AT&T paying Apple $325 per iPhone 3G?

According to one financial analyst, AT&T is paying Apple $325 in subsidies on each iPhone 3G.

AT&T will reportedly pay Apple $325 in subsidies on every iPhone 3G.

(Credit: Apple)

Barron's Tech Trader Daily spotted a report from Oppenheimer's Yair Reiner that claims Apple will wind up getting just as much revenue from the subsidies as it did from the revenue-sharing agreement between Apple and AT&T that was in place before the introduction of the iPhone 3G last week. Reiner notes that this figure is far more than the typical $200 subsidy most carriers pay to reduce the price of other smartphones, and it's supplemented by a $100-per-new-subscriber bounty paid to Apple for each new AT&T customer that signs up in an Apple store.

Apple and AT&T unveiled a new pricing scheme for the iPhone 3G after the device itself was given the standard Apple keynote treatment during the first day of Apple's Worldwide Developers Conference. The 8GB iPhone 3G will cost $199, and the 16GB version will cost $299: $200 cheaper than the original version after AT&T agreed to subsidize the price.

The actual price of the iPhone doesn't matter to most people, but certain AT&T customers who might not be eligible for the upgrade price of $199 or $299 will likely have to pay the unsubsidized price--or something close to it-- for the iPhone 3G. Current iPhone owners are eligible for the $199 price, as are new AT&T customers, but some AT&T customers who use another smartphone and have been with the carrier for a short time might have to pay the higher price.

And it matters to AT&T, obviously. The company raised the price of its iPhone data plans by $10 a month to offset the subsidies it's paying to Apple. AT&T is throwing an awful lot of cash at Apple from the start, rather than on an ongoing basis as was the case with the revenue-sharing agreement. Still, the heavy subsidies will be worth it if iPhone 3Gs start flying off the shelves on July 11.

[Seaspray0]

Tom, did AT&T raise the price of the data plan for all smartphones or just for the iphone?

[smithrl]

No, they didn't "raise" the price of data services as the article suggests. AT&T has always charged $10 more for data services for 3G capable smartphones. This is inline with their pricing model for all other phones.

[sanenazok]

Just the iPhone, which had its own data plan to begin with.

[Tom Krazit]

If you currently have an iPhone with AT&T, you'll pay at least $10 more a month to use the iPhone 3G. iPhone users have special plans right now just for them, but they are now being folded into the rest of AT&T's data plans, which cost $10/$30 more a month for voice and data than the original iPhone plans.

[derrlick]

Hey I have a Blackjack II and it is 3g. The cheapest data plans for 3g are already $10 more than the edge network. People are talking as if AT&T are raising prices on just the new iphone but this is false, they are just saying that now with the 3g iphone it will cost more because you are now using 3g instead of edge. I really dont understand why people are talking smack about at&t raising rates when they are just pointing out the obvious and people are retarded and twisting things up.

[CA1900]

"The company raised the price of its iPhone data plans by $10 a month to offset the subsidies it's paying to Apple." Uhhhh.... no, that's not correct at all. AT&T charges $10 more a month for ALL smartphones that use the 3G network versus the slower EDGE network.

[Tom Krazit]

I can't find anything on AT&T's site that says that. I went through the process of ordering an EDGE Palm Centro and a Motorola Q on HSDPA with unlimited data, and it cost $30 in both cases, regardless of which network the phone ran on.

[Thomas, David]

Isn't all the confusion because the iPhones original data plan was 20 dollars? According to some statements, the data plans for other devices was 30 dollars. So making the iPhone 3G 30 dollars brings it in line with their current prices.

That is what I appear to be reading. I don't have any facts, so its merely a case of masticated hearsay.

[atzicecream]

To be fair, AT&T doesn't charge a "3G" data charge, that is the cost of Blackberry (which until the new one is out, are not 3G) data plans for Blackberry Internet Service...not to be confused with Blackberry Enterprise Service (which is $45, but offers the ability to sync contacts and e-mail instantly with the use of a Blackberry Enterprise Server).

Yes, most of the phones sold by AT&T are 3G, but if you buy a Palm Centro, the data cost is the same as a Blackberry or a Tilt, but once again, the Centro isn't 3G either.

I know everyone wants to say this is a 3G upcharge, look at it for what it really is: Unlimited Data was $20, Telenav is $9.99 so there is your $30.00. AT&T has at least a right to make something off of this deal, because if this $325.00 subsidy is correct, they are stepping up to the plate, as are the other carriers throughout the world that are doing these phones "cheap" as compared to what the real cost is.

