AT&T got shafted by Apple
EUROPEAN CARRIERS might be a little concerned about reports from the US that suggest AT&T might not be doing so well out of its exclusive deal with Apple to carry the Iphone, which everyone thought would see it raking in coin.
The general perception was that AT&T would make a fortune and get loads of Apple fanboys signed up as customers. Competing US mobile telecom companies muttered that the whole thing was unfair and they should have been allowed to join in. European mobile telecom companies bid to land similar deals, believing such franchises would be in their best interests.
However it is now starting to look as if things did not move as planned and those who sup with Jobs' Mob should use a very long spoon. True, the Iphone attracted new customers, and it probably gained AT&T a bit of Apple's smugly self confident 'cool image', but it seems to have come at a cost.
While the FCC is questioning whether some deals are good for the industry, it is clear that AT&T itself has been losing over its Iphone deal.
It trumpeted that it had at least 10 million Iphone activations since they became available in mid-2007, but only 40 per cent of these were new customers. Okay, four million new punters is not to be sneezed at, but the number appears to be falling off. It fell to 35 per cent in the most recent quarter in which the Iphone 3GS became available.
In a best case scenario the Iphone might have kept some AT&T customers from defecting. Since the Iphone arrived in the third quarter of 2007 the percentage of customers who leave has dropped to just under 1.5 per cent from 1.7 per cent.
AT&T claims that Iphone customers generate much higher revenue per user than the average, close to $100 a month. However to keep Apple happy, AT&T paid a $400-a-phone subsidy to keep the Iphone cost down for those who signed away their souls on two-year contracts to buy the thing.
For an Iphone customer to make AT&T any cash they have to pay the telecom firm $2,000 a year. If AT&T is right, on average punters are paying $2,400 during that time. But $400 over two years is nothing, really.
But actual revenue figures might be even worse than AT&T is letting on. JP Morgan Chase analyst Mike McCormack said that other smartphones that come with a lower buyer's subsidy tend to generate similar average-revenue-per-user levels as Apple's device. In fact the Iphone subsidy depressed AT&T profit margins, he claimed.
Then there is the small problem of AT&T's network. From day one Apple users have complained that the telecom's network was not up to scratch. Now they are really hammering it, downloading material online for a flat $30 a month fee.
AT&T's network, which was flaky to start with, appears to be unable to handle the extra traffic. While AT&T has made improvements, it is still not really able to take the strain.
Now the fear is that if AT&T's US rival Verizon eventually also gets the right to offer the Iphone, some of those four million customers who signed up for AT&T might defect.
In America it is starting to look like the only winner out of AT&T's big Iphone deal has been Jobs' Mob.
The situation in the EU might follow the same pattern. While the European telecoms firms haven't offered the huge subsidy that was seen in the US, they also don't have the same network problems. T-Mobile, Orange and O2 might be rushing to look at their books to work out if signing up to offer the Iphone was really such a good deal for them, after all. µ
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AT&T has had slim margins, but that's due to a highly competitive market, not Apple. And if AT&T hasn't gained so many customers, is it Apple's fault that people talking to iPhone customers always hear, "yeah, the iPhone's great but AT&T sucks." (And this was the case long before Apple started grumbling about it publicly.)
Until a non-player like Apple came along, the routine was the US consumers were locked into contracts for two or three year old tech for twice the rate and with most features disabled. Now we can actually use the bandwidth we've been paying for and their network falls to pieces. "Shafted" really only applies to the US consumers here.
If these companies were so eager to dance with the devil, they should have known how it was likely to end.
When I got to your first (of many) misspellings of iPhone (it's not not Iphone) I thought "This guy doesn't know what he's talking about" and I stopped reading.
I'm sorry, but any company who can't turn a profit with 10 million customers paying them $2400 a year should be shot.
The market in Europe is smaller, our bills are much cheaper and still our carriers make a (huge) profit. Oh and our service is decent too....
Not wishing to downplay your ability to read, but it is not a spelling mistake if you fail to capitalise the letter that a marketing department tells you to capitalise. Iphone is spelt the same as iPhone, or IPHONE. In case you had not noticed The INQ really does not care a monkey's about being a sop to anyone's marketing department. Basically what you have just told the world is that you don't read anything unless it comes in the form approved by marketing department which is really really dumb.
Having been an AT&T customer myself, I can tell you that AT&T service is absolutely horrible and perhaps the worst mobile phone provider in the U.S. In spite of their BS advertising, I suffered more dropped calls and intermittent service than I have had with any previous mobile phone provider. I couldn’t even reliably make or receive calls from close to the center of one of the large and upcoming cities in the Southeast. A hint is that this city is a major banking center, home of many rich assholes. At least that was the case before The Great Depression #2 arrived. Anyway, this particular crappy service area is a historic neighborhood and one of the now most sought after neighborhoods to live in, hence, expensive areas in that particular Southern city. When I went to the closest AT&T office to try to get some help they said I was in a “moderate” signal reception area. After inquiring what that meant, exactly, she replied that it meant that I had to go outside my house to make or receive calls. All I could think was WTF????!!!!!!
It wasn’t just this area that I suffered crappy service. I was traveling through Atlanta and experienced the same dropped calls and horrible intermittent signal reception areas. And from all the complaints I’ve read lately from all over the U.S., this is normal. Of course, AT&T was the long distance phone service monopoly in the U.S. for decades, but that issue was addressed years ago when they were broken up, or so everyone thought.
