Filed under: Apple Corporate, Apple Financial, iPhone
How much are you worth to Apple?
Think you're worth 3 bucks a month? Or even 11 bucks a month? Those are the figures being bandied around today over at Seeking Alpha regarding the secret details of AT&T's revenue sharing with Apple. The post suggests that AT&T may be paying Apple $3/month for AT&T customers who switch to the iPhone and $11/month for iPhone customers who have switched carriers to AT&T. They cite a recent Piper Jaffray research note authored by analyst Gene Munster.
That sounds like a lot of money to me (especially for the switching customers) heading off to Apple along with the revenues on the physical iPhone sales.
Reader Comments (Page 1 of 2)
Josh H. said 4:07PM on 7-20-2007
In that case, I'm worth 11 dollars. That and my shiny 1,300$ iMac, 300$ iPod, 500$ iPhone and Newton. I guess you could call me a fanboy :-)
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Bloor said 4:22PM on 7-20-2007
I guess I am worth three dollars per month.
But considering my family owns an ibook, powerbook, macbookpro, and a Power Mac. Not to mention four ipods, an apple tv, and to top it off an iPhone; I think apple values my purchases with a little more weight then the messily three dollars per month.
But I'm not complaining considering all the extra revenue just boost my already soaring AAPL stock.
Gotta love how apple deals.
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artifex said 4:23PM on 7-20-2007
I must be worthless, since I own a Mac Mini and a MacBook, but no iPhone.
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Michael B said 4:43PM on 7-20-2007
wow! Well im worth a whopping $0
but I think Apple should let ATT keep their money then maybe we would see apps (true apps) for the iPhone. Which I think Apple wants because they arent stopping the hacking.
Though my theory is ATT offered to pay Apple so Apple wouldnt keep asking ATT for developer access.
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SubGenius said 5:08PM on 7-20-2007
Considering AT&T isn't subsidizing the cost of the phone, the revenue sharing seems perfectly fair.
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Xavier said 5:21PM on 7-20-2007
Considering the iPhone has the potential to bring so many customers to AT&T but more importantly AWAY from other carriers, 11 bucks is NOTHING.
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Ben said 5:25PM on 7-20-2007
This worries me. Now, I'm apparently worth $11/month to Apple, but that's $11/month out of ATT's pocket. That seems like an incentive to not provide me with good service (or make me dislike my iPhone and switch to a different one). Especially if my edge data use is high, which it will be.
I was hoping that the arrangement was that ATT would pay apple the normal phone subsidy or some other one-off option. Now I'm worried.
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Gidgidonihah said 5:37PM on 7-20-2007
Michael B: I think the reason att is sharing money is because Apple REQUIRED it. Everyone knew this phone was going to make people switch. I recall rumors that Apple had talks with other carriers and were turned down.
It's genius. Apple sold a half a million iPhones the first weekend. At only 3 dollars a phone (and this isn't counting the extra 8 bucks for switchers) Apple is making 1.5 million dollars a month just for making an amazing product. They knew it would be worth it. ATT knew it would be worth it. They're charging what, a required 20 bucks data plan per phone? Even at 11 bucks a month, I think they can afford it. Not to mention the extra revenue brought from the standard plan for switchers. Genius on both parts.
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Gidgidonihah said 5:40PM on 7-20-2007
Ben, you're missing the point. That's not 11 bucks out of ATT's pocket. That's 11 bucks of the 55 that they weren't making before.
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nfidel said 5:47PM on 7-20-2007
AAAARRRRRGGGGGHHHHHH!
Can we please go back to the time when the iPhone was just a rumor. Almost every darn post is iPhone related. There has to be more out there. Right? Whatever, I will keep reading.
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Michael B said 6:26PM on 7-20-2007
wow! Well im worth a whopping $0
but I think Apple should let ATT keep their money then maybe we would see apps (true apps) for the iPhone. Which I think Apple wants because they arent stopping the hacking.
Though my theory is ATT offered to pay Apple so Apple wouldnt keep asking ATT for developer access.
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Gidgidonihah said 6:29PM on 7-20-2007
...
Try the iPhone free feed:
http://pipes.yahoo.com/pipes/pipe.info?_id=hNQjSv4g3BGE8lINYEsBXw
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Michael B. said 6:37PM on 7-20-2007
oops - sorry about the second comment - I got a new email with the same comment - and forgot I already clicked the link -weird
It is possible that apple require it but my theory was that Apple would rather have better features (i.e. Voip, extra apps, mms) so that more people buy the iphone if Apple is really making $250 - $350 on each iphone then even at $11/mo it'd take a while to get there (well for a 4GB they's actually make a few extra bucks after 24 mo- but the 8gb has sold the 4gb by 4:1). So it'd make sense if they just sold more iphones.
But who really knows?
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(01) said 6:50PM on 7-20-2007
Also worthless apparently...thought I figure one MBP and two iPods would equal the worth of one iPhone. What? Not enough to cover the contract with AT&T? Still worthless in Apple's eyes then :-)
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mrchin said 6:59PM on 7-20-2007
Everyone is worth a lot more to Apple as a following consumer. Applecare alone also give you a minimum of $1 a week to depend on Apple giving you great hardware support.
On this 3-11 front, I got a different interpretation of the article. Not that any speculation is true, I read it as $3 a month for the service and an additional $8 for carrier switchers. This doesn't necessarily mean it's $8 per month. I see it as a one time thing.
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mrchin said 6:59PM on 7-20-2007
Everyone is worth a lot more to Apple as a following consumer. Applecare alone also give you a minimum of $1 a week to depend on Apple giving you great hardware support.
On this 3-11 front, I got a different interpretation of the article. Not that any speculation is true, I read it as $3 a month for the service and an additional $8 for carrier switchers. This doesn't necessarily mean it's $8 per month. I see it as a one time thing.
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Brian said 3:10PM on 7-21-2007
If this news is true, and assuming 50% of iPhone users already had AT&T and 50% switched for the ~1,000,000 iPhones sold Apple stands to make $168,000,000 over the 24 month period that iPhone users are tied in for.
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Eideard said 3:14PM on 7-21-2007
An extra special chuckle looking in at all the geeks who don't know squat about the world of biz - displaying a notorious geek trait in all it's glory: cheapskates!
Let me give you one example of what a solid client in the hardware + monthly charge business model is worth:
Say you signed up with a local security geek you know - for a home alarm system. After a year or two, he has loyal customers, charging rates just a tad below national rates for monitoring. He goes to ADT to sell you all to them.
It's mid-contract, you can't jump ship because of the fine print, ADT knows the odds of you staying on board are good and they'll match his current rates for maybe 6-12 months.
Any idea what they'll pay him - for you? I haven't been in that biz for several years; but, the starting price used to be ~$750.
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Brian said 3:17PM on 7-21-2007
Oh and that $168,000,000 is on top of the ~$300,000,000 in profits they'll be raking in based on the sales of 1m iPhones; estimating cost and 4 and 8GB models.
Oh and sorry for the poorly punctuated, horribly long run-on sentence that was my last post. haha
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JeffDM said 6:17PM on 7-22-2007
All this is basically speculation. If this is true though, then that means that rather than Apple choosing leash themselves and their products to a business partner because the partner is the best, they'll go with the one that will give them the most money, even if they are the worst major carrier. I think AT&T happened to be the worst last time I saw customer satisfaction surveys. That's kind of a shame coming from a company that gets the highest customer satisfaction from surveys like Consumer Reports or PC World's surveys, you'd think Apple would want to better protect their reputation as if that's a selling point.
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