A really good 
post over at CNET articulates what a lot of people have been speculating about since the bevy of iPhone hacks have been released.
This is all part of Apple's plan.
Apple has been known to screw its partners over before (cough**Motorola ROKR, IBM, Adobe, Microsoft etc.) albeit privately. By not taking any actions against the new iPhone hackers and leaving the dirty work to AT&T's legal team, Apple isn't helping its case. Perhaps because Steve can relate to phone haxors?
From a strictly mathematical point of view, let's look at the revenues. Apple gets 10% ish of every legit iPhone's usage revenue. Over 2 years@ $5 a month, that is $240. About the same as the margin on the iPhones according to iSupply. So about break even.
However those people taking them off of AT&T are unlikely to be cannibalizing AT&T sales - they are people stuck in other contracts...all things being relatively equal besides visual voice mail, if you are plan-less in a semi urban area, you'll go to AT&T. So it is mostly gravy.
If Apple is serious about keeping the iPhone locked to AT&T, they will release a firmware update that will seal up the holes that it has allowed hackers to break throguh. Much like the PSP vs. Homebrew PSP fight, it will be a sticky situation.
With 3G iPhones coming to Europe and predicted price drops in current iPhones, there is a lot of excitemnt in this market segment. And don't forget about WiMAX in 2008!
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Good call
That is total BS. AT&T got f'ed
Break even?
HUH???
More like pure profit!!! Apple gets the iPhone sale PLUS the revenue sharing. They don't cancel each other out.
If the get a sale to a
If the get a sale to a hacker, n+1 units of iPhone give them about $250 but they lose the $250 in revenue sharing thru AT&T
they still make $250 but would probably like to make $500
what?
[quote=admin]If the get a sale to a hacker, n+1 units of iPhone give them about $250 but they lose the $250 in revenue sharing thru AT&T
they still make $250 but would probably like to make $500[/quote]
that doesn't even make any sense. is that English?
Lost your credibility...
...the moment you mentioned iSupply's cost breakdown. That "breakdown" does not factor in such things as assembly (okay, yes that would be cheap since it is made in china), packaging, shipping, marketing and.... oh yes R&D.
I can't believe the hack "journalists" out there that hear one piece of sensationalistic headline grabbing "news" and spread it around like a wild fire. iSupply is a joke. All of their figures are estimates and only account for components - nothing else. Why any respectable journalist or news outlet would quote them is beyond me. Oh yeah - makes for a great headline.
@Orange Glo. Get high school education then come back.
n+1 cost is iSupply's point. Which means that Marketing is the same cost for no matter how many you sell. So is R&D. All of the other factors you mentioned are so minuscule at scale that they don't matter.
So the cost of making 2,000,001 iphones - 2,000,000 iphones is around $250
It's official - this site
It's official - this site sucks. from the juvenile "look - someone mentioned us on their podcast yesterday!" (yes, be excited like the little schoolgirl you are) to this absolutely idiotic post about iphone hacks being part of the plan) to the eighth grade response to someone else's criticism (I would say "very professional" - sarcastically of course, but to ask you be professional and adult before your balls drop is like asking a fat girl to just eat one potato chip - useless).
I DO admire that you guys can cobble up a site during recess.
I will thank you for inspiring me to remove this site from my bookmarks.
excellent. Good riddance
excellent. Good riddance
I second that...
I Second that, good riddance. Spare us your whiny complaints.
I agree completely with the
I agree completely with the above - goodbye!
And good riddance to you too! Glad to see you idiots all go!!
And good riddance to you too! Glad to see you idiots all go!!
jeeeeeeze
for this site sucking so much and being as junival as it is macmanager seems to be paying a lot of attention to and posting on such a "junival" site there are a lot of people griping on the comment section of this site, lay off if your not happy with it dont read it or post here. go make your own if you hate this so much. im content with it apple people have gotten really rotten and gripe a lot. makes my g4 466 powermac cry.
iPhones costs
I wouldn't support this paper rationale (because it sounds a little bit too much like a "the powers that be" conspiracy) but the figures make sense. Before you yell again, let me explain.
What iSupply calculates is what we call a "gross margin" without taking account of the assembly costs (but we can assume it is relatively cheap since it's made in Chinese factories where the work "atmosphere" is probably very far from what is allowed under the "Déclaration des droits de l'Homme"...). Still with me?
Each and every other costs you talk about are implemented when you need to calculate the "net margin". They are fixed costs. So far, I'm only repeating what the admin explained (by the way, thank you for your very interesting web site).
Let's say if the iPhones stay locked to AT&T, the demand will be only 10 million units. Then, they will make something like the gross margin ($250) minus the fixed costs (FC) divided by the number of units sold plus the 10% of AT&T average revenue per user ($250), the whole thing times the number of units sold:
Profit = ((250-(FC/10M))+250)*10M
So the more they sell, the less the fixed costs matter, the more money they make. Now, if we could estimate the fixed costs, we could probably show whether there is any interest for Apple to leave iPhones be unlocked by hackers and therefore loose part of the AT&T revenue but earn more by selling more. Let's say they would then sell 15M, and less with AT&T (7M), so:
Profit = (250-(FC/15M))*15M+250*7M
However, every good marketing people will tell you that when you screw people, you'll get screwed sooner or later... What goes around comes around. I'm not a marketing guy (hopefully!) but I tend to believe in that.
A little more info
Basically what this equation comes down to is that if Apple expects to see more users from an unlocked iPhone than it expects AT&T to lose, it makes a greater profit due to the unlocks.
Let's put some values up:
If it cost Apple $30M to develop the iPhone (FC)
And they sell 10M under a locked ATT, they make $4.9B profit
But if they allow the unlocks, and they become commonplace, and they sell 2M more iphones because of it, and an additional 1M ATT customers jump ship, they make $5.2B profit.
The situation is reversed if they have more ship-jumpers than additional buyers.
In the end, it all comes down to whether or not people are not buying the iPhone due to AT&T exclusivity. If loads of people aren't, then Apple is losing out on their sales. At the moment, due to the contract problem (and the newness of the iPhone), I would think that the number of sales would be much greater than the ship jumpers. But once everyone gets off their contracts and makes a decision about the iPhone without a contract over their heads, I think they will mostly just end up on AT&T, meaning more profit for Apple down the road.
Of course it doesn't help me, since I live in NYC where GSM is poor and Verizon CDMA is good.
is this guy wearing
is this guy wearing lipstick?
hpw'd my name become
hpw'd my name become macmanager? i've never typed that name in my life and i've never been here before. site could use some design expertise -- both in the code and the look.
yup
you guys are all fucked. Can't believe such idiocy exists here. And it is the 21st century already.
[quote=Quincy
[quote=Quincy Pince-Nez]let's look at the revenues. Apple gets 10% ish of every legit iPhone's usage revenue. Over 2 years@ $5 a month, that is $240. [/quote]
??? 2 years or 24 months... 5.00 a month... 5 x 24 = $120.00 and 240.00 comes from where????
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