RBC: iPhone to go non-exclusive, subsidized
updated 04:50 pm EDT, Mon May 5, 2008
RBC on Apple iPhone plans
Sales of the iPhone in 2008 will exceed Apple's projected goal of 10 million and reach 14 million, in part due to some radical changes to the device's distribution schemes, argues RBC analyst Mark Abramsky. He first agrees with suggestions that AT&T may subsidize the iPhone by up to $200, reducing the price of an 8GB model to $199; this could increase sales by between 50 and 100 percent. In exchange, however, Apple would likely have to agree to drop revenue sharing, which has been extremely lucrative but an obstacle to adoption in countries like China.
Abramsky further supports the notion that Apple will scale back exclusivity in some regions, possibly dropping it entirely. Countries currently without the iPhone (such as Australia) would be primary candidates, but Abramsky notes that the strategy could also applied to the US, opening the iPhone to T-Mobile subscribers. This though would require a mutual deal between Apple and AT&T, overturning their five-year exclusivity agreement.
Fully unlocked iPhones are another possibility, but these would probably be sold at the same price as current ones, says Abramsky. The major advantage would be in sales outside North America, where unlocked phones are more accepted; in theory, the rate of adoption could increase by two to three times.
Abramsky predicts that even with unlocked $400 iPhones, Apple's margins should not be significantly hurt. A gross margin of 35 percent is expected, an improvement on last quarter's 32.9.
smart!
05/05, 05:36pm reply
if they would only do this... I think at this point Apple is better off growing market share than chaining themselves to AT T. The more market share they earn, the faster they can kill/cripple RIM and seize the high ground in smartphones like they did with MP3 players.
Good luck getting AT T to let them out of the exclusivity agreement though. If I were them, I'd be way against that. Why help T-Mobile?
climacs
Fresh-Faced Recruit
Joined: Sep 2001
i think
05/05, 05:39pm reply
part of the reason for exclusivity with AT&T was that US carriers are soooo far behind the rest of the world... Apple had to convince someone to make the investment in their network to enable visual voicemail etc, which they should have made long ago.
Once 3G becomes widely available on T-Mobile... why be wedded to AT&T?
climacs
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Joined: Sep 2001
I'd go for it
05/05, 06:09pm reply
I'd have one in a heartbeat if it wasn't locked to AT&T. I considered getting on on eBay and unlocking it after each Apple update, but decided against it.
Get rid of the crappy carrier, and put me down for one.
Mr. Strat
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Joined: Jan 2002
Let the trickle down...
05/05, 06:10pm reply
...begin...
Perhaps the $99 iPhone will be corporate stocking stuffers at 2010 Christmas parties...
;-)
bobolicious
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Joined: Aug 2002
The Truth Is . . .
05/05, 06:45pm reply
. . . that ALL carriers are hated, Mr. Strat. Volumes of people now with AT&T left Verizon because they hated them. Scores of people now with Verizon left AT&T because they hated them. (Evidence: Members of my own family.) A hard and fast fact of consumer life in the USA: The grass is always greener with a different company. The b******* that did me wrong with Company A do not exist in Company B . . . at least such is the impression of most consumers.
Guest
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Joined: Nov 1999
The truth
05/05, 07:11pm reply
"The grass is always greener with a different company."
Actually it's more like the grass is less brown with another carrier...
Tralthamidor
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Joined: Jun 2007
No carrier complaint here
05/05, 10:52pm reply
I have no complaints with my current carrier.
I wouldn't think of giving money to Verizon due to their predatory business practices. Don't think much of Sprint either, so that kinda narrows it down
I used to write knowledge base articles for my carrier, so I'm familiar with people's biases.
Mr. Strat
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Joined: Jan 2002
So revenue sharing....
05/06, 02:03am reply
Revenue sharing is the carrot that Apple wisely held on to just in case it needed to back out of the AT&T contract. I bet AT&T would scrap the agreement if they were the ones who got to keep all of the revenue themselves ... or maybe they would just have a jump on the visual voice mail stuff.
I just wonder how Apple is going to re-set its accounting if they drop revenue sharing.
MacnnChester
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Joined: Jun 2007