An infographic with some very good info:
http://gigaom.files.wordpress.com/2009/12/go-iphone-r7.png?w=600&h=5275
http://gigaom.files.wordpress.com/2009/12/go-iphone-r7.png?w=600&h=5275
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Who is getting rich off the iPhone?
- Thread starter Axemantitan
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I still hate when parts of a device are broken down and the fact that these parts don't magically work together isn't explained. There's no telling how much R&D went into the original phone and the updates, plus all the cash going into constant software updates, which we iPhone users never pay for.
But looking at AT&T's plight, I would highly suggest EVERYBODY move toward tiered data plans. I would really like to get one of my parents an iPhone, but they wouldn't use squat on the data end. Maybe give a 100MB data plan at $5 that would essentially get you by checking e-mail and the occasional use of Google Maps. Then go up to maybe $15 for people like me who aren't breaking 1GB. I mostly use mine as an iPod and phone, but then as a news reader and info seeker. I don't go nuts on YouTube or do any other video streaming. When I do audio streaming, I don't even do that really much. Get up to $30 for the 5GB on there now, and then go to $40 or $45 for a plan with a higher limit. Include tethering in the $15 and up plans and you'll make bank.
But looking at AT&T's plight, I would highly suggest EVERYBODY move toward tiered data plans. I would really like to get one of my parents an iPhone, but they wouldn't use squat on the data end. Maybe give a 100MB data plan at $5 that would essentially get you by checking e-mail and the occasional use of Google Maps. Then go up to maybe $15 for people like me who aren't breaking 1GB. I mostly use mine as an iPod and phone, but then as a news reader and info seeker. I don't go nuts on YouTube or do any other video streaming. When I do audio streaming, I don't even do that really much. Get up to $30 for the 5GB on there now, and then go to $40 or $45 for a plan with a higher limit. Include tethering in the $15 and up plans and you'll make bank.
I'm not sure what the point of all this is. So Apple makes money on the iPhone. Who expects that they wouldn't?
I think your figures are significantly flawed, however, especially for AT&T.
According to your figures, in 3rd Quarter 2009, Apple sold 5.2 million iPhones. For the purpose of this exercise we will leave aside the significant portion of these phones which were sold overseas and assume that AT&T accounts for all 5.2 million of these phones.
At $550 each, Apple took in about $2.86 billion in gross revenue. Subtract from that the cost of manufacturing of $930 billion, and you get 1.97 billion. From that you have to subtract the cost of advertising and R&D, etc., which are hard to estimate. Still, Apple is making a hefty profit, probably upward of a billion dollars. Good for them.
AT&T, on the other hand, stands to take in $720 over the next two years from data plans for iPhones sold in Q3 2009, for a potential revenue of $3.74 billion. Subtract from that the up-front cost of $2.86 billion paid to Apple, and you have $980 million. Of that, a significant portion has to go into the costs of providing service, including significant upgrades to AT&T's data networks. Also take into account the cheaters who cancel data service or quit their contract early. I'm sure AT&T doesn't lose money on the iPhone, but they can't be making anything like the $2 billion you claim.
I think your figures are significantly flawed, however, especially for AT&T.
According to your figures, in 3rd Quarter 2009, Apple sold 5.2 million iPhones. For the purpose of this exercise we will leave aside the significant portion of these phones which were sold overseas and assume that AT&T accounts for all 5.2 million of these phones.
At $550 each, Apple took in about $2.86 billion in gross revenue. Subtract from that the cost of manufacturing of $930 billion, and you get 1.97 billion. From that you have to subtract the cost of advertising and R&D, etc., which are hard to estimate. Still, Apple is making a hefty profit, probably upward of a billion dollars. Good for them.
AT&T, on the other hand, stands to take in $720 over the next two years from data plans for iPhones sold in Q3 2009, for a potential revenue of $3.74 billion. Subtract from that the up-front cost of $2.86 billion paid to Apple, and you have $980 million. Of that, a significant portion has to go into the costs of providing service, including significant upgrades to AT&T's data networks. Also take into account the cheaters who cancel data service or quit their contract early. I'm sure AT&T doesn't lose money on the iPhone, but they can't be making anything like the $2 billion you claim.
The whole point of the OP was to show how rich AT&T is getting after the iPhone. Like Latinist wrote, the figures in the graphic are highly inflated. I would assume that's to support the premise that AT&T is getting rich? What seems to be ignored here is who's really getting rich. Apple.
Precisely. I would be surprised if AT&T was doing much more than break even on iPhones, even with the $30 data plan. I imagine they are mostly in it to attract new voice customers and to finance upgrades to their data network.
You guys forget some things. There are more countries than the USA. There are more providers than AT&T.
ATT has a lot of money tied up with the iPhone, that could've otherwise been used for improvements.
As pointed out in the graphic, and mentioned even by ATT, it takes about 1.5 years for them to recoup the iPhone subsidy from each customer.
(That's one reason why ATT stock dropped earlier this year, after they disclosed that their profits were down due to over a half billion dollars tied up in those subsidies.)
And they're paying high subsidies as well.
Or worse, they're stuck with millions of iPhones they can't sell, like in Russia and in India, places where official sales flopped.
As pointed out in the graphic, and mentioned even by ATT, it takes about 1.5 years for them to recoup the iPhone subsidy from each customer.
(That's one reason why ATT stock dropped earlier this year, after they disclosed that their profits were down due to over a half billion dollars tied up in those subsidies.)
And they're paying high subsidies as well.
Or worse, they're stuck with millions of iPhones they can't sell, like in Russia and in India, places where official sales flopped.
Wrong.
AT&T gets as much revenue as Verizon
AT&T spends as much as Verizon
AT&T money is not tied up with iPhone, just read their financial
By the way, profit is different than cash flow or operation cash.
And wrong again.
iPhone is not a flop at certain foreign countries.
The people who can afford an iPhone in those countries already bought them unlocked from the US and other places.
You can't deny that AT&T has laid out billions of dollars in iPhone subsidies that they won't be able to recoup for some time. Sure, they have "assets" in the form of 2-year data contracts, but much of that is already spent buying people iPhones. They won't make a profit on the millions of iPhone 3GS they've sold in the past six months until sometime in 2011!
How about some links to back up your claims? Thanks!
AT&T Sees iPhone Subsidies Hurting Earnings - shares fall at news. Okay, I agree. It's not tied up in subsidies per se. But they're not helping.
iPhone is not a flop at certain foreign countries.
The people who can afford an iPhone in those countries already bought them unlocked from the US and other places.
The India article above says:
a senior Airtel executive confirms analyst estimates that total official iPhone sales here have yet to touch 20,000 handsets. Vodafone, which has a lower-key advertising campaign, has sold even fewer, the analysts estimate. Even including sales on the black market, where the phone sells for half the $700 sticker price, the total only increases by an additional 15,000, according to an Indian customs official. That's puny, especially since Indian cell-phone providers have added nearly 20 million new customers since the iPhone's launch last year.
As for Russia, a similar story told below. 400K is not a lot for a country with 91 million subscribers on just the iPhone carriers.
Three major carriers sell the iPhone in Russia, having collectively agreed with Apple to sell 3.5 million units over a two year period. But they have managed to move barely 250 thousand phones in the first six months of availability, according to Gladkova, and market players there a feeling distinctly glum about prospects for meeting their goal.
Corruption also hampers legitimate iPhone sales in Russia, where some 400,000 black market devices made it into circulation before the official release
Cheers!