June 23rd, 2008
AT&T may pay Apple $325 for each iPhone 3G sold
I wrote a post about how it seems that AT&T was going to be the big winner when the iPhone 3G is launched in a couple of weeks due to the increase in data and text message rates and the monthly subsidy that will no longer have to be paid to Apple. According to one analyst report, AT&T may have some fairly significant up front costs before they start seeing the benefits of long term subscriber fees. AT&T is subsidizing the iPhone this time, much like the other mobile phone purchases made in the United States and may be paying Apple as much as US$325 for each iPhone 3G that is purchased.
Oppenheimer analyst Yair Reiner stated that the usual mobile phone subsidy is US$200 so $325 for the iPhone is pretty significant. While $200 may be a value for feature phones and some smartphones, looking at subsidized versus non-subsidized higher end smartphones like the Treo, Blackjack II or AT&T Tilt shows that the subsidy for these types of smartphones may actually be something like $250 to $350 so the $325 value isn’t that surprising.
Don’t worry about AT&T though, since they will make up this $325 and a bit more with the increased data and text message rates. Plus, with the new lower initial out-of-the pocket price for new subscribers we may see a lot more iPhones flying off the shelves next month than when the first generation iPhone started off at $599 last year.
Looking at my AT&T account, I am eligible for an upgrade discount and will most likely be buying the iPhone 3G. However, AT&T still hasn’t revealed all of the pricing details so it remains to be seen how much I will be paying on 11 July.
Matthew Miller is an avid mobile device enthusiast who works during the day as a professional naval architect in Seattle. See his full profile and disclosure of his industry affiliations.
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