“AT&T may have dropped hints about Apple’s plan for the iPhone this summer, based on a report in Fortune. If you buy a next-generation, 3G-capable iPhone with a two-year AT&T Wireless contract, AT&T will take $200 off the sticker price,” Anders Bylund writes for The Motley Fool.
“If Fortune’s sources turn out to be right, it’s a rather audacious grab for market share from old Ma Bell. The discount would not apply if you bought the phone at an Apple store, so the telecom would effectively steal some retail sales from the very partner that supplies the hot product in the first place,” Bylund writes.
“Now, the current iPhone already sells out about as fast as Apple’s manufacturing partners can make ’em. We’ve even seen outright shortages… which tells me that AT&T shouldn’t need to lower prices at all,” Bylund writes.
“Unless, of course, the next iteration would be sold through multiple carriers,” Bylund writes.
Full article here.
Nobody outside of Apple and AT&T (and their lawyers) know for sure what their U.S. iPhone agreement stipulates. Imagine if it only really covered the first year and/or the first-generation iPhone (multi-year deal, but for the original iPhone only). Then, with the debut of the next-gen iPhone, it would make perfect sense for AT&T to want to begin subsidizing it. But, what would preclude others (Verizon, etc.) from doing the same (or better) subsidies?
Shouldn’t have bought an O2 one in March, grrrr
Apple fans are forever locked in the loving embrace of Ma Bell.
The discount is simply to signup 10M new customers instead of 1M new customers.
Dump your current provider and nuzzle up to Ma Bell’s big boobs!
doubt it
Whatever Apple’s deal with ATT you can bet that when ATT sells an iPhone that Apple gets exactly what share of the price it has negotiated. If ATT decides to subsidize the iPhone, they would still be required to pay Apple the amount agreed to in their contract. ATT can give them away but Apple would still get the money it wants.
It won’t. Believe me. Obviously these dumb analysts don’t remember Macworld 07 when Steve Jobs calls their exclusivity with At&T;a multi year deal.
BOGUS SPECULATION-a huge setup for AAPL drop…thanks alot rumongorers for your fantasy ideas! Does the Fortune writer have any clue about Steve Jobs??? Why would Apple do anything that takes traffic away from their stores?
This is Bogustein Fool, not Motley Fool. One of their guys loves Apple, the other one hates them…got sick of them on WSB radio years back…by the way…WSB canned them.
@Aaquib:
Yes a multi year deal. But was that multi year deal for the 1st generation iphone? Or was it for all iphones?
I sincerely doubt any truth to this rumor. For starters, it’s a GSM phone, and moreover Apple executed a 5 year exclusivity deal with AT&T;. There’s probably a buyout clause (I haven’t read the contract), but I doubt it would be worth it in the US. The non-exclusive carrier model would probably work in other countries where no deal is in effect. Don’t forget that Apple has a double revenue model on it exclusivity deals: one from the phones, another from the service contracts. Selling to an open market may sell more phones, but it would decrease revenues and profits.
I’m using mine with T-Mobile because I was happy with my plan & service but I probably would have broken my contract and signed with ATT if they were knocking $200 off the price.
@Olternaut
Good Point.
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I believe that AT&T;and Apple will amicably terminate there deal if Apple drops any subscription fees it gets from AT&T;. Think about it for a moment. Countless rumors from Belgium to Australia (and even Canada) have turned up regarding an unlocked iPhone.
It appears Apple wants to sell unlocked iPhones globally. It is possible that, due to potential revenues from the forthcoming Apps Store, Apple believe it can earn more revenue through Apps distribution on tens of millions of iPhones rather than subscription + Apps store on 6-7 million. Current hacked/Jail-broken phones would not work on the Apps store.
I do think we will see iPhone unlocked by Apple worldwide in June. Think of how many they would sell?!!?!?! Let’s look at chine with 370 million subscribers. What’s that? The entire population of the US? Then throw in another 50m in Mexico, 50m in Japan, 60m in India, 35m in Italy, 23m in Spain….
I think its a foregone conclusion we will see Apple unleash an unlocked 3G GPS iPhone with Video/Text/Audio Conferencing through iChat. The adoption rate of the iPhone combined with iChat will = Consumer and Enterprise adoption unseen before.
To me, the story here is that it’s a shame that AT&T;can’t win customers on its own merit. And, of course, that is because they suck. Any increase in customer base that AT&T;has culled over the past year has been due in large part to the iPhone. And what really sucks is that I’m sure AT&T;knows this and doesn’t care. They’re perfectly content to let Apple do all the heavy lifting in terms of bringing new service contracts to the table.
