But, on the other hand, if the carriers are subsidizing current phones, don't they have to make up the difference on their monthly plans/rates and commitments.
Nope. The monthly plan price is the monthly plan price pretty much, regardless of whether you supplied your own phone or paid full retail for it or whatever. And, in fact, if you do supply your own phone and go 'sans contract', you'll lose your 'promotions'... stuff like free nights, free weekends, free m2m. It's really quite insidious.
Overseas apparently its different, but in the US I haven't heard of any large carriers offering monthly plan discounts for folks supplying their own phone/buying one at full retail. If someone does hear about somethin' like that, let me know, 'cuz I might be interested in takin' them up on it.
Quote:
So, because the iPhone is not going to be subsidized shouldn't the monthly plans/rates reflect this lack of subsidy, or at bare minimum not require a 2 year commitment.
Nope. It's whatever the market will bear. The plans won't be reduced price for the same reason the phone likely won't be subsidized... because they'll sell tons of 'em regardless.
It still wouldn't matter, as the $500 to $600 is the price people see, and therfore, the one that people relate to.
There is nothing more than speculation, at this time, that Apple is receiving anything from Cingular.
Sorry, but it does matter as the question is whether the $500-$600 is a subsidized price, or not. At least that's what I'm talking about.
Since this thread is about this AI report then based on this quote from the report
Quote:
Overall, the analyst said he walked away from the meeting believing that AT&T's revenue share with Apple could be a more meaningful portion of monthly average revenue per user than previously thought. He explained that this is possible given the "significantly better economics" AT&T should realize from iPhone subscribers, given the lower "churn" and cost of adding each user to its network with advertising and branding help from Apple.
Apple will receive money from the CUSTOMER in two ways.
1) Some percentage of the sale price of the hardware
2) Some percentage of the AT&T contract revenue.
To me this is no different in total, than any other subsidized phone, just a higher price that other subsidized phones, and no non-subsidized purchase price being offered.
It may be different in that other carrier-phone maker contract call for a payment for the hardware up front from the carrier instead of over the life of the contract but I simply don't know.
You may argue that the AI report is wrong but it say that Apple will receive monthly payments from AT&T they're just arguing over how much.
To me this is no different in total, than any other subsidized phone, just a higher price that other subsidized phones, and no non-subsidized purchase price being offered.
sub?si?dize
verb [ trans. ]
? pay part of the cost of producing (something) to reduce prices for the buyer.
It's lexical semantics, but there is a distinct difference between AT&T paying Apple directly for the retail cost of the iPhone and the AT&T paying Apple a portion of the subscribed dues.
This is very different than the current manufacturer/carrier model, but this not automatically make the iPhone a higher priced solution because it fails to offer some BS subsidized option. That is a similar argument that PC users make about the Mac which can seem more expensive than a PC at first glance, but where the long term usability of the machine is actually quite a bit cheaper.
? pay part of the cost of producing (something) to reduce prices for the buyer.
It's lexical semantics, but there is a distinct difference between AT&T paying Apple directly for the retail cost of the iPhone and the AT&T paying Apple a portion of the subscribed dues.
This is very different than the current manufacturer/carrier model, but this not automatically make the iPhone a higher priced solution because it fails to offer some BS subsidized option. That is a similar argument that PC users make about the Mac which can seem more expensive than a PC at first glance, but where the long term usability of the machine is actually quite a bit cheaper.
I know well the meaning of subsidize.
I don't believe there is any difference between this and the current model, other than accounting rules. This is merely time-payments instead of one payment. The 'source' of the funds for the payment is the same in both cases - the customers service contract. The only thing that would make it different, which may be the case, is if Apple is the only support source for the phone. This has real value and offloads additional cost from AT&T.
I hope this is the case because then I'm getting a lot of additional value (compared to the current model) for this money. WIth Apple I might get some real support. With phones I think we've all been on our own out there after purchase.
I don't believe there is any difference between this and the current model, other than accounting rules.
While it's true that Apple is getting paid smewhere, somehow; 'how' Apple is getting paid is completly different that the current manufacturer/carrier relationship. This makes all the difference as manufacturer is, for once, committed to making the best possible phone and isn't interested in coming out with new models at break-neck speeds to increase its profit margin.
