Filed under: iPhone
iPhone to become subsidized, non-exclusive?
RBC analyst Mark Abramsky says that the iPhone will exceed its projected goal of 10 million devices sold in 2008 -- possibly by selling upwards of 14 million. How is Apple going to get these sales figures? Well, Abramsky suggests that AT&T could subsidize the iPhone by up to $200 for the 8GB model. This would mean the 8GB iPhone could sell for as little as $199 (previously rumored here); and possibly increase sales by 50 to 100 percent. According to Abramsky, this would mean Apple would have to drop revenue sharing with AT&T. Mr. Abramsky also believes that Apple will start to sell unlocked iPhones (or iPhones without a specific carrier) without a premium over the AT&T iPhones. He suggest that unlocked iPhones could increase the adoption rate by two to three times for Apple's phone.
All of Abramsky's conjecture hinges on Apple and AT&T agreeing to end their 5 year exclusivity agreement early. We here at TUAW see no real reason for either company to agree to that, at least not in the States.
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Reader Comments (Page 1 of 2)
ryaninc said 10:13PM on 5-05-2008
I seriously might buy an iPhone if I could get it unlocked direct from Apple. Here's hoping that happens!
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mikekochansky said 10:20PM on 5-05-2008
This doesn't indicate whether or not this will also pertain to the new 3G iPhones.
http://mikekochansky.com
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Jon Niola said 10:29PM on 5-05-2008
For some reason I doubt AT&T would want out of the deal early. It seems from various reports over the months that they have gained quite a few new subscribers as a result of this pact.
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Ryan Trevisol said 8:35AM on 5-06-2008
It depends. AT&T seems excited about the LG Vu, what with it's full-touchscreen goodness, 3G data and TV service of some sort.
If they start pushing that phone, Apple may not be very happy.
I mean, the exclusivity had to be a two way street. The Vu has a lot of elements that put it at odds with the iPhone. Apple might have grounds to end the contract early with that.
AT&T's had it's boon from the iPhone. Maybe they feel it's time to move on. 1 Year is actually a long time for AT&T to feature a phone.
Tom said 12:30AM on 5-11-2008
I really hope they do, as much as I know it's easy to unlock and there are really no problems I don't want my 500 dollar device to get screwed up or an update to kill it. If they made an official unlocked one I would love them even more. I guess we'll see in June which is when I wanted to buy mine anyway.
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Ed said 10:46PM on 5-05-2008
Well, AT&T could get an exclusive on Visual Voicemail and any other special services that Apple might be able to cook up... 'AT&T: The best for iPhone'
Not exactly as good as exclusivity though. Apple could just pay them off with the $19.5 billion they've got hanging around.
Perhaps a shorter exclusivity - 6 months perhaps, on new models.
Apple might learn from this that you can only change so much at once. The ideal route might have been an MVNO, but they'd have been even slower at spreading that around the world. They're safest following the iPod model and selling them in as many places as possible as easily as possible or they're going to marginalize themselves.
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berbabed said 2:45AM on 5-06-2008
r u kidding?
A slow meticulous rollout was the model they followed with the ipod,same as iphone...get it right and then improve with evrey step generating intertest. Its marketing the apple way.
$ 20 bln in cash and stock at $184 id say they know what theyre doing. Dell,Hp,Rimm all lost market share over the past five years to apple since the inception of the ipod,slowly rolled out. Steve Jobs is the most prolific ceo in the understanding of marketing, of all the fortune 500 companies today.
Seth A said 10:58PM on 5-05-2008
I think this is a great idea, however, I would make sure it stays GSM only. This would avoid any confusion, so GSM 3G only. Then, keep the "Deal" with AT&T by allowing it to be subsidized sans $199, then sell an unlocked version sans $299-$399. The biggest thing would be no "Carrier specific software" meaning, every phone off the shelf is the exact same, aside from the AT&T subsidized ones being carrier locked (easily unlocked after two years) Basically each country has an "Official" carrier, the one that has revenue sharing and the Subsidized phone, but Unlocked versions are also sold in those countries and countries where an "Official" carrier has not yet been negotiated. Thats just how I would do it anyways. :-) I think that would make everybody happy. I don't think that the amount of people going to AT&T would drop much, if anything, it would increase with the phone only being $199
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mike said 11:13PM on 5-05-2008
"All of Abramsky's conjecture hinges on Apple and AT&T agreeing to end their 5 year exclusivity agreement early. We here at TUAW see no real reason for either company to agree to that, at least not in the States."