It would make sense to it. AT&T;isn’t all that bad. I have yet to have any issues with them. Plus, the hidden cost with ALL phones is that you have to sign a service agreement. So, if you want to use an iPhone on Verizon, sure, you can do it for $400, but if you buy it from AT&T;and sign a 2 year agreement, you can get it for $200, plus you get their visual voice mail and stuff.
I love iPhone speculation. It’s so entertaining watching everyone guess what Apple is doing and how they are going to do it.
The Fact is no one outside of Apple and AT&T;in the US knows. Does Apple get revenue sharing? and if so, how much? What are the terms of the exclusive AT&T;iPhone deal?
There are lots and lots of guesses but no one on the outside really knows.
If I were to predict I predict that there is not enough reliable information out there to make a predication at all.
@Steve
I agree about the GSM thing. Isn’t T-Mobile the only other provider with GSM in the US? That doesn’t help me at all here where I live, because we’re dominated by a bunch of CDMA carriers — particularly Alltel.
Maybe the next gen iPhone will have this capability, too, or as an option. I’d love it. I’d also pay a good $500 for it, with or without visual voicemail.
If not, I’m going to get a second gen Touch and pretend to make phone calls with it. This old 20-gig 4th gen iPod doesn’t get me chics anymore (which is probably a good thing, my wife of seven years would say)
BTW, I was just kidding about pretending to make calls with the Touch . . .
Perhaps the discount will be for the original iPhone while the new 3G model will come in at the current $400. AT&T;continues to sell the old model at a low price point, thus gaining new customers, and Apple sells an unlocked 3G to all carriers.
So what if the iPhone is sold unlocked in the U.S. You gonna take it to T-Mobile, the only other GSM network provider? Knock yourself out with that.
That’s true, but an unlocked iPhone will be veeeery expensive.
Apple and all the carrier who signed the exclusivity deal will share this extra profit. That’s how Apple and AT&T;will agree amicabily to re-shuffle their deal.
May 15: new job and new phone. Maybe I can convince them to get me an iPhone instead of a stupid RAZR.
ATT is not stupid to do a 5 yr deal just for first generation.
so now why Att give a $200 discount and not Apple when it is Apple that wants to/needs to sell 10 mm this year.
it doesnt make sense
The Mobile Phone world is very different today than one year ago. Remember limited phone models, remember limited services on phones, remember no Android open source option, remember the phone companies dictating what you could have and what it would cost. All gone for the better with the phone companies wising up to customer needs (iPhone) or face losing massive market share (e.g. Verizon, Motorola, Palm).
iPhone lock in makes less sense in the USA and even less sense in the rest of the world.
CDMA is great… i mean, you can just buy any phone you want and use it with Veriz…. oh.. you can’t, that’s right.
My mom is on her samsung phone with Sprint.. she had to wait 3 hours for someone at the Sprint store to take the phone numbers off her old Sprint Sanyo and put them onto her new phone – because there was no way for her to do it herself… She also can’t get the pictures that she’s taken with her phone off of her phone because she refuses to pay $20 a month for the privilege of emailing them to herself.
Verizon and Sprint are so great… who’d ever want to go with TMobile or AT&T;with their GSM phones?
It’s obvious that the $200 is to get people to move from other carrier s. The $200 from AT&T;will match the other carriers $200 charge for breaking your contract.
I wish they would offer it to work on all or most US cell providers. I was an early adopter on iDay last year and took a hit by cutting off my better carrier T-Mobile for AT&T;. The iPhone is awesome but the AT&T;service where I live sux! I had way better cell coverage with Alltell & T-Mobile. If they’d support the new 3G iPhone I’d prolly switch ASAP if their data plans are the same or better since calling in or out from home is nearly impossible 24/7 on AT&T;. And yeah, I’d take another loss on canceling another contract or I’d get an elcheapo refub Go-Phone and throw my SIM card in there and use it as a backup. However, I’d rather keep my current phone number since I’ve had it for like 5+ years! LOL
Already knew that.
I use my iPhone on T-Mobile. My wife is waiting for 2nd Gen iPhone before buying. She wants 3G which T-Mobile is finally coming to market with. Problem I hear is that ATT and T-Mobile are on 2 different frequencies and an ATT 3G isn’t compatible with T-Mobiles 3G system and visa versa. I know nothing about cellular technologies so I could be talking out my ass but I read this somewhere. I hope that isn’t correct because I want to use the new 3G on T-Mobile.
The reason Verizon cannot do this is because the iPhone will be GSM based. So, T-Mobile may do this, but they will not as they don’t have the infrastructure for visual voicemail. So, people will be pissed.
Unlock it, I’ll buy it. Keep it locked — keep it.
Uuuuuu… Don’t know how to tell you this but Verizon is more the old MaBell than AT&T;is. (Verizon is a re-conglomeration of the “baby Bell’s” left after the breakup)
So it’s the Old Ma Bell regional divisions, the Long distance division of the Old Ma Bell or Sprint/Nextel (which is a joke, trust me on that)
You tell us which is better?
