1/30/2008

Missing: iPhones

Apple reported that they have sold 3.7 million iPhones, but the mystery is that AT&T, the sole wireless provider for iPhones, has only reported 2 million iPhones activated. Where have the other 1.7 million gone? Industry insiders suspect that the iPhones are being “unlocked” to run on non-approved networks. Apple receives $10 a month for every iPhone on the AT&T network, so they are missing out on a lot of revenue from the “unlocked” phones.

It sounds like there's plenty of demand for the iPhone, but that the problem is the low demand for the AT&T network. There are plenty of substitutes for different networks, but not as many for an iPhone. Maybe Apple could come up with a different strategy that didn't depend so heavily on one network.

7 comments:

Reagan said...

I'm sure Apple is smart enough to know that his would happen when they signed a contract with a single provider for the iPhone. They are aware of the demand for their new products and that people will also find a way to use the iPhone on another network. 2 million accounts paying them $10 a month probably exceeds their projections and makes their shareholders very happy.

Dr. Tufte said...

I'm not even sure how to think about this one.

My guess is that Apple had some idea that piracy would be a problem with a monopolist carrier. On the other hand, it isn't their money to lose.

Gavin said...

I agree with the Piper Jaffray analyst who suggested that the iPhone be sold at a premium to those using unauthorized carriers. It is illogical for Apple to try and police the use of the iPhone. Apple should have offered the iPhone at a discount through AT&T and at a premium through other providers.

Gavin said...

Extra Credit-Dr. Tufte
Dr. Tufte I think that it was Apple's money to lose because $10 per month over two years is $2,400. Apple did a great job with their product, but obviously should not be trying to control its use.

Jacques said...

I don't know much about the decision for Apple giving exclusivity to AT&T, but I do know from personal experience that the iPhone can easily be "unlocked", enabling it to be used on practically any other wireless provider. I believe they are available on eBay at a slight premium. And no, I am not a seller of unlocked iPhones on eBay and this is not a plug.

TheFindlay said...

Dr. Tufte
I think that Apple is just so full of themselves they want to prove how much control they can have over their products. I personally think that allowing only one network to have the iPhone was a lousy move. Piracy will always be a problem. It is a lot less valuable to pirate something that everyone has access to and therefore Apple should have increased consumer access.

Dr. Tufte said...

Gavin: oops on that math.

I think TheFindlay may have a point: Apple may be a bit too confident of their ability to defend against piracy.