Wednesday, June 11, 2008

How Much is Apple Getting from AT&T for Each iPhone 3G?


Now that AT&T is no longer delivering revenue sharing, I wonder how much they're giving Apple upfront for every iPhone activated?

A clue may be in the price Vodafone is selling a contract-free iPhone 3G in Italy. They are selling the 8 gb for 449 euros, which is about $691, and the 16 gb for 569 euros, which is about $876 (according to Google's rate conversion for today).

If we assume those prices are what Apple would sell the iPhone in the US, then AT&T is reimbursing Apple $492 for the 8 gb and $577 for the 16 gb.

If we look back to revenue sharing and say Apple was getting $15 a month per contract, that comes out to $360 for each iPhone over a span of two years. Could AT&T have upped the ante in order to get the more draconian activation rules in place?

If I were AT&T, I would definitely up the ante, especially knowing just how powerful the new enterprise features in the iPhone are. They have to be salivating at the thought of getting contracts from the corporate world--the easiest big money out there. Plus, they are making an extra $10 per month on the $30 data plans. If Verizon didn't regret passing on the iPhone the first time they saw it, they have now with the iPhone 3G.

I did not think Apple would allow the kind of shitty customer experience that comes with phone activation for the iPhone. But I think all that upfront cash changed their mind.

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