Bernstein’s Sacconaghi: AT&T subsidy would dramatically boost Apple iPhone unit sales

“What happen to Apple iPhone sales if AT&T subsidizes the cost of the phone for subscribers? The answer, says Bernstein Research analyst Toni Sacconaghi, is that they would sell a lot more phones, to the benefit of both companies,” Eric Savitz blogs for Barron’s.

MacDailyNews Take: Eric and Toni obviously have each other #1 in their Fave Fives. Get iPhones, guys.

Savitz reports, “As Sacconaghi notes, there has been recent speculation that AT&T will provide a $200 subsidy for the pending-but-unannounced 3G iPhone, bringing the phone’s cost for consumers down to about $200. (Current models are priced at $399 and $499.) In a research note this morning, Sacconaghi took a look at what would happen if AT&T does choose to subsidize the next generation iPhone – and why it makes sense for both sides.”

Savitz reports that Sacconaghi “thinks that it is realistic to think AT&T’s iPhone sales could easily double with a $200 subsidy.”

“Sacconaghi says a jump in iPhone sales would likely cannibalize sales of the iPod Touch [sic], which is sold at price points of $299, $399 and $499. But he adds that the overall impact would be positive, since the iPhone is more profitable for Apple than the Touch given the fees the carrier pays back to Apple,” Savitz reports.

More in the full article here.

“Research note?” Give us a break. Wherever the wind blows, Toni goes. And Eric just can’t wait to blog it. This “AT&T subsidizing iPhones” is currently just a rumor. That, and a bunch of idle speculation, will get you an analyst job and an article on the Barron’s blog site, but it certainly won’t give you any meaningful investment advice.

21 Comments

  1. lol its funny how all the mouth pieces think everything is gonna cannibalize iPod sales…. I guess if they say it long enough… and enough time.. eventually someday they may end up being right…. I dont see that happening for a long time though.

  2. I am sure Apple has just been testing the waters so far with iPhone 1.0.

    We can expect a lot of changes with iPhone 2.0, in term of design, fuctionality and overall strategy.

    Therefore, anything can happen with the deal they have with AT&T;, Orange, T-Mobile, etc… from my prospective.

    Hopefully Apple won’t make the same mistake as they’ve done with the Mac.

  3. I don’t know how I feel about this subsidy rumor… On one hand, it’s great because it gets the phone into more people’s pockets; on the other hand, does it inherently devalue the iPhone by making it a commodity product?

  4. I laugh when I read crap like this. When customers forego one of your products in order to buy another with a larger contribution margin, it’s NOT called cannibalization!

    I suppose they just need an editor with some business savvy, so we should go easy on them.

  5. @Jay-Z,

    No. Selling a lot of iPhones doesn’t make it a “commodity product.” Commodities are products that multiple companies produce with virtually indistinguishable characteristics. Gold is a commodity because one miner’s gold is as good as another’s. The iPhone is pretty much the opposite of a commodity, regardless of the price.

  6. “pending-but-unannounced 3G iPhone”

    Unannounced. May not happen. Perhaps something other than 3G. I hope the next one is NOT a 3G iPhone, so the dumbasses that keep announcing an unannounced product will look like the idiots that they are.

  7. The most we might see is a $100 subsidy, but we will NOT see it happen only at the AT&T;stores. It will happen across the board IF it happens at all.
    Again, Apple will not hinder traffic to their Apple Stores in any way, shape, or form.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.