iPhone users are paying Apple twice for their phones, seriously!

Published on October 25th, 2007

Posted by SN in General

CNet – October 24, 2007:

The exact details of AT&T’s revenue-sharing agreement with Apple have not been disclosed, but one analyst thinks that over the two-year life of a user contract, the amount exceeds the actual price of the iPhone.

Silicon Alley Insider spotted a research note from Piper Jaffray’s Gene Munster estimating that Apple is receiving $18 per month for each iPhone subscriber, under the revenue-sharing agreement between the two companies.

That would mean that over the life of a two-year contract, AT&T will pay Apple $432 per iPhone subscriber.

20 users responded in " iPhone users are paying Apple twice for their phones, seriously! "

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# 1 Boyd said, on October 25th, 2007 at 5:15 pm

No wonder they’re fighting tooth and nail to lock down those puppies.

# 2 pedro said, on October 25th, 2007 at 5:25 pm

And if daddy steve asks for more, he won’t finish the sentence asking for more when the macfans will be having a 3 block line already

# 3 Angel H. Wong said, on October 25th, 2007 at 5:47 pm

Is it sleazy? Very much so, but it is brilliant from a sales point of view.

# 4 hhopper said, on October 25th, 2007 at 6:35 pm

Apple you greedy bastards.

# 5 doug said, on October 25th, 2007 at 6:55 pm

#1. Exactly. All this speculation about whether Apple is required by contract to block unlocking the iPhone misses the point – this is free money! AT&T gets a bunch of new subscribers, and Apple gets a piece of the monthly, along with the substantial profits from the hardware itself.

#4. I am shocked, SHOCKED to find CAPITALISM going on here …

# 6 jaywoody said, on October 25th, 2007 at 7:08 pm

What? do you think the actual cost to you, are the FREE cell phones.

# 7 Joey said, on October 25th, 2007 at 7:15 pm

Actually, it’s AT&T who’s eating the difference since the iPhone plans are comparable to AT&T’s other plans. It’s still a good deal for AT&T considering it steals customers from rivals for near zero acquisition cost, while hurting margins of rivals in turnover expenses.

# 8 Andrew said, on October 25th, 2007 at 7:50 pm

I love how people want to say the iPhone is ridiculously priced and that you have to pay soooooooooooo much for it.

You paid the one-time fee of purchasing the phone and now you’re paying a monthly service charge (very similar to other “smart” phones) and that is outrageous! You’re being ripped off around every corner! Shame on Apple and AT&T charging for their product and services!!

# 9 Robert said, on October 25th, 2007 at 8:03 pm

This phone was a problem to begin with. Paying that much for a phone that was locked onto one network only was already trouble. Isn’t it just better now to buy this from France (unlocked) or somewhere else and then use it here? Is the iPhone really that good that other phones can’t compete? I can find some nice ones from Nokia and other makes that do way more than this “brick” (exactly what it is) can do, such as video, expandable memory, freedom to use on any network.

Why go for this phone in the first place? As John Dvorak pointed out before, the NeoNode from Sweden was the original iPhone with the Touch screen capabilities.

The iPhone looks nice, but that’s about it. I think it’s features are better suited for the iPlayer or whatever you call it.

# 10 god said, on October 25th, 2007 at 8:32 pm

Why should I be surprised to see the anti-fanboys whose life depends on their Apple-pan-Stevie hangups – also don’t know squat about business?

Cripes. When I worked for ADT, we paid $850 per customer to mom-and-pop alarm companies – just to move them to our monthly. Back in the day, when home customers paid $25/month for monitored alarm service, it took 34 months to begin to break even. It still ended up being profitable.

# 11 Glenn E said, on October 25th, 2007 at 9:33 pm

5.- “I am shocked, SHOCKED to find CAPITALISM going on here …”

In case no one else caught this, Doug was making a comparison joke to “Casablanca”, about the chief of police finding gambling going on at a place he frequently gambles at. Anyway.

I don’t agree that it’s “free money”. Apple basically had to get a carrier for its new phone. As apparently you can’t make a phone that works for all the carriers, in this lame ass country. So they bribed AT&T with the deal that they get to keep all but $18 a month, of the service fee. How do we know that Motorola and Nokia doesn’t charge even more? Why do you think the their phones are practically free, but only if you stick with the two or three year service plan? Maybe Motorola gets $35 a month. It would be interesting to know ALL the facts, before labeling Apple as greedy.

# 12 GregA said, on October 25th, 2007 at 9:42 pm

Curiously, the social-networking-enforced-group-think-blog-o-sphere has very little to say about Microsoft’s earnings report…

# 13 Jake said, on October 26th, 2007 at 1:01 am

SO?… iPhone is fantastic… iPhone is the best mobile phone eye have ever owned. Who cares how much money Apple and AT&T are making on me… Eye sure don’t care. iPhone upgrades will continue to blow the competion away for many years into the future. Next generation iPhone is 3G. Take that Apple haters ! ! !

# 14 Hello!!! said, on October 26th, 2007 at 3:19 am

It’s not like people didn’t know that Apple screws their customers every chance they get. The iPhone is just the latest example. The IMac is another example, people pay $1800 for a computer they could get rom Dell for half the price. People get ripped off and love it.

# 15 Angus said, on October 26th, 2007 at 4:31 am

So, basically, Apple is receiving the cash from the 20 data plan. I have no problem with that. Other than the cost of the data plan and the cost of the phone, my plan is unchanged. It’s an awesome device. It’s now around the price of a blackberry, but with a personal, not business focus. I love mine. I’ve never understood the venom of the whole locked network thing. The hate some people have of ATT is incredible, though Verizon has done the same thing to me. The iphone is a great first step for apple. Now, if they would only figure out an easy way to store the headphones…

# 16 pedro said, on October 26th, 2007 at 4:44 am

#8 I don’t pay extra for my pocketpc phone. I get chatged the same ammount I was being charged with my previous plain-vanilla phone. All I did was slip my old sim in.

People love getting ripped-off, there’s no other explanaition

#13 drop the mirror. You’re talking to a public blog. Affirmations are private.

# 17 GigG said, on October 26th, 2007 at 5:24 am

So that means AT&T is getting $2 for the unlimited internet service they are providing me. I can live with that.

I did the math. It was time to get a new iPod and it was time to get a new phone. The iPhone was by far the best deal for me.

# 18 Joshua said, on October 26th, 2007 at 11:46 pm

I just read that the iPhone will be selling for 1100 pounds in the UK. Thats a lot of money for something that 92% of the people who buy it don’t need.

# 19 pedro said, on October 27th, 2007 at 7:11 am

#18 It’s puurrty, you know? It’s the new boob tube.

# 20 emg said, on December 18th, 2007 at 1:54 pm

That’s called a SUBSIDY! Almost all cell phones are subsidized. This is different from the standard, cash up front one off subsidy but this is a different play all around with closer cooperation and network service modifications made for the phone.

Plus, what do I care as long as I don’t pay more than someone else with the same rate plan at the same carrier? I was with AT&T to begin with and, aside from the unlimited data plan, which can be cancelled immediately after sign up, my plan didn’t change at all.

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