I think I am OK with what AT&T and Apple are doing, but once another device comes out with a browser like Safari and the multi-touch screen, then the game will have to change...and Apple won't be able to price their phones as high...OK, maybe they can, they still have iTunes which is far better of a store then the rest.

MM

[Abraham _James]

What about the iphones 3G that are going to be sold in other countries around the world, how will apple benefit from that since the selling price of iphone 3G in all countries around the globe is the same, just $199 for the 8 GB one and $299 for the 16 GB?

[Dani210]

thats a good question, but how do we know that Yair Reiner has his facts straight?

Maybe Apple expects that the more iPhones they sell, the more profit they will make in the App Store and iTunes. After all, if i had an iphone, then i would totally use the app store, it looks so cool

[thevmax]

atzicecream has it right. I am an AT&T subscriber, using a RAZR2 V9 with 3G. They charge $20 for unlimited use of the network, not because it is 3G. An important point to make here: for the same $20 a month to AT&T, you can have DSL Admittedly, not as convenient as having a portable browser, but the throughput is faster. (I was using my V9 as a tethered high-speed modem for my desktop PC.)

[Kev50027]

The assumption is that all carriers that will carry the iPhone 3G will be subsidizing it.

I only buy unlocked phones though, so I'm not interested in this all form and no function phone.

[Cyber Akuma]

$20 is the charge for any non-pda phone's unlimited data plan

$30 is the charge for any pda phone's unlimited data plan (blackmerry, HTC smartphones, iphone, etc)

My guess is this is because someone on a PDA phone is far more likely to pull larger amounts of data than someone on a normal phone. I download about 2x to 5x the amount of data that normal cellphones even have the storage space for on my Att Tilt on a monthly basis. And the iPhone is a cellphone designed for viewing full webpages and pulling music/movies off the net.

[bearwithmee]

You also have to take into consideration the 200 text messages that were included with the original $20 iphone data plan. This makes the new data plan $35 for the same features (yes I know 3g is faster, but edge isn't even an option anymore) So 15x24 = $360 more then the original plan....

[dspogreev]

While many talk about 3G and all this great stuff can someone tell me why we forget about simple stuff like MMS? there's NO FREAKING way you can send MMS and when i get one it is actually a login information to view it. So i have to go online and type in bunch of random characters that i never get right at the first time and then i can never save that picture - EVER. great! I love iPhone but the other thing is that sometimes i have no signal until i reboot it, sometime i don't get voicemails for 2-3 days and when i get them it's too late (happened on my 30th birthday - my friends and family called me and left voicemails while i was at the gym and when came back i had no calls no voicemails until 3 days later so i was pissed of at all who didn't call me... you can imagine your own reaction in situation like this)
Simple SMS - sometimes just don't get through... internet - pretty slow but should be fine with 3G i suppose...
So, yeah, i like the iPhone but i am soooo ready to hack the 3G one and go to some other carrier because ATT just not good. not good at all... ah, and this is off topic but my ATT DSL is as slow as a dial-up for a price more than i paid for T3 line with a cable internet... Big company, overmerged bunch of businesses, making money off customers(no issues with that), providing you with lame service (big issue)

Maybe i'll just wait another 1.5 years until ATT and Apple contract is over so finally we can have iPhones with other, much more reliable carriers.

[Dani210]

^^^^^Sorry, I think you are alone^^^^^^^^ If you really want another phone (since you don't like apple for some reason, then get the Vu by LG. iPhone is still way better)

The thing I just realized is what the price of the iPod Touch is gonna be. Its the same price as before. Thats right, the iPhone is cheaper than the iPod.

[anti3g]

The actual price of the new apple iphone 3G = $399!

The published price being advertised all over for the new apple iphone 3G is $199?what they are not telling you is that price is only for new ATT customers and those current ATT customers who happen to be eligible for an equipment upgrade (according to ATT, upgrade eligibility is ?generally? determined by the amount of time remaining on a current contract). For all those current ATT customers who do not happen to be at the end of their contract, the actual price for you is $399 plus an $18 upgrade fee along with a new 2-year contract. ATT is penalizing their long-time, account in good standing, customers a whopping $200. Why is the actual price of the new iphone not being advertised for what it is?$399? It?s the same price as the old iphone with an increase in the data plan.

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