AT&T’s $375 subsidy boosts Apples’ iPhone profit margin to 60 percent
Turley Muller, who writes the Financial Alchemist blog, has laid out the math on Apple’s iPhone costs and pricing. Muller calls attention once again to something VentureBeat has reported before: AT&T is nearly buying its customers their iPhones. Customers now pay $99 to $299 for their phone. AT&T kicks in another $375 to bring iPhone prices down so low that the feature-packed device becomes a better buy than a cheaper but less-subsidized phone from another maker. That makes the average sale price of an iPhone anywhere from $474 to $674.
Muller’s spreadsheet, above, shows his estimates of Apple’s profit from 57.8 to 59.6 percent. Maybe his next post can explain something anyone must wonder after reading this chart: What is AT&T getting from iPhone users? Because it seems the wireless carrier has bought most of its customers’ phones for them, let them overrun its networks with their unlimited data plans, and earned nothing but hate for its not-quite-ready 3G network, which often fails to deliver data to customer phones. We’ve been told that the iPhone is partly to blame because it has poor reception compared to other phones, yet AT&T takes the heat for its customers’ weak connections. Fixing that reputation will require AT&T to install more cellular antennas, not a trivial investment. In every row and column, Muller’s numbers show that Apple has created a sweet spot for itself in the mobile ecosystem, largely at AT&T’s expense.
[Image from Fotosearch]
Next Story: How much is Twitter worth? $589 million, says SharesPost report
Previous Story: Spamalot! Volume of spam is back on the rise
About the Author, Paul Boutin
Paul (paul@venturebeat.com) covers Apple & the iPhone, social networks & social media, digital music & video, and any crazy Internet story. Paul wrote and edited for Valleywag from 2006-2008, after several years with Wired magazine and Slate. He writes regularly for The New York Times' technology section and sometimes for Wired and The Wall Street Journal. He studied computer science at MIT in the early 1980s, and worked as a software developer and network administrator for 15 years before becoming a professional writer. Follow him on Twitter at @paulboutin, and follow VentureBeat on Twitter at @venturebeat.
-
NickLeung
-
m2b2us
-
rkorba