none of this has ANYTHING to do with ATT exclusivity. That only applies in the US, and since the ATT is the only GSM carrier in the US, that won't change. Apple can sell the iPhone however they want outside of the US, because ATT has no power or jurisdiction through the market beyond US borders. Since they are in the exclusivity deal, they can't offer "unlocked" phones (beyond there being no point in the US to do so) to boost adoption here in the States. THAT is why they would possibly subsidize the phone through ATT- they would still get the revenue sharing and still get the full sale price from ATT, while ATT would pick up even more customers and contracts to compensate for having to eat $200 per phone subsidy.
The US plans have no effect on international plans, and vice a versa.
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Antwan L. Payne said 11:23PM on 5-05-2008
Umm... There are a few GSM carriers in the US... T-Mobile USA being one. Then there's the regional carriers... I've seen many people with unlocked iPhones on T-Mobile USA working perfectly (well, without visual voicemail [but regular voicemail works perfectly]).
-Antwan L.
Anderson said 11:31PM on 5-05-2008
@mike : AT&T is NOT the only GSM provider in the states. If it was there would be no point in people unlocking it.
@Seth A: "sans" = "without"... you mean iPhone subsidized (minus) that amount?
When iPhone launched I was under the impression that the AT&T 5 year exclusivity agreement was for the current version of iPhone. I seem to remember that that was when they hinted that there would be other versions of the iPhone in the future. Does anybody know?
Greg L said 11:20PM on 5-05-2008
Um, T-Mobile is a GSM carrier in the US.
Also, the exclusivity agreement may have only applied to the first-generation iPhone, not to the 3G product. If AT&T didn't notice/negotiate for that, then Apple surely can release the new phone unlocked, if they so choose. None of us have read the agreement and know what it contains.
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Duscrom said 11:41PM on 5-05-2008
I don't like AT&T... They want $600 deposit for me to sign up with them. It's either that or get raped on the per month. Even if they had a deposit, there should be no way it goes to $600. AT&T know they are the cock of the walk now, and their prices are showing it.
I want a CDMA version of the iPhone, running on my EVDO Rev A Network. And with Sprint getting Visual Voicemail on the Instinct.. (If they can stay afloat long enough for that to release)... iPhone would be a perfect fit.
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tnkgrl said 2:58AM on 5-06-2008
Good luck with that :)
Jeff said 11:54PM on 5-05-2008
Unless the old rumor about Apple being a carrier itself is coming back. ATT has to be talking about knocking down the price for a reason...
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Quix said 1:47AM on 5-06-2008
Um, doesn't RIM get some sort of revenue sharing from carriers? I believe they do, but can't say for sure.
But if they do, and Blackberries are subsidized by carriers (which they are), why would Apple have to give up their revenue sharing to get the carrier to subsidize the iPhone?
Answer: they wouldn't.
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parity said 8:34AM on 5-06-2008
http://www.news.com.au/technology/story/0,25642,23654801-5014239,00.html
Looks like this could be true.
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SaNcTuS said 8:37AM on 5-06-2008
I personally would not like this to happen. If the price were to go to 200 dollars and be available unlocked/for every carrier. This would just become another RAZR. A great, popular, revolutionary phone then after a year or so everybody has one and you will pretty much get them for free or under 100 dollars with deals these days.
I just wouldn't be able to stand seeing a kid toying around with an iPhone and dropping it like I've seen kids with RAZRs do.
My two cents.
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Sean said 3:18PM on 5-06-2008
Elitist.
SaNcTuS said 3:45PM on 5-06-2008
lol, I worked hard for my iPhone, its one of my best purchases. I just don't want something to sink down to the point where its just offered for free. :(