AT&T iPhone subsidy

AT&T reportedly paying a $325 for each iPhone 3G, an unprecedented dollar amount that would put the device well above competing smartphones and mobile devices in terms of carrier-supplied financial assistance. Oppenheimer analyst Yair Reiner told Barron's that typical smartphone gets a subsidy of about $200, but the iPhone will command a dramatically higher subsidy because of "AT&T's faith in the iPhone's ability to attract new subs and increase ARPU." The report also claims that AT&T is paying Apple an extra $100 for subscribers signed up in Apple stores, for a total commission of $425.

Previously Apple did not accept up-front subsidies for the iPhone, instead relying on monthly revenue sharing agreements with wireless carriers.

The Oppenheimer analyst projects iPhone unit sales of 15.2 million in calendar 2008 and 33.2 million in 2009.

The iPhone 3G carries a lower price, but it also costs about half as much to make, according to a report in the EETimes. The report says tests by teardown specialist Portelligent put the bill of materials for the new model as low as $100. That should help offset the 3G’s lower $199 price point. Portelligent estimates that based on materials alone, Apple’s gross profit on the iPhone 3G totals about $99, compared to $229 for the previous version. Apparently, Apple is counting on sales volume to make up the difference and Apple may also be receiving a payut for each carrier activation, although the revenue sharing plan with carriers, as with the original device, is no longer in place.

by MacNN Staff