Quote:
Originally Posted by physguy
This is merely time-payments instead of one payment.
But Apple is not getting paid installments for the cost of selling an iPhone. It's getting a payment for a portion of the subscription fees. This is not a subsidization of the iPhone as Apple is not getting paid a direct one-time fee for the sale of the hardware like with all other carrier/manufacturer relationships.
Quote:
Originally Posted by physguy
The 'source' of the funds for the payment is the same in both cases - the customers service contract.
Of course it is, since the subscription fees is their bread and butter. But the reason for the payment is different. Apple is selling the hardware for little or no profit but will get it on the back end instead of up front.
Scenario 1: Customer purchases RZAR for $100 with 2 year contract. AT&T pays Motorola $300 for the sale. 3 months later the customer decides he doesn't like the phone and purchases a Nokia. Motorola already got it's money.
Scenario 2: Customer purchases iPHone for $500 with 2 year contract. AT&T pays Apple $500 for the sale. 3 months later the customer decides he doesn't like the phone and purchases a Nokia. Apple only gets 3 months of subscription based fees.
Quote:
Originally Posted by physguy
The only thing that would make it different, which may be the case, is if Apple is the only support source for the phone. This has real value and offloads additional cost from AT&T.
I don't see how not being able to go into an AT&T Mobility store to get service would benefit the consumer.
While it's true that Apple is getting paid smewhere, somehow; 'how' Apple is getting paid is completly different that the current manufacturer/carrier relationship.
True.
Quote:
Originally Posted by solipsism
This makes all the difference as manufacturer is, for once, committed to making the best possible phone and isn't interested in coming out with new models at break-neck speeds to increase its profit margin.
I don't see how this is any different. Customers will still get a byte at the apple (pun intended) every two years, just as now. If the iPhone is an $900 phone which is subsidized to $600 then they get to make the same choice again in 2 years.
Quote:
Originally Posted by solipsism
But Apple is not getting paid installments for the cost of selling an iPhone. It's getting a payment for a portion of the subscription fees. This is not a subsidization of the iPhone as Apple is not getting paid a direct one-time fee for the sale of the hardware like with all other carrier/manufacturer relationships.
I don't think we know this. This depends entirely on the wording and intent of the contract between Apple and AT&t
Quote:
Originally Posted by solipsism
Of course it is, since the subscription fees is their bread and butter. But the reason for the payment is different. Apple is selling the hardware for little or no profit but will get it on the back end instead of up front.
Scenario 1: Customer purchases RZAR for $100 with 2 year contract. AT&T pays Motorola $300 for the sale. 3 months later the customer decides he doesn't like the phone and purchases a Nokia. Motorola already got it's money.
Scenario 2: Customer purchases iPHone for $500 with 2 year contract. AT&T pays Apple $500 for the sale. 3 months later the customer decides he doesn't like the phone and purchases a Nokia. Apple only gets 3 months of subscription based fees.
Huh? How do you know that? 1) It's still a two year contract with the customer so the may be termination fees, which could go to Apple in compensation for the termination. Without the contracts this is all PURE speculation. We don't know if the model is the way you are proposing or not.
Quote:
Originally Posted by solipsism
I don't see how not being able to go into an AT&T Mobility store to get service would benefit the consumer.
Only because, in my experience, going to AT&T Mobility has no value. Being able to go to Apple will.
1) It's still a two year contract with the customer so the may be termination fees, which could go to Apple in compensation for the termination.
In my scenerio there was no termination of the contract. The customer is still with the same carrier and still required to subscribe for the agreed length. The fact is, we don't know how Apple will be paid if a customer does switch to a non-Apple phone or does terminate a contract prematurely. These unknowns strengthens my argument as the manufacture is now dependent on the subscription service, not just the initial hardware sale. This helps the customer as Apple has no choice but to deliver a higher quality product.
I don't know what the AT&T/Apple contracts are. I will probably never now. My scenarios were merely to show how this new paradigm of the manufacturer intimately involved with the carrier is not the subsidize hardware model we are used to.
