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Shazam

Strongly disagree. The iPhone plans start at a minimum of $60. According to a January AT&T press release, ARPU was $49.29 which was up from $48.26 a year earlier. That's a 2.1% increase in overall ARPU from same quarter in the previous year. Excluding the iPhone that's pretty rotten growth.

But, for the sake of argument, let's increase ARPU by 5% to $51.75. That means at a minimum, each iPhone subscriber, on average, is increasing ARPU by $9.25 or 18%, and possibly much more given the consumer (vs. business) appeal of the device. Now factor in the 2 year required contract and AT&T is generating, on average, $222 more per sub than without the iPhone. That's a ton of money when multiplied by the 700,000+ devices already sold; nevermind how many might actually be sold.

Long story short, your assertion is wrong. There is significant financial benefit alone to AT&T. Of course then you have the halo effect AT&T is getting by being attached to a cool, cutting edge device vs. Verizon with its dated, 80's style laser-line font, horrible and homogenous UI and all-around lame hardware.

digitalmsg

One other thing that isn't mentioned is the number of people defecting from Verizon to AT&T. I know in some forums I've read there were several Verizon customers chomping at the bit to run to AT&T and the iPhone, some even willing to pay the early termination fee. Was Verizon stupid? Time will tell, but I'm certainly wondering.

Personally, though, I'm a long-time T-Mobile user and want to know why they didn't get the iPhone (besides fewer subscribers)....

Professah Funkensteen

Shazam -- that's a brilliant theory. However, you neglect to consider what AT&T is paying out to Apple for the right to sell the iPhone, both in upfront fees but also in terms of revenue share. Those revenue shares are apparently onerous enough that they convinced Vodafone, the world's biggest operator by revenues, to pass on the opportunity to sell the device in Europe (see http://business.guardian.co.uk/story/0,,2119921,00.html). Furthermore, you fail to acknowledge that some/many iPhone buyers are already AT&T subscribers, and if they're already paying for data service or a lot of text messages, their effect on ARPU will be negligible.

But the revenue share to Apple is the biggest factor. That ARPU boost of which you're so confident isn't such a great thing if it comes at the expense of profitability.

pcs

Who says Apple ever wanted to work with Verizon? By shacking up with AT&T's GSM network for it's iPhone allows them to be able to sell it on a global scale in a timely fashion, not just for the US market.

John

"The most optimistic forecast I've seen is that the company will sell 8 million of 'em in 2008."

Obviously you are not paying attention if that is the most optimistic forecast you have seen you have seen.

My household are existing AT&T customers on a family plan that has just been increased $60 per month for data on three iPhones in addition to the renewed two year contract. $720 in additional revenue over two years. Not too shabby.

In addition AT&T does not subsidize the iPhone which saves them a bundle of cash and offsets any sort of finders fee that T pays Apple in exchange for delivering them locked in new customers that they would not have otherwise.

If the iPhone sells 10 million by the end of 2008 which at this point is conservative and only one million of those are converts (also conservative) at the minimum $60 per month plan ($720 per year/ $1440 per 2 yr contract period), obviously AT&T stand to make a bundle.....and Verizon stands to lose a bundle. Hence the title of your article is a good one.

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feareddevil

ATT service sucks (drop calls plague them more than ALL other carriers)... So the public looses. Apple may do well and AT&T may get some new subscribers but this techy is passing on the iPhone. A typical Apple stunt, try to control as much as they can but I respect Verizon for making the right decision.

Hang in there Verizon... Samsung, LG, and others will get the equation right eventually - just like the personal computer industry. We use PCs because everything is offered on them AND as phones merge with computers - it will be the same.

Phone users have NO commitment and will jump faster than anything.

How do you like them apples???

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jackansn

If the iPhone sells 10 million by the end of 2008 which at this point is conservative and only one million of those are converts (also conservative) at the minimum $60 per month plan ($720 per year/ $1440 per 2 yr contract period), obviously AT&T stand to make a bundle.....and Verizon stands to lose a bundle. Hence the title of your article is a good one.

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  • The Stalwart is a blog written by Joseph Weisenthal, covering such topics as stocks, business, economics, politics, technology, gambling, chess, poker, economics, current events, music, math, Chinese food, science, randomness, kurtosis, sports, evolutionary fitness, and anything else of the author's choosing. The words contained herein are the author's own, not affiliated with any other firm or employer.

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