Apple shares jump as AT&T pricing suggests higher subsidies for device

“AT&T Inc. said Tuesday that the latest version of Apple’s iPhone will go on sale July 11 and that the company will eventually let customers buy the handset without signing an annual contract,” Jeffry Bartash and Dan Gallagher report for MarketWatch.

“New or current customers of AT&T who are eligible for an upgrade would be able to buy an iPhone for $199 to $299 with a two-year contract, as the company previously announced. An activation fee ranging from $18 to $36 would apply,” Bartash and Gallagher report.

“AT&T also said it would sell the iPhone without a service contract at some point in the future, though customers would pay a much steeper price: $599 for the 8-gigabyte version and $699 for the 16-gigabyte model.
The company did not specify when that option would become available,” Bartash and Gallagher report. “Shares of Apple jumped more than 3% by early afternoon.”

Full article here.


  1. “Did any body noted that the “iPhone guy” from the guided tour is really a computer animation? I just note it.”

    Come on, if that was true he would be more lifelike and animated and certainly less creepy.

  2. What’s interesting here is that most analysts have expected the subsidy to be between $300 and $350. Turns out that it is more like $400. If Apple gets $600 for a device that costs $180 to manufacture and ship to channels, $420 per device is quite a hefty sum. Now, if they get $700 for a $200 machine, that’s even more — $500 in profits.

    With the first phone, the larger model was vastly outselling the smaller one, at $600 vs $500 retail. There is little reason to believe the same won’t be the case this time around.

    Even with conservative estimates, if subsidies are indeed what the pricing structure suggests, Apple should be raking in an average of $450 for each iPhone sold.

    If Apple sells 30 million phones in the next year and a half, that will translate into over $13B in profits. Entire 2007 brought in $4B in profits. This is colossal.

  3. Hopefully, you’ll be able to put the unsubsidised (full price) iPhone on a Go-Plan (pay as you go), where you only pay for what you use. In the end, it just might be the least expensive choice, over the life of the device.

  4. Has anyone done the math? $199 for the phone. $36 subscriber fee. Then $200 to break your contract = $525. That’s cheaper than just buying the phone. Of course they could make you pay the first month’s service which would pretty much make it even.

  5. Does this mean that at some point in the future you’ll also be able to buy them at an Apple store at that price and never set foot in an AT&T;store? You can buy a subsidized phone at an Apple store. You just have to activate it there.

  6. This is no big deal. Why would the hackers pay $600, add $300 to cover transport costs and profit, when their customer can buy the iPhone through an authorized carrier for around $200. You’d have to dislike the authorized carier a lot to do that.

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