“The coming release of Apple’s iPhone will give the tech titan more than a toe in the mobile phone market, according to one observer,” Scott Moritz reports for TheStreet.com.
“The hotly anticipated iPod-inspired cell phone also will give Apple a nice handle on a partner’s pocketbook, a Wall Street analyst said Tuesday,” Moritz reports.
“The iPhone, due out from Apple in June, commands enough potential sales leverage that AT&T is willing to share some of the proceeds, says American Technology Research analyst Shaw Wu, in a note Tuesday,” Moritz reports. “According to the two-pronged revenue sharing arrangement, AT&T will pay Apple a commission for each new customer and a cut of the customer’s monthly payment, writes Wu.”
“‘We believe this recurring revenue stream is high quality and adds an additional degree of stability and predictability to Apple’s financial results,’ writes Wu, who increased his share price target to $145 from $118 based on the juiciness of this deal,” Moritz reports.
Full article here.
iPhone, bitch!
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@ Dbl Standard
Also, I don’t recall the record labels giving Apple apple any long term exclusivity rights to their catalogs. Apple is giving AT&T a multi-year exclusive deal to use the iPhone to leech customers from their competitors. Something which I suspect the iPhone will be good at.
Perhaps the headline should read
“Behold the power of AT&T: AT&T to pay Apple for new customers, cut of monthly service charge
@Bob,
Well, for one, it doesn’t sound like Apple asked for the kick-back. It sounds like AT&T is willing to help the customer and their new hardware partner, Apple, at the same time. I don’t recall the record companies ever wanting to do anything nice for the consumer. Actually it seems they are doing everything in the world to alienate them.
Please read: The downing of Internet radio
http://playlistmag.com/weblogs/ipodblog/2007/04/internetradiodown/index.php?lsrc=plrss
I beheld a powerful business alliance once.
No wonder his Steveness moved the Leopard developers over to iPhone. He made an very reasoned decision of which product would hurt less to delay. No doubt that a delay of the iPhone intro would cause more damage to Apple than the delay in Leopard. Let’s face it, Tiger still kicks ass, and it’s no real hardship to continue using it a few months longer. There will be much tearing of clothes and pulling of hair and dropping of shareprice if the iPhone doesn’t ship in June.
“When record companies wanted a cut of the iPod profits, we all cried foul. Why is this any different? Why is Apple getting a cut from AT&T?”
Because its capitalism, and when someone wants what you got, you have leverage.
Record companies have no leverage.
AT&T is seeing potential far beyond “minutes” when it comes to talk time because the iPhone is more about a Breakthrough Internet Device than it is about a phone. As a portable internet device, the phone was a natural side effect.
Think about all the time users will spend on the internet. AT&T has.
I should restate that:
As a portable internet device, the phone was a natural side effect as well as the most likely and logical gateway to true portable internet.
ChryssyOne …
Brutal, babe… brutal ….!!
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I still think (tho) — you’d be fun at a party !!
Roberto..
Good read !! .. but remember the lessons of the 18th Amendment ..
When the things which the public really wants are prohibited.. fortunes are made in the underground !
ShoutCast can become the catalyst … A safe bet would be others in the Open Source community would provide Mac solutions as well !
@ ChrissyOne: Wow, I heard you were a picky slut.
Don’t worry, babe, it’ll clear up in a month.
and the claws come out !
rrowr !!
Mark, that’s why I reckon the moniker “iPhone” sells it short. It ain’t just a phone, it’s your portable digital life. They shoulda called it iMobile (or Mobile Me!)
This Chrissy rivalry could prove to be very interesting!
145… wow
ChrissyOne’s got bollocks, ChrissyTwo. So watch out.
MDN: “told” as in “I told you so”
If this is true, Apple has redifined the US cell phone business!
Yeah and it needs redefining, it’s years behind Europe and a decade behind Japan.
iPhone may struggle in Europe without 3G, here’s hoping that Apple include 3G before European launch.
Doggone:
Your numbers are out.
Apple aims to sell 10 million phones worldwide by the end of 2008, so assuming AT&T will be paying them a cut of 10 million units is overly optimistic as it’s a US-only carrier. The market is far more developed outside the US, so I doubt very much that carriers would be paying Apple rebates, although stranger things have happened.
Vanillacide said, “If this is true, Apple has redifined [sic] the US cell phone business!
Yeah and it needs redefining, it’s years behind Europe and a decade behind Japan.
iPhone may struggle in Europe without 3G, here’s hoping that Apple include 3G before European launch.”
Oh please, stop repeating the FUD. The lack of 3G is for the Cingular version of the iPhone, because their infrastructure is almost wholly void of 3G capabilities at this time. Jobs made it clear that 3G is in the iPhone’s future at the 2007 MWSF keynote.
I think I just craped myself.
<a >”I still think (tho) — you’d be fun at a party !!”</a>
Indeed. ^_^
@ doG
But have you got the minerals?
-c
Okay, what were we talking about???
“I still think (tho) — you’d be fun at a party !!”
Oh how I wish I could edit. Lil’ help, MDN?
-c
MW: ‘party’
Wait —- how about lowering the prices to us Consumers!!!!
Forget the “kickbacks” to Apple…what about us buyers of the products? We want better products and service at lower prices.
The price is not going to come down THAT much. iPhone will remain a premium product, like iPod. This adds to its lust-iness..
When the record companies demand a cut of hardware revenue (which Universal got from Zune, all $12 of it) that means that it becomes more expensive to produce the hardware. You have to add that 10 bucks on somewhere, because the cost of production can’t just magically go down. So you either have to add that on to the retail cost of the player, or the hardware manufacturer eats it as a loss. Microsoft already looses money on every Zune, and that caused them to loose more. The idea is that they keep the price as low as possible to build market share, and, eventually, recoup that loss. But either way, the demands of the record companies create a demand on the consumer, who will, in the end, be the one that pays more for zero added value.
Apple, however, actually knows how to make money on hardware, and they do so quite well. AT&T is in no place to demand that Apple pay them a royalty, because AT&T knows that Apple is going to build the phone that everyone wants. So, AT&T pays Apple for signing customers up to their service. Apple, in turn, can now afford to discount the iPhone, or just make more profit. That decision will depend on how much people are willing to pay for the phone. But here the consumer wins, because there is no added cost to pass on to them. And Apple wins, because they can choose more profit or more sales. And AT&T wins, because their customers have access to the best phone and a subsidized data plan.
Record companies want money for nothing, and they don’t mind if that cost is passed on to you, the music buying public. AT&T is making an investment to attract more subscribers by adding value and reducing cost.
Capisce?
-c