930 Forums
=> GENERAL DISCUSSION => Topic started by: vansmack on October 29, 2007, 01:35:00 pm
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I must say, Jobs is an f'in genius. Even if the consumers lose, this is an incredibly lucrative deal for Apple (and arguably even for AT&T).
The $831 iPhone
October 25, 2007, 12:41 pm
By Saul Hansell
Apple doesn??t chat too much about the iPhone service fees AT&T shares with it. But the good folks at the Financial Accounting Standards Board (who make rules for how companies keep their books) have forced it to give us some clues. The accountants say that if someone promises to pay you money in the future (as AT&T does for each iPhone activated), you have to report this ??deferred revenue? to investors.
All this makes Apple??s financial statement into a rather complex algebra problem. Gene Munster, an analyst at Piper Jaffray, has tried to do the math.
His bottom line is rather shocking: AT&T appears to be paying $18 a month, on average, to Apple for each iPhone activated on its network. That adds up to $432 over a two year contract. In other words, Apple will receive $831 for each iPhone it sells. (It??s a little less for iPhones sold in AT&T stores.) He can??t tell, of course, what makes up that average. Apple may, for example, receive higher payments for customers new to AT&T or those who buy more expensive monthly plans.
Mr. Munster says he was surprised by the numbers. He previously had estimated that Apple received $6.50 a month from AT&T. A carrier will typically subsidize the price of a high-end phone by about $200, he says. With the iPhone, AT&T is spreading the payments out over time, but ultimately putting up twice the typical amount.
The numbers will be harder to figure out from here on out, because Apple has started selling iPhones in Europe, where it has presumably different arrangements with carriers in Britain, Germany and France. But Mr. Munster says he figures the payments from them will be at least as much as from AT&T. And that certainly is consistent with reports that Apple has been demanding as much as 40 percent of the monthly fees from European carriers.
Still to Mr. Munster, this is incredibly bullish news for Apple investors. The higher revenue, of course, compounds Mr. Munster??s already optimistic view of the IPhones sales prospects. He figures Apple will sell a total of 3.4 million iPhones this year, 12.9 million next year and 45 million in 2009. The boom, he suggests, will come from increased features such as navigation and faster data speeds, as well as a lower price. He figures the average price of the iPhone, now $399 in this country, will drop to $300 in two years.
Mr. Munster assumes that the payments from carriers will then fall to $9 a month. As a result of this analysis, his estimate of Apple??s 2009 revenue increases from $36.2 billion to $42.8 billion. And the company??s net income per share increased by 14 percent. The bottom line: Mr. Munster??s target price for Apple??s stock, which today sells for around $184, goes to $250. (He had it pegged at $220).
All this shows how much incentive Apple has to maintain its exclusive deal with AT&T rather than to sell unlocked phones or cut deals with multiple carriers. AT&T is finding that an exclusive on the iPhone draws in new customers and lures existing ones to buy more expensive data plans. Carriers will keep paying Apple big kickbacks so long as its phones still stand out from the pack.
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I wonder how much other cell phone companies are making thanks to early termination fees
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Originally posted by pdx pollard:
I wonder how much other cell phone companies are making thanks to early termination fees
That's a great point, but seeing as how two CEO's were recently fired because of the exodus of subscribers, I'm sure it's not enough to cover the forecasts for future revenue.
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"Apple Has Destroyed the Music Business" (http://weblogs.jupiterresearch.com/analysts/schatsky/archives/009099.html)
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Originally posted by ggw?:
"Apple Has Destroyed the Music Business" (http://weblogs.jupiterresearch.com/analysts/schatsky/archives/009099.html)
The above was said by NBC Universal CEO Jeff Zucker, who wanted a cut of iPod sales (http://www.ilounge.com/index.php/news/comments/nbc-universal-wanted-cut-of-apple-hardware-sales/11764). Man, talk about your crybabies.
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Apple destroying the paper currency market (http://news.yahoo.com/s/ap/20071027/ap_on_hi_te/apple_iphone;_ylt=AkCW7uvDUt8e1.K3kCq_J4gjtBAF)
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Steve Jobs - White Collar Criminal (http://www.msnbc.msn.com/id/16373057)
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http://www.youtube.com/watch?v=br1FhO80BLI (http://www.youtube.com/watch?v=br1FhO80BLI)
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Originally posted by Venerable Bede:
Apple destroying the paper currency market (http://news.yahoo.com/s/ap/20071027/ap_on_hi_te/apple_iphone;_ylt=AkCW7uvDUt8e1.K3kCq_J4gjtBAF)
That's might be the least innovative thing I've seen Apple do in the history of the company.
Oh wait, they've been locking down the Mac kernels for years. Nevermind.
