toggle

AAPL Stock: 119 ( + 1.4 )

Printed from http://www.macnn.com

Analysis: Over 25% of iPhones unlocked

updated 11:30 am EST, Tue January 29, 2008

1/4 of iPhones unlocked

Over 25 percent of those who have bought US iPhones to date are using them on networks other than the intended one, says Toni Sacconaghi of Bernstein Research. Reuters quotes the analyst as basing numbers on discrepancies between Apple and AT&T, the latter of which is the only authorized iPhone carrier in the States. By the end of 2007, some 1.45 million iPhones were "missing in action," built but not subscribed to AT&T. The carrier is believed to have held 480,000 of these back as inventory, but that leaves nearly 1 million -- 27 percent -- unaccounted for.

Because people must officially activate iPhones via iTunes before use, and this directs people into an AT&T contract, any other use must involve some form of unlocking, whether through hardware or software. Apple itself has admitted that many iPhones may be unlocked, yet following last week's quarterly earnings report, it has still declined to give precise estimates.

iPhone owners can technically unlock their devices under a provision of the Digital Millennium Copyright Act, but Sacconaghi notes that this may cause problems for Apple as well as AT&T. Under the terms of a five-year exclusivity contract, Apple earns a portion of the revenue for each iPhone on AT&T's network; if the former reaches its target of 10 million iPhones by the end of 2008, and 30 percent do not attach to AT&T, revenue could fall $500 million below expectations, with a corresponding earnings-per-share drop of 37 cents.

Apple cannot, however, afford to crack down too hard on unlockers, says Sacconaghi. Eliminating hacks would maintain profit margins, but could alienate the public, shrinking sales and deterring future carriers from signing on in the US or abroad.




by MacNN Staff

POST TOOLS:

TAGS :

toggle

Comments

  1. dwoodruff

    Joined: Dec 1969

    0

    BS

    This story is a bunch of s&#@...

    I personally know at least a dozen people with iPhones, and not a single one is unlocked. Since the phone was released I have on seen only one unlocked phone.

  1. Flying Meat

    Joined: Dec 1969

    0

    hmmmm

    "1.45 million iPhones were "missing in action," built but not subscribed to AT&T. The carrier is believed to have held 480,000 of these back as inventory,.."

    And Apple has no stock in the pipeline? what percentage just never were activated? Lost after purchase? Effectively destroyed accidentally? Still in a truck hijacked in the midwest?

    I don't think there is enough actual data to base this statement on, but even so, the result might come close to the projection... Just seems sloppy to me.

  1. Jonathan-Tanya

    Joined: Dec 1969

    0

    flawed thinking

    If you sell 10 million iPhones, and 7 million are on the AT&T network, you haven't lost a single dime of revenue due to unlocking.

    The choice was 7 million on the AT&T network and no additional phones sold. Or 7 million on the AT&T network and an additional 3 million phones sold. (to use numbers from the authors example).

    It's nappy time, dreamland 'lost revenue' the author is trying to calculate...but it has no basis in fact, science, or economics.

    The fact is, someone who bought the iPhone and unlocked it...was never going on the at&t network. They would have just bought a different phone, had unlocking not been an option.

    And for millions more...Apple gets zero revenue. I won't go on the at&t network, and I also won't buy a phone I have to unlock by some silly method.

    So, take another 10 million of customers and call them 'non apple customers' and calculate how much revenue was left on the table there....I would have loved an iPhone, but I won't take either of the current options.

  1. Eriamjh

    Joined: Dec 1969

    0

    Mine's unlocked...

    F*ck you, AT&T. Apple got my money for the iPod, but you are not getting it for my phone service.

    These are all "estimates" based on very little hard data.

    The problem with the lost revenue is Apple reports 4 million phones sold and the stock goes up. When AT&T reports 2.5 million iPhone users stock goes down because investors expected Apple income from 4 mill.

    Lose the AT&T contract, Apple, and you will sell more phones.

