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."

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RE: Hmmm
By Grast on 1/29/2008 3:45:42 PM , Rating: 2

If you dislike the spending habits of the average American, please blame the American Government during the 20's through 40's. It was during the time of the depression and after WWII in which the American government actively encouraged Americans to spend rather than save their money in order to keep the economy going. If you add in the main stream of credit cards in the 80's, you will see that American culture has been moving away from saving and into spending for the last 80 years.

One of the major indicator for the American economy is the consumer buying index. This index is a represenation of how many Americans are spending their money on excess non essestial goods and thus stimulating the economy. When this index is down, this main means that excess money is not avaiable or people are unsure of the economy and thus not spending. This has historically mean a recession is coming.

The bright side to this issues is the inclusion of 401K saving plans. Since companies are moving away from pension programs, it is very easy for the average American to set aside a large amount of money in their 401K's. It not really a savings plan but anything is better than nothing.

Now for everyone that is going to say that not everyone works for a company which offers such programs. I would say STOP thinking of working at a burger join for 20 years as a wise decision and get some education. If education is not your cup of tea, Think up a business idea and become a small business owner. Then you will either work for a company which offers 401k type programs or start you own program in your own business.

I digress. The point of my rant is simple. American culture has been steadyly since the 20's moving away from saving and increasing to spending. They did not call the 80's the ME generation for nothing.


RE: Hmmm
By Adonlude on 1/29/2008 4:04:27 PM , Rating: 2
Hey, don't listen to this guy about an education, someone needs to make my burgers! Preferably an American citizen (spawn of illegals don't count in my book).

RE: Hmmm
By jtemplin on 1/31/2008 9:31:08 AM , Rating: 2
Very interesting Grast. I wouldn't say I necessarily dislike American's spending habits. I was trying to provide an "off the cuff" explanation for the people who were saying "Omg iphone=expensive, if you buy that thing your stupid". Now I do know some people who are irresponsible spenders, but I certainly don't know enough people here (or in the rest of the world) to make a claim about the spending habits of all Americans.
Thanks for sharing, I am always interested in hearing about the historical roots of the modern condition!

"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch
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