New iPhone/AT&T information offered by analyst

Seth Weintraub
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November 24, 2009
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Stock Analyst Turley Miller offers some of his research as it refutes many of the claims made by analyst Brian Marshall (video) yesterday.  Among them:

  • AT&T's subsidy for the iPhone is $400, not $450 as Marshall states.  Best Buy buys 16GB iPhones from Apple for $542, and sells it for $199 with a 24 month service contract. AT&T reimburses Best Buy $400.  Therefore, Best Buy's margin is $57/iPhone.
  • That subsidy wouldn't change if other carriers offered the iPhone as Marshal states.  Tim Cook stated at a earnings call that it hadn't in other countries where they went from exclusive to multiple carriers that the subsidies didn't change.
  • iPhone users represent about 14% of AT&T’s total wireless customer base.  AT&T has roughly 11.3M iPhone users. On the June call, AT&T said it had nearly 9M iPhone customers. AT&T has 81.6M wireless subs, with 63.4M being postpaid.
  • He's heard from sources at AT&T the contract runs until the end of 2010.  Ugh.

via Daring Firball

Comments (14)

9to5Mac Noob (not verified) | November 24, 2009 - 2:51pm

No surprise there. Who's to say one is more reliable than the next. It's all pure speculation.

9to5Mac Noob (not verified) | November 24, 2009 - 4:17pm

Best Buy only makes $57 per iPhone sale? That seems to be hardly worth the trouble and very hard to believe. By the time you factor in the cost of space, employees, and taxes they make nothing on a big ticket item.

9to5Mac Noob (not verified) | November 24, 2009 - 4:57pm

its the accessories that they make the money on

Cory Schulz | November 24, 2009 - 9:04pm

Best Buy is all about accessories. Cases, headphones, car chargers, FM transmitters. My iPhone car charger cost me like $30 for a piece of plastic with some wires and resistors and a little red light. These things can not be expensive to produce. 

9to5Mac Noob (not verified) | November 24, 2009 - 2:59pm

With cell phone subsidizations now reaching to $400,  it is no wonder that Verizon has decided to charge a very reasonable $350 contract cancellation fee to its customers.  Not doing so seems irresponsible.

pk de cville (not verified) | November 26, 2009 - 6:36am

Is it very reasonable for Verizon to charge $350 14 months into a contract? 

 

Perhaps they could charge $175, which, BTW, is the prorated cancellation fee charged by AT&T. In other words, 12 months into a contract the fee would be less than $100.

Turley Muller (not verified) | November 26, 2009 - 3:55pm

VZ reduces the termination fee $10 for every month into the contract. 

Tallest Skil (not verified) | November 24, 2009 - 3:12pm

About the end of the "contract", there are two options:

He's right, meaning no Verizon iPhone until 2011. "End of 2010" implies the middle of the fourth revision life cycle, with a dual-band in 2011.

He's wrong, meaning potential for a dual-band iPhone next year at product introduction time at WWDC.

9to5Mac Noob (not verified) | November 24, 2009 - 3:14pm

Daring firball? Sounds even more like a font! Or a cheese ;)

9to5Mac Noob (not verified) | November 24, 2009 - 3:16pm

I knew that idiot was full of crap when I watched that video the other day. It's sickening how so-called "experts" get it wrong all the time.

9to5Mac Noob (not verified) | November 24, 2009 - 8:53pm

I highly doubt this. It makes now sense. Qualcomm and Apple are in talks right now to put their new dual chipsets in the the iPhone. And I highly doubt the contract runs through 2010. I'm sure the in June, when they release  the refresh to the iPhone that they will be announcing a new partner. Otherwise, exclusivity would end at the end of 2010, and then what? We all wait 6 mos. to find out what's going to happen next? Gimme a break.

Turley Muller (not verified) | November 24, 2009 - 10:45pm

Best Buy also makes money on the bounty or sales commission. Ranges from $50 to $150. Plus BBY makes money on its Black Tie protection program. 

So, BBY brings in much more than the $58 margin on the handset. 

Free iPhone 3G S (not verified) | November 25, 2009 - 12:57am

Even if you are only making $57 per sale that is a lot of money when you consider how many of these things have been sold worldwide