  1. Jonathan-Tanya

    Joined: Dec 1969

    0

    p.s.

    as it turns out, unlocked iPhones, are a bridge platform.

    People who, are on long term contracts with another provider, pick up an iPhone, and then when their old contract expires, they go to at&t.

    Typically, when a contract expires, a cell company is very good about extending the contract with some bs promotion.

    The fact is, this is why checking facts and actually doing studies is important, even if modern day journalists prefer just to pull stories out of their hind end.

    Those people would have never gone to the at&t network, and just chosen a different phone...surveys have proven this. By getting an iPhone, they end up bridging to at&t at a much higher rate of adoption than the general public.

    Not only does apple make money on every iPhone sold, but the unlocked iPhone 'bridge platform' actually increases the migration to at&t than otherwise.

    Now....I could be pulling this out of my hind end too. But I'm not a journalist, and my point stands....until you know, you don't know.

    You cannot make supercilious projections about 'lost revenue'.

  1. Will53

    Joined: Dec 1969

    0

    Europe

    Lots and lots of Europeans have been hopping across the pond these days, to take advantage of the low dollar, so you find quite a lot of the unlocked ones over here. I think this tieing it up to one carrier only, was a stupid move by Apple. If that was because they wanted that special voice mail feature to work, the benefit is simply too small compared to the hassle to be tied up like this. People like choice. The phone is more than good enough to sell without one or two small features which requires it to be tied up and locked in. So, they should keep it free and add 3G when they try to sell it here.

  1. Guest

    Joined: Dec 1969

    0

    I consider unlock myself

    My iphone is unlocked and I am with ATT...but I am pissed off at the lack of obvious features that could be readilly implemented IF aApple choose to do and are not for marketting reasons ONLY in my opinion....most important for me will be ssh terminal ...and ability to pass a text from my mac to iphone via bluetooth and then into mail.( or a bluetooth keyboard... If these features do not appear soon I will unlock just to have them...

  1. Athens

    Joined: Dec 1969

    0

    unlocked phones

    the 22 people I know who have iPhones are all unlocked :)

  1. ClevelandAdv

    Joined: Dec 1969

    0

    unlocked

    I'd be willing to bet Steve Jobs annual salary that unlocked iPhones are less than 5% of the market, and likely less than 2%.

  1. testudo

    Joined: Dec 1969

    0

    Re: flawed thinking

    If you sell 10 million iPhones, and 7 million are on the AT&T network, you haven't lost a single dime of revenue due to unlocking.

    The choice was 7 million on the AT&T network and no additional phones sold. Or 7 million on the AT&T network and an additional 3 million phones sold. (to use numbers from the authors example).


    This may be "flawed" thinking, but it's how the suits who run companies, and the suits that work as analysts think. (The ol' "2000 people use our software illegally, so that's $200,000 in losses!" argument).

    Apple and the investors are expecting that revenue from their iPhone sales (which is why they want that subsidy from AT&T or whoever). Apple doesn't want to sell iPhones by themselves, because they make little money on the iPhone. At a 30% margin, that's $120. Taken over 24 months (because they're 'subscribing' the revenue over 2 years), its $5 a month on the books. Wow, the excitement.

    But that's not the money they want. They want that $10/month from AT&T and whomever, not to mention possible income from marketing and placement deals (like to put YouTube or Google Maps on the device). That's where the money is, and that's the money the investors are expecting.

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

MacNN Sponsor

Recent Reviews

IDrive cloud backup and sync service

There are a lot of cloud services out there, and nearly all of them can be used for backing up key files and folders. A few dedicated ...

Plantronics BackBeat Pro Bluetooth headphones

Looking for a pair of headphones that can do everything a user requires is a task that can take some study. Trying to decide on in-ear ...

MaxUpgrades 512GB Retina MacBook Pro SSD

Apple's Retina line of MacBook Pro notebooks have been impressive, right from their debut in 2012. Thinner than the previous model, t ...

toggle

Most Commented