“The iPhone user interface is extraordinary, but the business model Apple has concocted for the iPhone is unprecedented and almost unbelievable. Here’s how it works: Apple sells iPhone hardware at a tidy profit and maintains complete control of its margins across its product line as Apple sets pricing itself without the confusion of carrier subsidies and rebates. Apple gets a cut of the service revenue the hardware generates. Apple maintains a separate billing relationship with the customer and uses that to sell content to users (music, movies and ringtones now, with games almost certainly coming soon) and takes a cut of that revenue as well,” Avi Greengar, Principal Analyst, Mobile Devices at Current Analysis Inc., writes for RCR Wireless News.
“However, like an MVNO [Mobile Virtual Network Operator], Apple doesn’t have to deal with any of the hassles of buying spectrum, building out networks, or maintaining them. Unlike an MVNO, Apple doesn’t even have to worry about managing billing for voice and data, or managing customer service. Apple also gets to piggyback on top of the carrier’s retail distribution network and advertising instead of competing with them. Apple’s model includes all the benefits of being an MVNO without any of the risk, and all the benefits of being a high-margin hardware vendor without many of the usual carrier constraints,” Greengar writes.
Full article here.
Excellent perspective. One that those whining hackers and haters just don’t understand.
Becoming an MVNO (hidden partnership with a single carrier) is Apple’s ace in the hole. AT&T;must’ve calculated a greater benefit to being a known partner than a hiddern partner. In effect, AT&T;got a great product and the positive benefit of linking their brand to Apple in exchange for paying Apple monthly revenue, and allowing Apple to use AT&T;’s distribution/retail network, advertising, and cell billing.
Well, I switched from Verizon to ATT…
so ATT got my dollar… which would not have happened before.
Enough with the glossy screen whining already! At least you can see the content in bright sun. The Razer I dumped was worthless outside.
Read carefully this article. It implied that American peoples are dumbs :
« In the U.S., carriers are the gatekeepers to consumers; it is hard to imagine selling high volumes of unlocked phones in the U.S.— the educational costs alone would be staggering (“It will work with any carrier in the U.S. that uses GSM technology on the following frequency bands…” Good luck with that.) »
The same article make a statement that the Apple plan is working in Europe. No yet! Because contrary to his affirmation there is no deal between Apple and Orange (sic). You know why? Because the Apple lawyers didn’t read french (and other european) laws that prohibite forced “joint sales” between phones carriers (networks) and hardward firms. Laws there authorised “joint sales” but not “forced” joint sales. That why there is some water in the gaz pipeline of Apple in France and eventually in the rest of Europe… Even in U.K., I am not sure that the deal of Apple there is legal…