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Unlocked iPhone sales as high as 40 percent in Europe - report

post #1 of 17
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Wall Street folk remain immersed this week in the hunt for Apple's missing iPhones, with one firm saying it believes that the majority of the unaccounted for units are in the hands of unlockers rather than idling in inventory.

The latest claims come by way of RBC Capital analyst Mike Abramsky, who in a research report to clients Monday said his checks with European resellers indicate unlocked units are accounting for as much as 40 percent of iPhone sales at some stores.

Slightly ahead of estimates by fellow analysts at Piper Jaffray, Abramsky also believes that unlocked iPhones comprise as much as 27 percent of US sales. Combined, he said, between 25 and 30 percent of iPhones have thus far been sold to with the intent that they'd later be operated unlocked.

The analyst noted that those estimates are consistent with the 25 - 35 percent of Pearl sales which handset maker RIM claims to sell without a dedicated data plan.

"Unlocked sales, though a headache for carriers, are positive for Apple and in our view bode well for global iPhone demand (including further international demand/uptake in countries in which Apple has not yet launched), [...] and for Apple exceeding its 10 million [unit] 18-month target," he wrote.

More generally, Amramsky used his report to speak favorably of Apple's potential to weather the ongoing economic downturn, explaining that while the Cupertino-based firm is certainly not "recession proof," it exhibits signs of being "recession resistant."



In support of this thesis, the analyst cited the "stickiness" of the company's products, the likelihood of high-end Apple consumers deferring other discretionary spending first, international growth upside, continued product innovation, and share gains.

"Even under a recession scenario we continue to expect Apple to outperform peers' growth," he said.

While iPod growth has undoubtedly slowed over the past four quarts, Amramsky maintains that the platform is still healthy with revenue growth of 17 percent and opportunities for the handhelds to undergo a transition to new form factors.

The slowdown is also offset by Mac share gains, which the analyst believes will continue in 2008. By the end of the year, he expects Apple's share of the personal computer market to rise from 3.1 percent to 3.8 percent, which would garner for the company revenues equivalent to of 50 percent of its fiscal year 2007 iPod sales.

Amramsky maintains an Outperform rating on shares of Apple.
post #2 of 17
I don't see unlocked phones being good for Apple. Part of the model for them receiving money for the phone is the monthly bill, which they don't get when its unlocked.
post #3 of 17
I think it was fairly obvious the 'missing' phones were the result of unlocking from day one.

IMO 1 x unlocked phone = good for Apple. 1 x locked phone = really good for Apple.

Either way Apple benefits.

PS: The sky is not falling.
post #4 of 17
An unlocked phone still brings Apple profit. Not as much as a locked phone, but better than none, as most of those unlocking would not have bought it unless it was unlocked.
post #5 of 17
Quote:
Originally Posted by cazlar View Post

An unlocked phone still brings Apple profit. Not as much as a locked phone, but better than none, as most of those unlocking would not have bought it unless it was unlocked.

I am betting the price drop in Sept. took into account the fact that they would be making more money through revenue sharing which doesn't occur with unlocked phones. Apple is still probably very pissed that 30% of their iPhones aren't "official" to them. Promotes the idea of "why change carriers when you can unlock one yourself?".
post #6 of 17
There's certainly a big market for unlocked phones. I wonder how it'll all play out.

Hey, Is it okay to ask about unlocked phones here? My brother almost bought one from eBay (in Australia) for US$700 yesterday. But my father is going to the US in the near future... so I figured he should buy one there for my brother.

Question would be
1) Assume it's easy to buy online from Apple Store and deliver to hotel?
2) How much is sales tax anyway?
3) Is it easy to unlock?

Or an easier question - anyone know which websites offer these answers for iPhone newbies?
post #7 of 17
Quote:
I am betting the price drop in Sept. took into account the fact that they would be making more money through revenue sharing which doesn't occur with unlocked phones.

This assumes Apple is pocketing the shared subscriber revenue which is likely not the case. The software developers who continue to improve iPhone OS and apps have to be paid. Apple is paying for services on the iPhone. Apple pays a royalty to Skyhook location software on each iPhone and iPod Touch sold.
post #8 of 17
the problem with EU sales is hat unlike UK and US sales, the iphone is only available @ t-mobile and orange stores... if you want to give one as a gift that's not possible, unless you get a coupon or something...

i think that a huge deterrent in those countries....

also the contracts are with much less minutes and SMS as their counterparts in the US... the at&t contracts are much more favorable than for example the t-mobile contracts...

50 for 100min and 40 SMS and only 250MB data traffic??? WTF??? ok, the wifi flatrate is also included, but that's not gonna outweigh the price.... no wonder only 70k iphones were sold in germany... if t-mobile would have offered a similar offering to at&t sales would have been at least double that of now....!!!
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post #9 of 17
Quote:
Originally Posted by GregAlexander View Post

There's certainly a big market for unlocked phones. I wonder how it'll all play out.

Hey, Is it okay to ask about unlocked phones here? My brother almost bought one from eBay (in Australia) for US$700 yesterday. But my father is going to the US in the near future... so I figured he should buy one there for my brother.

Question would be
1) Assume it's easy to buy online from Apple Store and deliver to hotel?
2) How much is sales tax anyway?
3) Is it easy to unlock?

Or an easier question - anyone know which websites offer these answers for iPhone newbies?

just buy one in an apple store in the US!
vista = virus inside switch to apple
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vista = virus inside switch to apple
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post #10 of 17
Quote:
Originally Posted by TenoBell View Post

This assumes Apple is pocketing the shared subscriber revenue which is likely not the case. The software developers who continue to improve iPhone OS and apps have to be paid. Apple is paying for services on the iPhone. Apple pays a royalty to Skyhook location software on each iPhone and iPod Touch sold.

Revenue is revenue. Why would it make any difference where the money goes once Apple receives it. The costs you talk about (software developer employees, skyhook) are there no matter if the phone ends up on contract or unlocked.
You tell me which is better
1) ($400 + $15/mo*24) - X costs
2) $400 - X costs
??
post #11 of 17
Quote:
Originally Posted by StuBeck View Post

I don't see unlocked phones being good for Apple. Part of the model for them receiving money for the phone is the monthly bill, which they don't get when its unlocked.

Yeah but we get to buy the damn phone, and loads of people see them and want one.

Oh, and you're missing the point. Me, and many many like me wouldn't have bought an iPhone at all if they were only available locked. Apple can either make some money from me buying an unlocking my iPhone, or they can go shove it, thems are the options.
Citing unnamed sources with limited but direct knowledge of a rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of a rumoured device - Comedy Insider (Feb 2014)
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post #12 of 17
Quote:
Originally Posted by winterspan View Post

Revenue is revenue. Why would it make any difference where the money goes once Apple receives it. The costs you talk about (software developer employees, skyhook) are there no matter if the phone ends up on contract or unlocked.
You tell me which is better
1) ($400 + $15/mo*24) - X costs
2) $400 - X costs
??


of course apple makes much more $$$/ when they sell locked iphones...

min $360 over the 24 months period... in europe much more, with bigger att contracts also much more!
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post #13 of 17
Quote:
Revenue is revenue. Why would it make any difference where the money goes once Apple receives it. The costs you talk about (software developer employees, skyhook) are there no matter if the phone ends up on contract or unlocked.

But revenue is not profit. Profit is the whole point of offering goods and services. If Apple is using the shared revenue to pay for iPhone services then it does not become profit.

I'm not entirely sure of your point. But with Apple using the shared revenue it does not have to pay for iPhone continued software development or services directly out of Apple's profits.
post #14 of 17
The iPhone would have been so much more popular if Apple had just kept it simple. Buy an iPhone from Apple and use it with whatever carrier you want. Why did they even get involved with the carriers at all?

If it was about subscription fees, well presumably that is to cover ongoing software development, so just charge for the software updates directly. They come through iTunes anyway so the payment system is right there. If it was about the video voicemail feature then just implement it through their own Internet server at Apple which the phone reaches through it's normal Internet access.
post #15 of 17
i live in brazil. i don't see iphones coming to my country anytime soon. but still, i own two macs, four ipods, an isight, i have a .mac subscription, and i'm planning to buy another mac (macbook pro).

if it weren't for the unlocked iphones, i could never get the chance to have one... i haven't bought mine yet, because i'm still waiting to see what comes out of this SDK, but i'll certainly will buy one and unlock.

can't see why this is a bad thing for apple.. specially when i'm a loyal buyer even when they don't want me as one.
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post #16 of 17
The mobile market in the UK is very mature, very big, and almost at saturation point. It is so inexpensive to get a mobile phone now that almost anybody who wants a phone, has one. Pre-paid phones have covered the marketsegments of those who coulddn't - or were not prepared to - take out a contract.

While the iPhone is selling rather well in the UK, it hasn't captured the imagination the way it has in the States. There are a couple of reasons for this. One reason is the iPhone is not 3G, and as the mobile operators here paid billions of pounds for their 3G licences, they want to get that money back, and all the emphasis is now on 3G services. O2 had to downgrade the their network to support the iPhone. But, a 3G iPhone will surely be announced this year, so that problem goes away.

The other problem is the fact that an iPhone can only be bought on an expensive monthly contract. £35 STG is the going rate, which equates to about $70 USD. I don't think the price of the handset itself - £269 STG - is especially expensive considering what it is, but customers will be use to getting the handset for free or very heavily subsidised when spending £35 STG a month.

I read a report which suggest the iPhone was drawing customers into stores to view the device, but they ended up walking away or buying something else!

I don't have an iPhone. When it goes 3G I have a look, but unless the contract has changes, even then I won't bother. But if I could just walk in to an Apple store, pay my money and have an unlocked device... I'd probably have one already!

I know the reason Apple went with the network lock-in. It was to bring in revenue (and in this case that is profit) and encourege the network to support the device. It might work well in the States, but I think the model they are using in UK / Europe won't hold water for long, once the early adopters have been in. I can buy and use an iPod without having to subscribe to iTunes Store. Why not an iPhone? Palm will sell me a Treo unlocked for close enough the same price?

I am surprised that the EU hasn't jumped on Apple over this.
post #17 of 17
I account for 2 of those unlocked phones myself.

And no, I wouldn't have bought a single iPhone if I couldn't unlock it because:

a) It's not available in Canada yet
b) Even if it were, I don't think I could justify spending close to $100 per month on a cell phone given that I'm a very casual cell phone user

So in my case, the iPhone being unlockable definitely benefitted Apple.
 
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