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AAPL Stock: 99.76 ( + 2.09 )

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AmTech: iPhone 3G tradeoffs help Apple, public

updated 10:20 am EDT, Tue June 10, 2008

AmTech on iPhone 3G

Neither Apple, its investors or the public at large should be overly concerned about tradeoffs Apple has made in the pricing of the iPhone 3G, writes analyst Shaw Wu of American Technology Research. Apple confirmed yesterday that in exchange for getting carriers to subsidize the new device, it is dropping revenue sharing requirements in most cases; buyers will meanwhile have to pay an extra $10 per month on their monthly subscriptions.

For Apple, Wu suggests, any lost sharing income will be made up for by higher unit sales. The public will get a two- to five-times speed increase, and for every million iPhones sold, it is believed that investors will receive an extra $0.10-0.15 in EPS over a stretch of eight quarters, only a slight decrease over previous estimates of $0.15-0.20. Wu continues to recommend Apple stock as a buy, with a $220 price target.




by MacNN Staff

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  1. Parky

    Joined: Dec 1969

    -4

    Not in the UK

    We are not paying more for our data in the UK! US centric reporting again!

  1. Guest

    Joined: Dec 1969

    +1

    Maybe Something more

    With no downstream revenue, I would put down a bet (though not a very large one) that the AT&T exclusive may end earlier than expected.

  1. Guest

    Joined: Dec 1969

    +1

    $10/month increase?

    Try a $20 per month increase. $10 increase for the same unlimited data plan and an additional $10 for the minimum text messaging plan.

    I don't think that Apple should be worried about it's numbers short team, what I do think it should be terrified of is losing it's perch as a "different" kind of company that treats its consumers with respect, and draws in new, loyal customers with a hard-working core of dedicated users.

  1. Guest

    Joined: Dec 1969

    +1

    Texting Is Extra, Too...

    See above post... nobody is mentioning the fact that SMS messaging isn't included in that more expensive 'data' plan.

    So, let's see it added to the article!

  1. danviento

    Joined: Dec 1969

    0

    Hmmm

    Perhaps this carrier subsidy model is Apple's way of trying to get more carriers to cave to the devices minimum requirements when it comes to network support. The higher plan costs aren't pro-rated, so after the difference in price is made up, the carrier still keeps the large price and Apple continues to get a percentage from that sale.

    At the same time, there is less of a sticker shock here, so some will be more apt to go for higher data plan prices.

    Before I could justify the $60 plan because it was only $5 for my most-basic individual VZW plan (no text or data, lowest minutes), but an extra $15 a month makes it harder to make the leap.

    Whatever happened to Apple's sales model of higher up-front cost, lower operating costs? I guess a new business leg means a new, revamped model.

  1. eldarkus

    Joined: Dec 1969

    0

    re: danviento

    Since Apple is not a Phone Provider, it cant carry the high cost up front business model.

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