AT&T is paying Apple a $325 subsidy on each new iPhone 3G sold in the US in addition to offering the electronics maker a hefty bounty for each subscriber addition it gains from sales of the handset at Apple retail stores, according to a new report.
Oppenheimer equity research analyst Yair Reiner told clients in a research report that the subsidy is more than 50 percent higher than most other smart phones, which are typically subsidized by about $200.
He said the abnormal concession on AT&T’s part reflect the carrier’s confidence in the iPhone’s ability to grow its subscriber base and drive an overall increase in the average revenue it makes off customers through higher margin services and data plans…
What’s more, Reiner said he also believes that AT&T is paying Apple an extra $100 for each new subscriber to AT&T signed up through Apple’s brick-and-mortar stores, for a total commission of $425.
All the fanboyz, all the antifanboyz, together – thought it was $200.
That explains why Apple & AT&T dropped the fee sharing plan.
AT&T took an awful gamble but dumber deals have been made in the pursuit of profit. I don’t there’s any lasting harm to either company.
I hope people buy a lot of them.
That way ATT loses money, goes belly up and the iphone people have to scramble to get another 3g carrier.
This WHY its not good to keep all your eggs in ONE basket.
But try to tell that to Steve Jobby Jobs.
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#3 – I hope your obsession doesn’t get into the way of work as it apparently does with reality. AT&T doesn’t care whether iPhone purchasers come from the Mac owners base – even with that base expanding because of switchers. Neither does Apple, the more the merrier.
Buying an expanded client base is nothing new. The last security company I worked for bought up annual service contracts for $850 each. That was a decade ago. I imagine the price is higher, nowadays.
Seems like a good move to me – This drops the iPhone in to “regular Joe” territory. If anyone in the United States wants a $200 iPhone, they’ll need AT&T (save for a few hackers). Everyone seems to love it. I bet they grow considerably by dropping the price this low.
#3, Pedro, I know about 20 people, myself included, with an iPhone. Of that 20 only 2 of us have ever layed hands on Mac. And I haven’t used one on 10 years. Of that same 20, 20 were iPod owners prior to iPhone ownership.
You know, I think pedro has it right. With the two thousand plus AT&T is going to make off the users they can afford to make Jobs inc. richer.
The total cost of an iphone plus the plan has not gone down. It is up $40. You can buy a 52 inch LCD tv for what this toy is going to cost you and the viewing screen is so much bigger.
#9 – and you talk to people through your TV set.
With or without your tinfoil hat?
Uh, #8 – like a few other egregious commenters, you really should include footnote when you’ve decided your version of the English language supersedes common parlance.
“Apple” really is the name of the company. “Mac” is the name of the computer.
Sorry if that offends your religion.
#4 – The more people buy them, the better off AT&T is. They aren’t losing money to this subsidy. That’s why they have early termination fees. Besides, what other 3G carrier is Apple going to get? T-Mobile? Like that would be better? Before anyone else says, “No, they should go to Verizon,” remember that they would have to completely reengineer the iPhone for that to work. And it would only be for the US, since the rest of the 3G world uses GSM. Fat chance. With a GSM iPhone, Apple only has to manufacture one device for the whole world. Apple is all about simplicity of experience. They’re not going to introduce a CDMA iPhone. Not a chance. If you love the iPhone that much, suck it up and use AT&T. End of story. Plus, that way you can continue to whine about how brilliant Steve Jobs is and how AT&T is ruining his brilliant device (which is really what the Mac fanboys want anyway).
Just bend over and take it like a man!
at&t will bend over backwards now to compete with Verizon-Alltell
iPhones are a status symbol and your run-of-the-mill human is willing to pay a premium to buy something that will increase his/her chances of being perceived well by others.
Where is the surprise in this? Macs and iPods are overpriced and their success in the modern world kills the notion of a homogenous Dell/Wal-Mart world.
Besides, the make Blackberries seem even more geeky.
AT&T is laying its bets on the sheepish mentality of the pathetic American consumer.
People are like zombies…ask them why they ‘have’ to have the iPhone, they develop a vacant expression, start to drool, and mumble ‘brains!’
There’s no reason to own the iPhone unless you have to prove your self worth by showing off this thing.
With 8GB micro SD cards available for $50, why in god’s name would anyone want this toy that has no practical application?
No MMS? No video record? Come on apple, get with the early 00’s!
Pedro, I’ve already told you not to post here anymore. Go back to your MySpace page.
Owned.
If everybody has an iPhone, it won’t be cool anymore, sigh.