Reuters reports that AT&T will shoulder part of the price of the 3G iPhone, from $200 to $500 per phone, according to analyst estimates. With current versions of the iPhone, the carrier pays Apple a percentage of monthly subscriber revenues, a practice that's ending.
"With dilution running at levels we never fathomed, we believe AT&T is assuming more risk than the previous arrangement," says JPMorgan analyst Michael McCormack. "We question whether a handset exclusivity agreement should warrant such a dramatic financial impact while other successful carriers have not found it necessary."
AT&T said the subsidy, aimed at boosting volume sales, will cut earnings per share by 10¢ to 12¢ in 2008 and 2009.
Apple, on the other hand, is expected to see its earnings dip only about 3¢ a share this year, according to some estimates, as it forsakes the percentage of recurring monthly service revenue it got from AT&T's iPhone users.
Editor's note: Previously, over 50% of iPhone buyers have been customers new to AT&T. Moreover, the iPhone recently lost market share to RIM and Palm, due to more aggressive pricing and marketing.
If AT&T and Apple want to keep this gravy train rolling, then they've obviously made the right moves. How much all of this costs each player in relative terms is a pointless endeavor at this point...
What's your take?
- 1Password 5 now available for iOS w/ extensions, touch ID support
- iCloud data gets 2-step verification, new app-specifc passwords
- Apple posts Android switcher guide
- Charlie Rose Tim Cook Interview
- 4 million iPhone orders in first day, up from 2 million for iPhone 5
- Podcast: iPhone 6, Watch, Apple Pay, etc, etc
- New iCloud storage plans rolling out
- Macworld Magazine ends, continues online
- Apple Watch
- The iPhone 6 and 6 Plus
- Apple Pay
- Podcast: iCloud security tips, TheFappening, Apple Event, plus more
- Wired on how iCloud accounts may have been hacked
- My iCloud security tips
- Podcast: Brown M&M, Apple event, wearable, tattoos, Dropbox vs iCloud + More
- That FLIR iPhone heat camera can steal PIN numbers
- Apple special event set for September 9
- Dropbox changes to a single 1 TB Pro plan
- August Smart Lock begins shipping
- iPhone 5 Battery Replacement Program
- Otterbox announces Alpha Glass screen protector
- OS X Yosemite allows screen sharing over iMessage
- Final Cut Pro suite gets minor updates
- Visual history of Apple designs
- Evernote Webclipper for Safari get big update
Browse and search for more articles