool smartphone out there, which can only take away from potential iPhone buyers.

iPhone is the crossover device which will take AT&T's $45 subscribers to $75 subscribers.

It's definitely one of the leaders for that.

AT&T's business model requires that they have the infrastructure as long as one subscriber uses it. Therefore, the operational cost remains relatively the same whether there are 10 data subscribers or 10,000 data subscribers.

More subscribers means more need for voicemail servers, backhaul bandwidth, and so forth. So no, operational cost is not at all constant.
 
AT&T often gives $250 - $380 off smartphones, which fits with the $325 figure. So that's not unusually high at all.

I'm not sure why an analyst would think that Apple would get an extra $100 for signing up in an Apple store. Not believable.

Why would it be not believable when this is a renegotiation of a contract which gave Apple a monthly cut of subscription revenue - an exception to the industry? Was that not unbelievable, but true?


And when you're checking the phone prices, don't count the $180 refurb discounts or manufacturer rebates as AT&T subsidies, they're not. The maximum subsidy I saw was $250 with the average around $175. Apple's still getting paid for exclusivity.


AT&T doesn't care who/what they sell, as long as it gets old/new customers. The exclusivity only works one way.

My difficulty here is understanding why people think that Apple, the company that (over)charges for everything including their new cloud computing initiative MobileMe which can be pieced together for free elsewhere, would say "let's sign a five year contract that screws us."


More subscribers means more need for voicemail servers, backhaul bandwidth, and so forth. So no, the cost isn't anywhere near to being constant.

As I've said, I work for a Fortune 500 full service broadband provider (telephone, internet, tv, voicemail, email, etc.). I didn't say the cost was constant. I said, "The operational cost remains relatively the same whether there are 10 data subscribers or 10,000 data subscribers." The infrastructure cost for 10 users is about the same as for 10,000. So reaching your 10,001st subscriber, you may as well reach your 20,000th subscriber. Reaching your 20,001st subscriber, you may as well reach your 30,000th subscriber. Actually, the capacity is much higher than 10,000 per cost layout. And the profits increase exponentially the higher you go since the majority of wireless cost is building and maintaining external sites, not the back end where storage and processing is comparatively inexpensive.
 
I'm not sure why an analyst would think that Apple would get an extra $100 for signing up in an Apple store.

As odd as that sounds, the fact is that Apple will be bringing business to AT&T. Perhaps people who are looking at Macs and getting swept up in the whole Apple thing will get hooked on the iPhone in the Apple store, but wouldn't have otherwise thought about going to an AT&T store to look at one.

The extra $100 surely goes a long way toward making up for Apple's lost business in the App store (lost due to exclusivity). It would explain what Apple's getting out of a long term exclusive.

If that's all true, then if I end up getting an iPhone through AT&T, I'll get it at the Apple store just to make them pay more for the exclusive BS!
 
Wow, I just caught wind of this analyst report. If it's true, this changes things. AT&T is not going to kick back that kind of cash without continued exclusivity. How long, who knows. For that kind of money, at least another year I'd think. Maybe more. Probably not another 4 years though.

It all depends on the accuracy of this report though. Analysts have been very wrong in the past. But this guy sounds pretty definite.

Maybe I'll be getting a Blackberry Bold after all.
 
The whole deal is depressing. Where I live, Memphis, TN, AT&T is hands down the worst service you can get. Verizon is BY FAR the most reliable cell phone carrier in the entire region. Over the last 10 years, I have subscribed to every cell phone carrier in Memphis and even comparing AT&T to CRICKET, AT&T was inferior. It's total s#%t and I refuse to own an iPhone on AT&T.

I hope Apple opens relations with ANYONE else but AT&T at the end of their exclusivity deal.
 
Why would it be not believable when this is a renegotiation of a contract which gave Apple a monthly cut of subscription revenue - an exception to the industry? Was that not unbelievable, but true?

The only thing that was unbelievable was how greedy Apple was, and how they suckered the public by calling it "revenue sharing".

With the original iPhone, the monthly subsidy was simply being given to Apple. I've said this for a year, and it should be even more apparent now that the subsidy actually goes to the customer instead of into Apple's pockets.

To AT&T, nothing really has changed. Same money in/out.

My difficulty here is understanding why people think that Apple, the company that (over)charges for everything including their new cloud computing initiative MobileMe which can be pieced together for free elsewhere, would say "let's sign a five year contract that screws us."

One possibility is that they were desperate for a large carrier after spending a year trying to get Verizon signed up. Another is that AT&T demanded it in return for not sharing in app or ringtone revenue. In any case, AT&T has stated that they think they got a better deal than Apple did.

As I've said, I work for a Fortune 500 full service broadband provider (telephone, internet, tv, voicemail, email, etc.).

And what do you do with them?

As I've said, I'm an contract systems engineer with phone companies. I also helped design the very first interactive TV systems, and built distributed realtime casino games. I'm quite familiar with operational costs.

I didn't say the cost was constant. I said, "The operational cost remains relatively the same whether there are 10 data subscribers or 10,000 data subscribers."

I still have no idea what you're saying. But there are weeks when we're adding 200 servers at a time to cover increased subscribers.
 
^EV-DO is the CDMA 3G, like HSPA is the GSM 3G. So it could be called iPhone 3G if it ever (which is doubtful) goes to Verizon.
 
if the iphone 3g were to be cdma, it wouldn't be called iphone 3g, it would be called iphone EV-DO. Thats my opinion.

Yeah, I made this mistake in logic as well. But it's incorrect. As randomusername pointed out, 3G refers to multiple 3rd generation technologies. EV-DO is one of them.
 
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.