How Apple Will Make Money From The Ever So Cheap iPhone 3G

This image described by AT&T, Apple, Steve Jobs, iPhone 3G, iphone 2, business, Iphone_3g_front_2

Apple has cut the price in half for the iPhone 3G. At $200 (8GB) and $300 (16GB), Apple is just barely breaking even on the actual sale of the device. So why did they do it?

How Apple (and AT&T) will profit from the iPhone 3G

  • AT&T is subsidizing the iPhone
  • For every iPhone sold, AT&T will have to pay Apple a specific amount (the actual figure isn’t publicly disclosed but it’s gotta be around $300)
  • That’s it – so in reality, it’s not just your $200 that theSteve Jobs is banking on, it’s AT&T’s payment as well
  • Why is AT&T doing this?
  • The iPhone Data Package – $30/month (regular) & 45$/month (business)
  • AT&T has exclusive rights to the Apple iPhone and now the Apple iPhone 3G in the US, so all that dough is straight to pocket. Every iPhone requires a 2 year contract, so at $30/month AT&T makes their (estimated) $300 back in 10 months – and the other $420 is pure profit. And that’s just the data plan (don’t forget the other $30-$100 you’ll be forking over monthly for minutes).
  • And of course, don’t forget the App Store
  • App Store sales are split 70% 3rd party developer/30% Apple (so far the apps we’ve seen haven’t been more than $10 – but I’m sure some will be)
  • AT&T and Apple will both be sittin pretty when the iPhone 3G hits the streets

How is this different from the original iPhone?

  • With the iPhone 1.0, AT&T did not actually subsidize the iPhone
  • There was no automatic payment of the estimated $300 for every iPhone sold
  • However, Apple received a cutback from every service payment AT&T got from their iPhone subscribers
  • The new method is better for both companies – the much more affordable iPhone 3G will obviously end up in more hands (and therefore more mothly payments for AT&T and overall sales for Apple)

How does this effect you?

  • Most importantly: Cheap iPhones!
  • However, there is a catch:

          You can only activate your iPhone 3G in the actual Apple or AT&T store

          You cannot activate your iPhone 3G from home via iTunes

          They claim the in-store unlocking process will take "10-12 minutes"

This is AT&T’s (and Apple’s) anti-unlocking defense

          There will be no unlocked iPhone 3G’s!

          (With the new financial plan described above, AT&T can’t afford the loss)

          Furthermore, you can’t buy iPhone 3G’s in the Apple or AT&T online store

The lines on July 11th will be massive! But so worth it…

This image described by AT&T, Apple, Steve Jobs, iPhone 3G, iphone 2, business, Iphone_line