“Due to the unique terms of iPhone sales and pricing, analysts for Piper Jaffray said Thursday they believe AT&T has agreed to a revenue sharing plan with Apple where the iPhone maker would receive a small portion of each subscriber’s monthly service fees,” AppleInsider reports.
“‘While we do not know the exact details of the agreement, we conservatively estimate that AT&T gives Apple $3 per month (over the life of the 24 month contract) for every iPhone customer already with AT&T and $11 per month for every new subscriber,’ lead analyst Gene Munster wrote in a note to clients,” AppleInsider reports.
Specifically, the analyst believes the monthly revenue sharing involves $3 per month for service and data fees related to all iPhone users, and AT&T gives Apple an additional $8 per month for iPhone customers who transfer service to AT&T in order to use the iPhone,” AppleInsider reports. “Munster is modeling for Apple to sell 3.2 million phones in 2007, 12.4 million in 2008, and 45.0 million in 2009.”
More details in the full article here.
[Thanks to MacDailyNews Reader “MacVicta for the heads up.]
“Munster is modeling for Apple to sell 3.2 million phones in 2007, 12.4 million in 2008, and 45.0 million in 2009.”
I think these numbers are the best forecast I have seen. they really look obtainable
not bad, since at&t doesn’t have to subsidize the phone in the plan.
This explains the iTunes/iPhone activation system.
Apple wants to be sure that they are in control so that AT&T can’t screw them by not recording who is transferring service from other carriers.
Noone really knows the numbers…it’s a stretch, but Apple may have already met the 2007 3.2 million phones. I think there will be a real shocker next week.
Go AAPL…now if only the Wii would get NTDOY off the pink sheet, as it’s halo is sucking new buyers in droves…and yes, that is for another forum.
Really recommend the whole article.
“These estimates may seem bold, but we believe Apple can garner 7.0 percent of the handset market share in North America and 2.8 percent share in the rest of the world by 2009,” he told clients. “We assume Street pricing on the iPhone will have dropped to $338 by 2009 from $542 in 2007. Additionally, it is critical to keep in mind that the iPhone combines iPod and mobile handset, which should attract more than just a mobile phone customer.”
No… it is $300-$1100 per month. Must be. RIM*job gets 10-40% per month. iPhone is SOOOO expensive that they have to get att least 100-400%.
Seriously. Apple must get something as the RIM does, because they provide support+upgrades for the iPhone. No one does that for free. End of discussion.
Analysts are like lawyers or security experts.
Hmmm…as a cynical observer of how to get the most of any given situation, it would seem that it makes more sense for Apple to try and sign deals with either the number two or number three network in any given market, so long as they have acceptable levels of coverage.
If you make $72.00 or equivalent from an existing customer but you make $264.00 for a new customer, it doesn’t take a rocket scientist to realise that you should be trying to ink contracts with networks who need new customers and are willing to pay for them. Interestingly, if you took that view, the target network in France is SFR who are owned by our old friends Vivendi-Universal: now what do they own that Apple could possibly want.
Now if you’ll excuse me, I just have to go and read my copy of “The Prince”…
I don’t see apple being able to sell 45 Million phones in two and a half years.
Not in the US only.
Hm.
Thats a big increase from 2008 to 2009.
So wouldnt that mean a new phone is in the production, that is set to be more affordable.
we can expext it around the entrance of 2008.
So, in 2009 Apple will be making about $2 billion per year in revenue just from this deal? Wow, how can I get some of that!
Analysts are just making this up out of whole cloth. There’s no reason for AT&T to send Apple money. If Apple wanted more money, they’d just raise the price of the phone. Which they did — you may have noticed it’s not cheap.
Just remember that the current iPhone might not be the best selling model as it’s quite expensive. A Nano size iPhone is something that would make more sense for most people.
Marc Page,
Buy some AAPL stock… that’s how you get “in” on that revenue stream.
Marc,
My guesstimate was $2.75 billion, but the key concept here is that nearly all of that cash is pure profit given that Apple takes its ordinary trading costs out of the revenue from the phone itself.
Given that the 45 million phones might have an average selling price of – for sake of forward-looking argument – $425.00, Apple would be – with the 24-month accounting rules in place – be looking at revenues of over $19 billion and gross profitability of about $3.5 billion.
If Macintosh sales carry on increasing at the present rate, Apple should also have be receiving gross profitability of around $2.5 billion from that product line, whilst iPods may well still be contributing $2.0 billion in gross profits.
On that basis, about $41 billion in tangible sales will yield around $8.0 billion in gross profit whilst iTS, software. Other miscellaneous items will probably deliver another $6.5-8.0 billion in sales which brings the total to, let’s say, $48 billion. If you assume that Apple maintains its current record on turning gross margins into net profits, the result would normally be about $5.25 billion.
But – going back to the $2.75 billion in commissions – Apple would probably receive the financial equivalent of a nitrous oxide boost (as if it were needed) and report a profit in 2010 of around $7.85 billion which is good for a market capitalisation of around $250 billion which is AT&T/Microsoft territory.
It’s also worth remembering that four or five years of that kind of performance and Apple will easily accumulate another $25 billion to add to its already enormous pile of cash.
Ben, the iPhone will be available in the whole world by 2008, so those numbers are not that amazing, 45million is only a 5% market share.
Ben; Try to remember that the US is not the whole world. It’s just a small portion of it. (a nice portion, but still only a portion.)
Ben said
“I don’t see apple being able to sell 45 Million phones in two and a half years. Not in the US only.”
Message to GM/Ford:
See? It’s all about product.
Make a better mousetrap….
@ MCCFR: I came up with close to the same number – $2.3 billion – given an average of $5 per phone per month (rough average for a mix of new and existing AT&T customers buying iPhones) for 12 months, and just using the lesser estimate of how many iPhones will be sold this upcoming year.
If this rumored revenue sharing plan is real, that is an AWFUL lot of cash AT&T is pretty much just giving away. And the amount is only going to get more massive as the iPhone gets more popular, especially if cheaper/more models start coming out. I don’t think there should be a doubt that we’re seeing the success of the iPod all over again, and at a substantially accelerated rate, but imagine if Apple got $5 per Pod from the recording industry (in fact, there’s a stronger case for Apple getting that kind of deal from them than from a cell phone company). The profit staggers the imagination.
I would never have predicted such a concession by any phone company a month ago, but now that the iPhone is such a hit it seems almost expected. Still, the device wasl an unproven commodity when this would have been negotiated, so that can only mean A] AT&T knew a winner when they saw it, and B] Jobs must have told them straight up that if they didn’t agree to his terms for the exclusive rights, he was just going to sell an unlocked phone. Or maybe one that Apple would provide the minutes for. Or one that worked on Skype. Either/any must have really scared them shitless.
Give ’em credit for knowing when they were licked (Verizon sure didn’t), and understanding the money they’d be making regardless, but man-o-man … thanks to Apple we are living in some very unique times.
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