All the rumours are just wishful thinking. Nothing is fundamentally different from last year in the mobile industry. Carriers still continue to dictate what features handsets can and cannot have; they still predominantly sell metered data plans, they still charge separately for ringtones, music, video, etc. They had nine months to see how giving up some of the control pays off really well, but no, they’re just as big idiots as music labels and movie studios.
AT&T;- Apple exclusive contract is for five years. There is absolutely no reason why would Apple want to change this. How could they possibly sell more phones than they already are? The inventory is always on the very low side, often selling out in many locations. Growth is phenomenal, the device is breaking all records. Any faster growth and Apple would encounter serious problems with support and service; their infrastructure simply isn’t strong enough to withstand 20 million new iPhone owners in such short time.
Keep them locked, keep them cheap ($400), keep them exclusive. I don’t want AAPL stock to tank because customer satisfaction is suddenly rapidly eroding after Apple took too big a bite.
Oh, and MDN, please don’t forget; Verizon is CDMA, so unless Apple decides to build the phone with two totally different chipsets, which is even less likely than the unlocked US model, we’ll never see it on Verizon (or Sprint for that matter).
This is pure speculation.
I agree with Bonano that Apple may be dropping the monthly subscription revenue share from AT&T;as an exchange for selling unlocked phones. AT&T;will get the extra income and possibly raise its monthly data plan fees to compensate for the 3G infrastructure costs. Also I don’t think Apple will raise unlocked iphones prices too much in order for it to reach the stated target of selling 10 million iphones this year.
There have been no shortage in Europe, that’s for sure. Carriers are lowering the iPhone price to the level of a candybar because they arent selling.
There have been some local shortage like in NYC but c’mon, only 1.7 million sold phones in Q1/2008 in total (European figures propably below 300k)..hardly anything to write home about, not to mention the bloodbath MDN is advocating.
Where is this “5 years” contract with AT&T;meme coming from?
All I’ve ever heard from Apple or AT&T;is a “multi-year” exclusive partnership. That could mean 2 years I suppose.
Anyone claiming 5 years, could you provide a link to something official?
It’s amazing how much people don’t understand mobile networks. In the US there are two totally seperate cell technologies at play. Att/tmo are 1 and verizon/sprint the other. So as a comment above noted unless the new (or future iphone) has both radio chipsets (possible) your stuck on Att spectrum.
The states will not have a retail sold unlocked device, if you can get one expect to pay top dollar as and unlocked blackberry / worldphone are still around 600+.
An unlocked iphone makes sense in europe, other areas as the cell industry is much different and people are used to moving their SIM around for the best deal. THAT is why the iphone isn’t selling right now.
Att deal is likely due to they will sell the new device at a higher price and the discount is likely to make it more attractive for new subscribers / upgrades over the current EDGE based iphone, which will likely sell off stock until it’s sold out from the channel. That is old devices phase out. So going into 2009 it will be only the 3g version. EDGE will still be updated for awhile from apple and the network will still be available so it likely has a 3-4 year lifespan.
If MDN’s take is correct on the theory of first year ATT only – then we know when the Next Gen iPhone comes out – 6-29-08!
@MDN “But, what would preclude others (Verizon, etc.) from doing the same (or better) subsidies?”
As all the others have noted in their feedback, the iPhone is GSM only and can’t work on Verizon’s network. I’m also on record saying that I’d gladly pay double the current price of the iPhone to get a CDMA version. I currently have to kuldge the iPhone’s capabilities using an iPod touch and a CDMA Treo. I’d kill to be able to ditch the Treo, but AT&T;is a deal killer for me.
@Randolph Kirkpatrick,
Apple said they had a 5 year exclusive contract with AT&T;when they released the iPhone.
Hello all. Verizon is going to change their 3G technology to LTE (Long Term Evolution) which is the same type of system that ATT is going to which is based off of the GPRS service that ATT currently has. Each of these companies will have this in place next year or so (2009-2010) by their own predictions. These same networks would make it easy (SIM chip) to switch from one to the other. Here are some links to back this up…
http://www.phonescoop.com/news/item.php?n=2920
http://www.intomobile.com/2007/09/20/verizon-switching-to-umts-based-lte-for-their-next-generation-network-100-megabits-down.html
http://www.news.com/8301-13579_3-9826437-37.html
http://www.networkworld.com/news/2008/040708-verizon-lte-network.html
I agree with Bonano that Apple may be dropping the monthly subscription revenue share from AT&T;as an exchange for selling unlocked phones. http://www.pspconverter.com AT&T;will get the extra income and possibly raise its monthly data plan fees to compensate for the 3G infrastructure costs.