Here are some of the major way I feel this will benefit the consumer:
Apple will probably have access to cell network infrastructure that other manufacturers do not
Apple will be able to create more carrier related services for the iPhone
Apple will benefit financially from releasing free software for the iPhone
Apple will benefit from allowing 3rd-partys to develop for the iPhone
Apple will be more committed to a more durable, longer lasting phone
Apple will have no need to up-sell a new communication device every few month
Other networks and manufactures will start working more closely together, which should end the US stagnation of the current subsidized hardware model
Let's check these things out first. The unlimited data plan at sprint is $39.99/month for two year contract.
Sorry but you are probably looking at the plan for computers using a phone modem card. It is more expensive because it is not a phone so they are not selling you minutes, just data.
The current data phone plan from Sprint is 15 dollars only. Because they are selling you a phone, selling you minutes for the phone, you get a very low cost, all you can eat data service.
In my scenerio there was no termination of the contract. The customer is still with the same carrier and still required to subscribe for the agreed length. The fact is, we don't know how Apple will be paid if a customer does switch to a non-Apple phone or does terminate a contract prematurely. These unknowns strengthens my argument as the manufacture is now dependent on the subscription service, not just the initial hardware sale.
I don't see how you can reach these conclusion based on the information at hand. Its certainly a nice model and I agree with your conclusions, given the input assumptions, but I don't see much to support these specific assumptions. They could be consistent with the information out there but its hardly a slam-dunk.
If the customer just exchanges the phone within the 15 or 30 days then there is no sale period, to Apple, to Motorola, to Nokia, or whomever was the manufacturer of the initial phone. Apple's position is no different than anyone else's. The carriers are not likely to pay whatever their going to pay to the manufacturer until the end of such a trial period as you describe. This return is as if the 'sale' never happened so it has no effect on the model.
I hope you are right but I see nothing currently available that leads to this conclusion.
Sorry but you are probably looking at the plan for computers using a phone modem card. It is more expensive because it is not a phone so they are not selling you minutes, just data.
The current data phone plan from Sprint is 15 dollars only. Because they are selling you a phone, selling you minutes for the phone, you get a very low cost, all you can eat data service.
Based on the cingular plans, for most phones unlimited data appears to start at 20 bucks and goes all the way to 40 mainly depending on texting if I read it correctly.
Not sure, but the iphone may fall in this same area unless they try to rip off people.
others seem to think that apple's gonna be happy with people holding onto the same iPhone for 5 years with free software updates. come on. apple is cool and all, but they're a corporation.
do you see apple offering hard drive upgrades on 3 year old [or ANY] iPod? color screen upgrades? NO. they want you to pay full price for an entire new iPod. more $$$ in their pocket. the same will be true with the iPhone. sure some software will be free to update... that required to run the device. but do we get a free update to iLife or ANY of it's components? hell, we have to pay to USE the .n wifi already installed in our laptops "for accounting purposes".
as for the subsidy, YES the iPhone will be subsidized. as soon as sales slow down and affect production/stock on unsubsidized units. until then [and i think it's gonna be a while] full price is what you're paying.
BTW, I don't they will subsidize the phone. If you can get it, get it if you like it. If not, Cingular has 100s of other phone to choose from. But the elitist comment was just silly.
Nope. The monthly plan price is the monthly plan price pretty much, regardless of whether you supplied your own phone or paid full retail for it or whatever. And, in fact, if you do supply your own phone and go 'sans contract', you'll lose your 'promotions'... stuff like free nights, free weekends, free m2m. It's really quite insidious.
Overseas apparently its different, but in the US I haven't heard of any large carriers offering monthly plan discounts for folks supplying their own phone/buying one at full retail. If someone does hear about somethin' like that, let me know, 'cuz I might be interested in takin' them up on it.
Nope. It's whatever the market will bear. The plans won't be reduced price for the same reason the phone likely won't be subsidized... because they'll sell tons of 'em regardless.
.
Thanks for the reply. Still, one can hope the pricing models will some day change.
Seems like no one here remembers that Apple is part of this equation too. Subsidies will happen ONLY if Apple approves the idea. Apple doesn't want the iPhone to become so cheap that ANYONE can get one.
Unless Apple is willing to totally eviserate the iPhone's feature set the way they did with the Shuffle, I don't see the price dropping to those levels.
others seem to think that apple's gonna be happy with people holding onto the same iPhone for 5 years with free software updates. come on. apple is cool and all, but they're a corporation.
Actually, it really depends on how the system is set up.
If Apple simply makes money on the iPhone hardware and that's it, sure, they'll want you to upgrade that iPhone, and they won't have an incentive to make the iPhone particularly durable either. But if the system was set up so that Apple simply breaks even on the initial sale of the iPhone hardware, but makes its profit by getting a cut of the monthly wireless service fees, then Apple has an incentive to make the iPhone very durable and reliable hardware-wise, and to provide a steady steam of updates on the software side.
That kind of system would seem to be a win-win-win... the customer wins because they get a great phone with great reliability in both hardware and software, and they don't have to buy another phone every year or two because their old one crapped out on them.
ATT wins because said happy customer is not going to churn on over to another carrier once their contract is up, and customer churn is a MAJOR problem and major cost to wireless carriers (ATT loses about 20% of its customers per year due to churn, and its expensive to attract enough customers to replace them).
And Apple wins because the iPhone's reputation/brand will be built in an awesome way, and they'd be making mad profit off of their cut of the monthly wireless service fees.
It's not my model though.... Solipism pointed out the idea first. I'm just commenting on the possibilities.
Comments
But, on the other hand, if the carriers are subsidizing current phones, don't they have to make up the difference on their monthly plans/rates and commitments.
Nope. The monthly plan price is the monthly plan price pretty much, regardless of whether you supplied your own phone or paid full retail for it or whatever. And, in fact, if you do supply your own phone and go 'sans contract', you'll lose your 'promotions'... stuff like free nights, free weekends, free m2m. It's really quite insidious.
Overseas apparently its different, but in the US I haven't heard of any large carriers offering monthly plan discounts for folks supplying their own phone/buying one at full retail. If someone does hear about somethin' like that, let me know, 'cuz I might be interested in takin' them up on it.
So, because the iPhone is not going to be subsidized shouldn't the monthly plans/rates reflect this lack of subsidy, or at bare minimum not require a 2 year commitment.
Nope. It's whatever the market will bear. The plans won't be reduced price for the same reason the phone likely won't be subsidized... because they'll sell tons of 'em regardless.
.
It still wouldn't matter, as the $500 to $600 is the price people see, and therfore, the one that people relate to.
There is nothing more than speculation, at this time, that Apple is receiving anything from Cingular.
Sorry, but it does matter as the question is whether the $500-$600 is a subsidized price, or not. At least that's what I'm talking about.
Since this thread is about this AI report then based on this quote from the report
Overall, the analyst said he walked away from the meeting believing that AT&T's revenue share with Apple could be a more meaningful portion of monthly average revenue per user than previously thought. He explained that this is possible given the "significantly better economics" AT&T should realize from iPhone subscribers, given the lower "churn" and cost of adding each user to its network with advertising and branding help from Apple.
Apple will receive money from the CUSTOMER in two ways.
1) Some percentage of the sale price of the hardware
2) Some percentage of the AT&T contract revenue.
To me this is no different in total, than any other subsidized phone, just a higher price that other subsidized phones, and no non-subsidized purchase price being offered.
It may be different in that other carrier-phone maker contract call for a payment for the hardware up front from the carrier instead of over the life of the contract but I simply don't know.
You may argue that the AI report is wrong but it say that Apple will receive monthly payments from AT&T they're just arguing over how much.
To me this is no different in total, than any other subsidized phone, just a higher price that other subsidized phones, and no non-subsidized purchase price being offered.
sub?si?dize
verb [ trans. ]
? pay part of the cost of producing (something) to reduce prices for the buyer.
It's lexical semantics, but there is a distinct difference between AT&T paying Apple directly for the retail cost of the iPhone and the AT&T paying Apple a portion of the subscribed dues.
This is very different than the current manufacturer/carrier model, but this not automatically make the iPhone a higher priced solution because it fails to offer some BS subsidized option. That is a similar argument that PC users make about the Mac which can seem more expensive than a PC at first glance, but where the long term usability of the machine is actually quite a bit cheaper.
sub?si?dize
verb [ trans. ]
? pay part of the cost of producing (something) to reduce prices for the buyer.
It's lexical semantics, but there is a distinct difference between AT&T paying Apple directly for the retail cost of the iPhone and the AT&T paying Apple a portion of the subscribed dues.
This is very different than the current manufacturer/carrier model, but this not automatically make the iPhone a higher priced solution because it fails to offer some BS subsidized option. That is a similar argument that PC users make about the Mac which can seem more expensive than a PC at first glance, but where the long term usability of the machine is actually quite a bit cheaper.
I know well the meaning of subsidize.
I don't believe there is any difference between this and the current model, other than accounting rules. This is merely time-payments instead of one payment. The 'source' of the funds for the payment is the same in both cases - the customers service contract. The only thing that would make it different, which may be the case, is if Apple is the only support source for the phone. This has real value and offloads additional cost from AT&T.
I hope this is the case because then I'm getting a lot of additional value (compared to the current model) for this money. WIth Apple I might get some real support. With phones I think we've all been on our own out there after purchase.
I don't believe there is any difference between this and the current model, other than accounting rules.
While it's true that Apple is getting paid smewhere, somehow; 'how' Apple is getting paid is completly different that the current manufacturer/carrier relationship. This makes all the difference as manufacturer is, for once, committed to making the best possible phone and isn't interested in coming out with new models at break-neck speeds to increase its profit margin.
This is merely time-payments instead of one payment.
But Apple is not getting paid installments for the cost of selling an iPhone. It's getting a payment for a portion of the subscription fees. This is not a subsidization of the iPhone as Apple is not getting paid a direct one-time fee for the sale of the hardware like with all other carrier/manufacturer relationships.
The 'source' of the funds for the payment is the same in both cases - the customers service contract.
Of course it is, since the subscription fees is their bread and butter. But the reason for the payment is different. Apple is selling the hardware for little or no profit but will get it on the back end instead of up front.
The only thing that would make it different, which may be the case, is if Apple is the only support source for the phone. This has real value and offloads additional cost from AT&T.
I don't see how not being able to go into an AT&T Mobility store to get service would benefit the consumer.
While it's true that Apple is getting paid smewhere, somehow; 'how' Apple is getting paid is completly different that the current manufacturer/carrier relationship.
True.
This makes all the difference as manufacturer is, for once, committed to making the best possible phone and isn't interested in coming out with new models at break-neck speeds to increase its profit margin.
I don't see how this is any different. Customers will still get a byte at the apple (pun intended) every two years, just as now. If the iPhone is an $900 phone which is subsidized to $600 then they get to make the same choice again in 2 years.
But Apple is not getting paid installments for the cost of selling an iPhone. It's getting a payment for a portion of the subscription fees. This is not a subsidization of the iPhone as Apple is not getting paid a direct one-time fee for the sale of the hardware like with all other carrier/manufacturer relationships.
I don't think we know this. This depends entirely on the wording and intent of the contract between Apple and AT&t
Of course it is, since the subscription fees is their bread and butter. But the reason for the payment is different. Apple is selling the hardware for little or no profit but will get it on the back end instead of up front.
Huh? How do you know that? 1) It's still a two year contract with the customer so the may be termination fees, which could go to Apple in compensation for the termination. Without the contracts this is all PURE speculation. We don't know if the model is the way you are proposing or not.
I don't see how not being able to go into an AT&T Mobility store to get service would benefit the consumer.
Only because, in my experience, going to AT&T Mobility has no value. Being able to go to Apple will.
1) It's still a two year contract with the customer so the may be termination fees, which could go to Apple in compensation for the termination.
In my scenerio there was no termination of the contract. The customer is still with the same carrier and still required to subscribe for the agreed length. The fact is, we don't know how Apple will be paid if a customer does switch to a non-Apple phone or does terminate a contract prematurely. These unknowns strengthens my argument as the manufacture is now dependent on the subscription service, not just the initial hardware sale. This helps the customer as Apple has no choice but to deliver a higher quality product.
