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AT&T Subsidizing iPhone 3G By $325

Submitted by Edward Kirk on June 19, 2008 - 3:49pm.
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According to Oppenheimer analyst Yair Reiner, US carrier AT&T is subsidizing the iPhone 3G by $325, not $200 as previously suspected, placing Apple's total cost for each device at $525 for the 8GB and $625 for the 16GB. In addition, he also states that AT&T is paying Apple an additional $100 for each iPhone 3G that is sold in Apple Stores for unknown reasons.

Normally, most smartphones are subsidized by around $200, making the iPhone's subsidy unusually high, which he says, “reflects AT&T’s faith in the iPhone’s ability to attract new subs and increase ARPU.” He also notes that it could be good news for Apple. “Rivals must scramble to hit a lower, less profitable price point,” he writes. He says that with this new information, it now appears that the iPhone 3G could be as profitable as the original, and with payments up-front.

Because of this, he is maintaining his estimate that the iPhone will reach 15.2 million units sold by the end of this year, and 33.2 million by 2009.

[via Tech Trader Daily]

Submitted by Parrothedd on June 19, 2008 - 4:45pm.
Makes sense. It is a very good deal for AT&T since they are getting out of the recurring revenue share with Apple. If we think that share was say, $15 a month for 24 months, the "saved" revenue to AT&T is $360. Easily covering the subsidy. When you add that to the fact that AT&T is also hitting the subscriber for another $15 a month ($10 more for data plan plus $5 for the 200 SMS messages that used to be included with the 2G data plan), AT&T is making out.

The additional subscribers won over from other carriers is just the icing on the cake!

I would also guess that the additional payment to Apple for phones sold in Apple stores is a negotiated amount that is intended to cover labor impacts to Apple.

Submitted by Pearldrm7 on June 19, 2008 - 5:35pm.
It was always hard for me to believe that ATT was getting a good deal from Apple, but when they continue to make these kinds of deals, they must be making a killing just like Steve Jobs wallet.

What

Submitted by tre flip on June 20, 2008 - 2:16am.
Does this mean that we pay 325.00 instead of 200.00 now?

Submitted by imagine engine on June 20, 2008 - 10:21am.
Quote:
Originally Posted by tre flip View Post
Does this mean that we pay 325.00 instead of 200.00 now?
It could mean for those with an existing contract that they may have to pay as high as $525 for the 8GB and $625 for the 16GB since the pricing quoted by Apple of $199 for the 8GB and $299 for the 16GB are based on new activations.

it's about time!

Submitted by Dttah214 (not verified) on June 20, 2008 - 11:00pm.
look, folks. at&t is not the devil. think about all the other service providers we have and which one would have been a better match. have faith in their product, and don't compare them to the darkside. it could've been worse, the iPhone could be under sprint.