October 29, 2007
Apple the real Alchemist
So why are we calling the Cupertino giant an Alchemist, well that is because only Apple is capable of earning close to $432 on a phone selling for $400. Well Apple pulling in a decent amount from AT&T on every iPhone activation was no secret, however no one knew the figures till now. It was thanks to the Financial Accounting Standards Board (who make rules for how companies keep their books) who forced Apple to give some clues into the AT&T iPhone deal. New York Times went into the depth of the matter and the findings are really astonishing – AT&T pays Apple $18 per month on an average for each iPhone activated on its network. This adds up to $432 over a two year contract. So Apple receives $832 for each iPhone it sells.
Apple must have surely worked out a similar deal with carriers in Europe, Canada and Asia where the iPhone will be released in a few months. Even with around 250,000 unlocked phones being sold worldwide (I myself have one) surely people will be lining up to buy one when it is released in the respective countries.
Moral of the story buy AAPL.
All this shows how much incentive Apple has to maintain its exclusive deal with AT&T rather than to sell unlocked phones or cut deals with multiple carriers. AT&T is finding that an exclusive on the iPhone draws in new customers and lures existing ones to buy more expensive data plans. Carriers will keep paying Apple big kickbacks so long as its phones still stand out from the pack.]
New York Times via BGR