backtop


Print 33 comment(s) - last by jtemplin.. on Jan 31 at 9:34 AM

Analysts describe the number of unlocked iPhones as "astounding"

Apple’s iPhone was arguably the hottest piece of consumer electronic for 2007. Those who purchased iPhones were expected to activate new contracts on exclusive wireless networks in the U.S. and parts of Europe. This proved difficult for those who desperately wanted iPhones, but were either unwilling or unable to commit with AT&T – such as those who live outside of the officially supported territories.

Such restrictions have led savvy cell phone enthusiasts to acquire iPhone hardware, but evade the attached contract. Those who wish to run iPhone have to unlock the mobile before it may run on any outside GSM network.

According to analysts cited by Bloomberg, around 1 million of 3.75 million iPhones sold last year were unlocked to run on outside networks. Since Apple receives an estimated several hundred dollars in royalties for every iPhone contract, Toni Sacconaghi of Institutional Investor magazine believes that Apple is losing $300 to $400 million in future revenue due to the abundance of unlocked phones.

"The prevalence of unlocked iPhones presents a significant strategic dilemma to Apple," said Sacconaghi, adding that unlocked iPhones generate 50 percent less revenue and as much as 75 percent less profit than those under contract. Furthermore, new carriers may be reluctant to sign with Apple due to the unlocking market.

The prevalence of unlocked iPhones is something Apple is fully aware of, but doesn’t appear to be addressing. "The number of iPhones bought with the intention of unlocking was significant in the quarter, but we are unsure how to reliably estimate the number," Chief Operating Officer Timothy Cook told analysts during Apple’s first-quarter results reveal. "We are unsure when all the recipients will activate."

Unlocked iPhones aren’t ideal for Apple’s business model, but aren’t completely bad either. Mike Abramsky of RBC Capital Markets wrote in a report that unlocked phones, "though a headache for carriers, are financially positive for Apple, and in our view bode well for global iPhone demand, and for Apple exceeding its 10 million, 18-month target."



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

$400 vs. $0?
By enlil242 on 1/29/2008 2:39:34 PM , Rating: 2
Well, I bought an iPhone when the price was down to $399. It was a bit more than the average smartphone, but the features I find great outweight the featrues that are missing. (e.g. activesync)

Here's the rub I found. I cannot get AT&T service in my home. I literally get "0" bars. I worked with AT&T for several hours over 4 days trying to find out why. (I live in Chicago). Their recommendation was to return the phone and they cancelled my contract without any fees.

Now, I could have taken the phone back but I instead unlocked it for use with my work t-mobile SIM. To me, this scenario doesn't hurt apple at all. They made a sale on the hardware and also have me as a spokesman for the product. (For better or for worse)

As far as the caveats to unlocking... To not be able to upgrade right away when new features are introduced is a bit of a pain, but I'll take what I can get for now. Also, I find the 3rd party apps I have access to offsets alot of the features Apple introduces in their firmware updates... We'll see how the SDK is managed.

Also, AT&T's plans are very competitive. I would be paying at least the same or more with TMobile (If I was paying for it, that is).




"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone

Related Articles













botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki