More iPhone Financial Wrinkles

Posted by Zealot on Jun 12, 2008

closeThis post was published 6 years 3 months 5 days ago which may make its actuality or expire date not be valid anymore. This site is not responsible for any misunderstanding.

dliphone209a In a story appearing on Reuter’s website, AT & T, while still not giving too many details about the dollar and sense behind the new iPhone 3G deals, indicates that they are viewing this as an investment that will only pay off in the long term.

The phone service provider is stating that it’s earnings per share will drop between 10 and 12 cents in 2008 and 2009.

However, it is the following quote that I find the most interesting/disturbing.

There would be penalties for users who do not activate the iPhone in the first 30 days, AT&T said, in a move aimed at reducing the number of customers who buy an iPhone and tweak it so that they can use it on another network.

Penalties unless you activate the device promptly? Sounds like Apple/AT&T is taking yet another page from the Microsoft playbook in order to try to stop the hackapolosa that happened after the last iPhone release.

Zealot (839 Posts) - Website | Twitter | Facebook


By day a department manager and writer for a major network device vendor...by night Zealot stalks the mean magnetic streets, striking fear into the hearts of bandwidth abusers and theme park mascots. Zealot has been involved with mobile devices for more than a decade now, starting off with dumb phones, moving to PDAs and then to smartphones, notebooks and netbooks with the odd PMP thrown in. Most of his mobile time currently is spent on a Treo Pro, Zune HD, Thinkpad T61, HP Mini 311, iPod Touch 3G, iPad 16G or a Hackintoshed Compaq Mini 704. He proudly groks the Geek community and considers himself a Neo Maxi Zune Dweebie (thanks Wil Wheaton!).

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  • http://www.jkontherun.com Kevin C. Tofel

    I don’t understand the “page from the Microsoft playbook” reference. Can you elaborate? Thanks!

  • http://www.gamingwithchildren.com Michael Anderson

    To an extent I can understand it – they are doing a sort of ‘razor & blades’ deal with the phone to increase market share, but AT&T is taking the hit so they want to make sure they recoup.

    I don’t see, however, why they don’t just sell it unlocked for ~$500 … but then I suppose subscriber numbers is as important as the $$.

  • Zealot

    By a page from Microsoft’s playbook, I mean a time requirement attached to activation, as they pioneered with Windows.

  • http://www.jkontherun.com Kevin C. Tofel

    Gotcha. Thanks for the explanation. Conceptually I get what you’re saying now, but in reality, I’m not sure it applies. Windows Activation is meant to thwart software piracy. If I buy the software out of pocket, why wouldn’t I activate it and if I don’t, I don’t have any additional expense. If I buy the iPhone out of pocket but don’t activate it, I *DO* have to pay an additional expense. Not quite the same because these are two different product markets, but again, I see what you meant. ;)

  • Zealot

    Very good point, and looked at that way it is somewhat like comparing apples and oranges. On top of your comments, the analogy is also flawed due to the fact that with MS software, the activation clock only starts when the software is installed. You can keep the shrinkwrapped CDs under your bed for months, you still get the same 30 days after install to activate.

    With the iPhone from the moment it is in your hand you only have so long before you need to start paying AT&T, one way or another.

  • bigds63

    Um, My “old” iPhone is shaping up to be even better than the new. Sounds like the new iphone is going to be hard and expensive to hack. I for one do not have the 3G service in my area and do not need GPS at all. I don’t think a person should be driving if they are depending on a computer to tell them where to turn, I mean come on. So other than that there is not many features over the old iphone, and it actually cost more after you figure in the phone plan. Guess I will be sticking with my old “Silver Back” iPhone and not the new “Black Plastic Back” one.

  • doogald

    I’m wondering if this “penalty” that they are talking about is merely the AT&T subsidy. In other words, you can buy the iPhone for $199 – a subsidized price, assuming that you are going to activate a 2 year AT&T contract – but if you choose not to activate a contract, you lose the subsidy.

    Seems to make sense to me, and suggests that there will be a way to get a phone unsubsidized.

    But, I suppose I should not speculate and just wait a few weeks to get the real scoop . . .

  • Raphael Salgado

    What I’m concerned about, not like this isn’t bound to happen to somebody… What if someone legitimately buys an iPhone 3G for $199 (or $299), starts or renews his contract for two years, then loses it in the ocean or simply gets it totally broken from falling off a building or something just after a week? Will he say, “oh well, it’s just $199 and not $599 anymore, let me run into the store and just get another one.” and will he get penalized for it? There’s no mention of a subsidy or no-contract price…

  • Zealot

    They have mentioned a no contract price.

    AT&T has already stated there will not be one, under any circumstances.

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