Bottom line is I’m not sure who the devil is here. When I read that the Apple Messiah, himself, had signed an exclusive agreement with AT&T to sell the iPhone, I was ROTFLMAO and almost pissed myself in the process. Here are two truly disgusting corporations that truly deserve each other. At least in this case the fruit themed fanbois can enjoy the same “superlative” phone service as the rest of us great unwashed masses. Steve Jobs, you stupid son of a bitch…you’ve been had by the great AT&T!!! There is a God after all!
But $400 over two years is nothing, really
What about when you multiply that by 5 million users?
Is 2 *BILLION* dollars also "nothing"?
The only "mistake" AT&T made, was in the numbers.
They should have only subsidized the iphone by about $200.
The iphone is just too expensive of a device to NOT be hugely subsidized.
@hmmmmm: As silly as the spelling "iPhone" is, Apple has a right to name its products. Apple doesn't make and has never made a product named the Iphone, just as Britain doesn't have a quEEn.
Let's be real here. People who get all excited about an iPhone aren't exactly the sharpest tool in the shed. they could be labeled unstable or unpredicatable.
RT:
When I got to your first (of many) misspellings of iPhone (it's not not Iphone) I thought "This guy doesn't know what he's talking about" and I stopped reading.
IT'S FUCKIN' iPhone!
I remember reading a few years back that T-Mobile refused the Iphone because they perceived it to be a one sided deal; they told Apple to go forth and multiply. Apple threatened to go to Verizon, so T-Mobile told them to go master their own bate. So Apple went to ATT.
I remember reading a few years back that T-Mobile refused the Iphone because they perceived it to be a one sided deal; they told Apple to go forth and multiply. Apple threatened to go to Verizon, so T-Mobile told them to go master their own bate. So Apple went to ATT.
Apple is a control freak. It shouldn't surprise anybody they picked one carrier only and made real difficult terms. That's how apple is. AT&T could have refused though. And maybe they should have.
Regardless, buying apple is bad for the consumer. iPhone is amazing, but the apple's lock-in control practices are far worse than microsoft and they show no signs of improving.
"What?
I'm sorry, but any company who can't turn a profit with 10 million customers paying them $2400 a year should be shot.
The market in Europe is smaller, our bills are much cheaper and still our carriers make a (huge) profit. Oh and our service is decent too...."
So What, We are a Capitalist and Free Enterprise Market System, and you guys as our intelligent voters would call you "a bunch of Commie, Socialists. We can't help it if were brain washed into believing we have the best system in the world, so take that and chew on it.
This just shows that phone companies can just sit back and let exclusive phone/hardware do the work for them.
Sure it has done them for a spell, the lack of creative plans is catching up with them. Plans need new features and to be more competitive. Prices should have gone way down by now, but instead of introducing new services to justify the cost, the make up need service charges, upgrade fees, punish customers that don't have text plans.
It will catch up with them eventually.
" "What?
I'm sorry, but any company who can't turn a profit with 10 million customers paying them $2400 a year should be shot.
The market in Europe is smaller, our bills are much cheaper and still our carriers make a (huge) profit. Oh and our service is decent too...."
So What, We are a Capitalist and Free Enterprise Market System, and you guys as our intelligent voters would call you "a bunch of Commie, Socialists. We can't help it if were brain washed into believing we have the best system in the world, so take that and chew on it."
Americans are such idiots !
They are kept in the dark by theyr government and corporations at such levels that they start to belive in Santa !
They are all owerworked by their "Lords" and simply do not have a life !
I live in Canada and since Canadians are as well brainwashed by their GREAT capitalism I could see how exploited thay are !
Here in Canada the only thing the "normal" people do for having fun is having sex and drinking !
Its not theyr faults since they are all assimilated by the system while others have the REAL fun with their money !
Its a society that valorize workaholics and criminalizes having fun !
In conclusion : American people are exactly like their products ! "NO QUALITY"
Wonder when thy will replace the Chinese since they masters are about to move to china with taking with them all the money ???
Wonder why 2 in 5 ppl here in Canada have or will have mental disorders ???
Dont get that wrong since the americans were once great but thay fadded away !
sorry for my bad English !
Clear.com has WiMax in Vegas that bursts over 10M down and 1M up for $40/mo unlimited. Just use VoIP for phone.
AT&T should have upgraded their network for service instead of for spying on people. I got so many disconnects from them I smashed their phone and refused to pay out the contract.
I don't get your math. AT&T subsidizes the iPhone to the tune of $400, right? That's a one-time cost. iPhone users generate $100 in revenue a month on average, right? That's recurring income. In exchange for the $400 subsidy, iPhone users lock into a 24-month contract, right? So doing the math, it takes four months (at $100/month on average) for AT&T to break even on their subsidy, followed by 20 months of black revenue, netting $2000 per user over the life of the contract -- and that's assuming everyone either ends their contract or upgrades to a new iPhone when their obligation is up. 10 million iPhone activations multiplied by $2000 per phone ... let's see ... that's $20 billion dollars net revenue in two years' time, according to Google's calculator. (My handheld doesn't even show that many digits.) Yeah, sounds like AT&T really got shafted.
Seriously, as soon as Verizon will support my iPhone, I'm switching over immediately. AT&T has ridiculously expensive rates compared to other carriers in the US, and the talk about their slow network is all true.
Just FYI, I live in Lancaster County, PA - in the middle of nowhere. I get good reception with AT&T almost everywhere I go (including at home, where my friends with Verizon and Sprint can't get any signal at all.) I hardly ever have a dropped call and it only happens when I'm in my car and happen to drive through some small spot (again in the middle of nowhere) where there is no cell tower at all - so NO carrier has service.
The service price is the only sore point for me, but I use my phone so much to access the net that I definitely get my money's worth. I don't particularly like Apple, but I love my jailbroken iPhone and have no issues with AT&T. Except that summer is over and I can't use MMS. - lol.