Don't worry folks, they know what's best for you so just trust them.
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Originally posted by vansmack:
Don't worry folks, they know what's best for you so just trust them.
And therein lies what many people don't like about Macs.
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right, we should trust microsoft instead
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if you "trust" any major institution, you're an idiot, and that includes both Microsoft and Apple.
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Originally posted by god's shoeshine:
right, we should trust microsoft instead
That wasn't intended to be an us vs. them comment, but instead to point out that the company most touted for being so "innovative" acts contrary to innovative principles more than just about any other company because they think they know what's best. I've just always been amazed by folks overlooking that.
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sorry, but these always seems like an us vs them. i naturally read these as if you use a mac the you are 'trusting' satan jobs, where as i rarely see the same priciple applied to the pc user world
so uh yay linux!
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Originally posted by god's shoeshine:
so uh yay linux!
Yay BeOS! See Bee Movie!
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now those ads i trust!
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Originally posted by vansmack:
Originally posted by pdx pollard:
I wonder how much other cell phone companies are making thanks to early termination fees
That's a great point, but seeing as how two CEO's were recently fired because of the exodus of subscribers, I'm sure it's not enough to cover the forecasts for future revenue. [/b]
Here's my case in point.
Can WiMax make it in the U.S.?
Sprint Nextel and Clearwire have called off their partnership to build a nationwide WiMax network, and the break could spell trouble for the technology.
By Marguerite Reardon
Staff Writer, CNET News.com
Published: November 12, 2007, 4:00 AM PST
With Sprint Nextel and Clearwire suspending their partnership to build a new nationwide wireless network using WiMax, the future looks precarious for the much-hyped technology that was supposed to revolutionize the mobile Web.
On Friday, Sprint Nextel and Clearwire announced that they had dissolved a deal signed in July to join forces and build a next-generation wireless network using WiMax technology. Together, the companies were supposed to share resources and the cost of deploying a new fourth-generation wireless network to reach about 100 million users in the next few years.
While the companies have said they are still committed to building their networks separately, the news throws into question whether they'll have the money or shareholder backing to actually get the networks built. And without a nationwide network in one of the largest markets in the world, the WiMax revolution could come to a standstill.
More on wi-max... (http://www.news.com/Can-WiMax-make-it-in-the-U.S./2100-1039-6217947.html?part=dht)
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So here you have a clearly better technology, one that will cost much less in terms of bits delivered per dollar spent, expand the reach of wireless, and provide a much faster speed for less money, and the cell companies are ditching it because the shareholders think that it's iPhone or nothing. Sprint is wrong, and unfortunately the only one that can tell them that is the CEO they just fired because he didn't land the iPhone contract. This is completely bass-ackwards thinking.
Imagine the 1Gig per second WiMax from sprint being how your desktop, laptop, gaming console and your cell phone all connect to the internet anywhere you have cell reception for one set price (around $50)? It would roll out much sooner than fiber could be brought to the majority of US households, and they're stopping it because the shareholder hype is all about the iPhone. Don't buy into gimicks - build a better infrastructure and watch the subscribers return when the hype is over (not to mention how many customers you could steal from the Cable Co's and the DSL providers).
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wow, i'm in. lets form a company to make this happen. we'll call it godsmack
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Originally posted by vansmack:
one that will cost much less in terms of bits delivered per dollar spent, expand the reach of wireless, and provide a much faster speed for less money,
one of the many problems: WiFi would cost much less in terms of bits delivered per NEW dollar spent. the current network is sunk cost, so they'd rather milk the crappy old cow they already have than spend big bucks on a new one.
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Originally posted by sweetcell:
one of the many problems: WiFi would cost much less in terms of bits delivered per NEW dollar spent. the current network is sunk cost, so they'd rather milk the crappy old cow they already have than spend big bucks on a new one.
First off, it's not wifi, it's WiMax. wifi was cute 5 years ago, now it blows.
But assuming that was a typo, I'll answer your inquiry, mister shareholder. You're already bleeding customers with your old network that doesn't really separate you from the rest of the providers - without innovating, how else do you plan to bleed the existing network and still make a NEW buck?
Innovate and separate yourself from the pack, or die a slow painful death.
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What happened to the good old days when you bought a mobile phone that, well, made fucking phone calls
<img src="http://www.oaktreeent.com/web_photos/Telephones/US-West_Old-School_Cell_Phone_Horiz_Tan_web.jpg" alt=" - " />
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Originally posted by god's shoeshine:
wow, i'm in. lets form a company to make this happen. we'll call it godsmack
Frightening, but today's TechView column (http://www.economist.com/daily/columns/techview/displaystory.cfm?story_id=10159097) in the Economist agrees with me.
I'm gonna go get me some financial backing for GodSmack....