Are unlocked iPhone sales really so bad for Apple?

“While its revenue-sharing agreement with AT&T is kept under wraps, Charles Wolf, an analyst with Needham & Co., believes the carrier pays Apple $10 per iPhone-brandishing subscriber per month of the two-year contract. While Apple still earns admirable margins on each iPhone it sells, missing out on this cut of monthly phone bills would cost Apple $300 million to $400 million in revenue and profits for every million unlocked phones sold. Although Apple posted sales of $24 billion in 2007, such lost revenues could become more significant as the iPhone becomes a bigger part of Apple’s overall business,” Olga Kharif and Peter Burrows report for BusinessWeek.

“But are unlocked phone sales really so bad for Apple? In countries where the iPhone isn’t yet legally available, unlocked devices may function as part of the company’s hype machine. Every time someone flies home with an armful of iPhones purchased at a local shop or online, it revs up awareness of Apple’s brand. That, in turn, could make it easier for Apple to strike more carrier distribution deals and make a case for better revenue-sharing terms. After all, unlocked devices sell for as much as a 70% premium to Apple’s retail price on foreign gray markets,” Kharif and Burrows report.

“Indeed, it’s possible that Apple has had a change of heart about the unlocking question. Soon after the iPhone was released last June, Apple issued an update to its iTunes software that rendered some unlocked iPhones useless. While the company has continued to add similar code into recent releases of iTunes, it clearly isn’t looking too hard for ways to foil the efforts of its million or so unlocked customers,” Kharif and Burrows report.

Full article here.

16 Comments

  1. My iPhone is unlocked because I can not have one officialy where I live. Everybody who sees (and touches) my (unlocked) iPhone just wants to have one right away. Apple should take me under contract for promoting. ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  2. @Apple Cider:

    *CUSTOMERS* sign up for 2 years with AT&T;. Apple’s exclusive deal with AT&T;runs for 5 years.

    I still don’t understand why I would want to unlock my iPhone. Would it be so that I can flee from evil AT&T;? To where? Evil Nextel or evil Verizon or evil Sprint? They’re all the same. Why intentionally forego features that led me to buy the phone just to spite AT&T;? I understand that some folks want iPhones where they are not yet offered, and that’s fine, but hacking the OS and/or hardware in my iPhone just to have my own way seems like cutting off my nose to spite my face. I’m REALLY happy with my iPhone. I will never use anything less again. AT&T;has the best coverage in my area, and they are only as painful to deal with as any of the other carriers.

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