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?
- Apple event scheduled for March 9th
- Pebble announces follow-up Time watch
- Report: Apple retooling in-store genius bar appointments
- YouTube launches family-friendly app for kids
- Apple announces two new data centers in Europe
- New Apple ad features Martin Scorsese and iPads
- Podcast: Apple Car and iPhone 6 to 6+ upgrade?
- Office Suite for iOS adds iCloud storage
- Modern Family episode shot on iPhones, iPads, MacBook
- Dropbox adds new iOS 8 extension
- New Yorker profile highlights Ive's leadership
- Apple Car rumor hits the right checkboxes
- Two-factor verification now active on iMessage and FaceTime
- Gassée on Apple redefining what's possible
- Apple looks to power California footprint with 25-year solar deal
- Apple uses store shelves to control iPhone designs leaks
- Podcast: Super Bowl, Apple Photos, New Verizon Rates, Plane Crash App
- New Photos app available in pre-release of OS X 10.10.3
- Report: Apple pitching new plan to TV industry
- Latest Verizon promo trims pricing on some plans
- Report: Jobs bio movie expected October 9th
- Apple Mystery Van spotted in Bay Area
- Apple to convert sapphire glass factory to data center command center
- Newer Tech replacement batteries for older unibody MacBooks
- McCracken on TUAW shutting down
Browse and search for more articles