[PCWorld]

Post your comments for AT&T May Pay Dearly to Retain IPhone Exclusively here

[sickpup]

Would cares about the sale price of the device. I have seen 3Gs for free and as low as $99 on a regular basis which is still cheap for these types of phones. The problem with the iPhone is service plan costs are ridiculous. There is no way I am paying $80 a month for a cell phone. No data plan should be required and they should definately not cost the same as the phone plan. Fix that and the sales will go through the roof.

[TechieXP]

But Apple would still have a high profit margin. Because they would be sell 3 times as any phones. It call sales through volume. Apple just doesn't get it. Even if iphone dropped in cost to $150 on a new plan...they would still make more money if 3 people signed up from different carriers vs one on ATT. If ATT is going to continue to have iphone then they need to take that miney and make the network better. That si why RIM is doing do uch better. Not just because the phone is better...they are on better networks as well. I have the Storm. but Verizon's network for data usage sucks ompared to Sprint which has a better data network. Data needs more bandwidth then people talking and Sprint has dedicated more bandwidth too smartphone users. I compared transferring data on Sprint vs Verison..and Sprint is much faster...ATT doesn't even coe close...even T-Mobile is faster with data than ATT.

[smax013]

sickpup said:

Would cares about the sale price of the device. I have seen 3Gs for free and as low as $99 on a regular basis which is still cheap for these types of phones. The problem with the iPhone is service plan costs are ridiculous. There is no way I am paying $80 a month for a cell phone. No data plan should be required and they should definately not cost the same as the phone plan. Fix that and the sales will go through the roof.

The problem is that AT&T makes WAY more money on data plans than they do on voice plans (at least as I understand it). Thus, AT&T wants you to get a data plan...thus, they require it...even if you don't want it. Remember that their goals don't necessarily match yours.

[smax013]

TechieXP said:

But Apple would still have a high profit margin. Because they would be sell 3 times as any phones. It call sales through volume. Apple just doesn't get it. Even if iphone dropped in cost to $150 on a new plan...they would still make more money if 3 people signed up from different carriers vs one on ATT.

Maybe. Overall profits are both a function of individual unit profit margin and raw number of units sold. The higher the price (and higher the profit margin per unit), the fewer units sold. The lower the price (and lower the profit margin per unit), the more units sold. The optimum price & units sold for most profit is usually somewhere in the middle.

Would Apple sell more units if they had deals with Verizon, Sprint, etc? You betcha. Would they make more profit? A tougher call. Most likely yes, but not necessarily. It is entirely possible that AT&T would give Apple enough of a "kick back" (i.e. subsidize the iPhone sales) that it make more sense for Apple to keep with only AT&T. Keep in mind that AT&T makes their money with the services (voice and data plans), not generally with the hardware sales. The same is true with the other phone companies. Thus, if more phone companies offered the iPhone, it is most likely that upfront prices would tend to go down under the competitive pressure. As such, it is likely that Apple would make substantially less per unit.

This is the same reason why Apple does not "play" in the "upfront price is the bottom line" computer market...the profit margins are a lot lower and you have to sell a HECK of a lot more units to make the same profit. Apple chooses to only sell in the "premium" level markets because they can get higher profit margins in such markets. And that is a big reason why Apple's profits are much better than the likes of Dell. Of course, that means that they will likely never gain dominance in the computer market (I doubt they will ever get past about 15% of the OS/computer market unless they enter more of the various "computer markter levels"...or unless Microsoft does something REALLY, REALLY stupid...i.e. stupid enough to kill the company...but that is extremely highly unlikely.

[TechieXP]

Ok well lets compare...

Apple would even have to drop the cost of the phone...lets keep the phone @ 199.99 with a 2 year agreement which is what is sold most. Now multiply that by how many phone Apple sold last year. Now multiply that by the total number of possible carriers they could sell the phone through. Because of so many carriers the costs would go down...which eans Iphone would dominate on ever possible carrier. Even if they dropped the phone too $150 they would still have a high profit.

Compare MSFT. MSFT makes $70 on every computer sold with Vista. Last year Dell sold 14.7 million units in a single quarter...and that is only one OEM. Consider adding all the other OEM as HP was number 1 because they sold even more computers...so that number doubles...then the next oem...the numbers triple. Look @ Wal-Mart...if they didn't have so much over-head look how much more money they could make.

Now compare how much jack MSFT has compared to Apple. Yes I agree with you Apple selling at high price gets more profits. Well compare...for every single MacBook at $1500 that is sold...it takes another computer company 2 computer sales to eqial the same thing. But Apple is only selly 2.5 million Macs every quarter vs Dell who is selling over 10 million per quarter...so who is making more money? Certainly isn't Apple.

Apple doesm't get it. They are all about pricing gouging. And that is why RIM is still dominating the smartphone market...while iphone sales have stalled...RIM is steady increasing. And the phones cost the same...why is RIM doing better? Because they sell at least 3 versions of their phone through several outlets...including ATT.

As the article said...making iPhone use EV-DO isn't a huge deal...there are only 2 carriers who use it...Sprint and Verizon..both whom have better networks than ATT. Sprint has the best and faster data plans period...and they don't price gouge. The last plan I was on before y contract ended was 129.99 that includes unlimited everything. To get the sae thing with ATT on iPhone will cost you over $200 with taxes applied. ATT will make plenty of money even if they drop the costt of the phone. But they don't have too..bec most phones are 199.99 with a 2year...ATT is just as greedy as Apple and that is why they are willing to drop more cash on Apple to get to keep iPhone. Even with sales dropping. There are other people who want an iPhone who don't like ATT bec they are to expensive and they have a crappy network. What ATT is afraid of is...Verizon and Sprint would over better plans to use with iPhone and ATT would sure lose business because EV-DO is a better network period...and Sprint is even better than Verizon...at least on data.

Based on the last contract..Apple isn't even making as much off each sale as they did at first. Apple is only getting money based on the sale of the phone. They were getting a piece of the deal on the contract too. Not anymore. ATT is getting all of that. That is why ATT isn't going to let go or desn't want too. I don't care about ATT..I care about everyone having an equal chance to get the phone on the service they like. If Apple stays with ATT...ATT will make less sales on iPhone an more on RIM..and with Storm making a comeback with a WIFI version...it could secure 1 place over its sibling the Curve. The Storm is better than iPhone in so many ways...just teh software on the first sucked...and the new version doesn't need you to press the glass...it works more like iPhone and if they fixed the software issues it will surpass iPhone very quickly. Its already in 3rd place. Either Apple wants to sell more phones and make more money or they don't.

Look at Apple history...staying in a niche has garnished them to stay way behind everyone else. If Apple had played their cards right back then..MSFT wouldn't have stood a chance and if they don't grow up..history will repeat itself.