I don't know what the AT&T/Apple contracts are. I will probably never now. My scenarios were merely to show how this new paradigm of the manufacturer intimately involved with the carrier is not the subsidize hardware model we are used to.
Here are some of the major way I feel this will benefit the consumer:
Let's check these things out first. The unlimited data plan at sprint is $39.99/month for two year contract.
Sorry but you are probably looking at the plan for computers using a phone modem card. It is more expensive because it is not a phone so they are not selling you minutes, just data.
The current data phone plan from Sprint is 15 dollars only. Because they are selling you a phone, selling you minutes for the phone, you get a very low cost, all you can eat data service.
Take a look at your bill and let us know what you pay for the data plan section of your bill, please.
Thanks
In my scenerio there was no termination of the contract. The customer is still with the same carrier and still required to subscribe for the agreed length. The fact is, we don't know how Apple will be paid if a customer does switch to a non-Apple phone or does terminate a contract prematurely. These unknowns strengthens my argument as the manufacture is now dependent on the subscription service, not just the initial hardware sale.
I don't see how you can reach these conclusion based on the information at hand. Its certainly a nice model and I agree with your conclusions, given the input assumptions, but I don't see much to support these specific assumptions. They could be consistent with the information out there but its hardly a slam-dunk.
If the customer just exchanges the phone within the 15 or 30 days then there is no sale period, to Apple, to Motorola, to Nokia, or whomever was the manufacturer of the initial phone. Apple's position is no different than anyone else's. The carriers are not likely to pay whatever their going to pay to the manufacturer until the end of such a trial period as you describe. This return is as if the 'sale' never happened so it has no effect on the model.
I hope you are right but I see nothing currently available that leads to this conclusion.
Sorry but you are probably looking at the plan for computers using a phone modem card. It is more expensive because it is not a phone so they are not selling you minutes, just data.
The current data phone plan from Sprint is 15 dollars only. Because they are selling you a phone, selling you minutes for the phone, you get a very low cost, all you can eat data service.
You're right. Sorry about that.
Anyone has a cingular smart phone with phone minutes and a data plan?
Take a look at your bill and let us know what you pay for the data plan section of your bill, please.
Thanks
The Cingular data plans are here. Note they already have different plans and prices for different hardware.
Not sure, but the iphone may fall in this same area unless they try to rip off people.
others seem to think that apple's gonna be happy with people holding onto the same iPhone for 5 years with free software updates. come on. apple is cool and all, but they're a corporation.
do you see apple offering hard drive upgrades on 3 year old [or ANY] iPod? color screen upgrades? NO. they want you to pay full price for an entire new iPod. more $$$ in their pocket. the same will be true with the iPhone. sure some software will be free to update... that required to run the device. but do we get a free update to iLife or ANY of it's components? hell, we have to pay to USE the .n wifi already installed in our laptops "for accounting purposes".
as for the subsidy, YES the iPhone will be subsidized. as soon as sales slow down and affect production/stock on unsubsidized units. until then [and i think it's gonna be a while] full price is what you're paying.
Go google search G4 Cube.
What's yer point?
http://en.wikipedia.org/wiki/Power_Mac_G4_Cube
What's yer point?
BTW, I don't they will subsidize the phone. If you can get it, get it if you like it. If not, Cingular has 100s of other phone to choose from. But the elitist comment was just silly.
Nope. The monthly plan price is the monthly plan price pretty much, regardless of whether you supplied your own phone or paid full retail for it or whatever. And, in fact, if you do supply your own phone and go 'sans contract', you'll lose your 'promotions'... stuff like free nights, free weekends, free m2m. It's really quite insidious.
Overseas apparently its different, but in the US I haven't heard of any large carriers offering monthly plan discounts for folks supplying their own phone/buying one at full retail. If someone does hear about somethin' like that, let me know, 'cuz I might be interested in takin' them up on it.
Nope. It's whatever the market will bear. The plans won't be reduced price for the same reason the phone likely won't be subsidized... because they'll sell tons of 'em regardless.
.
Thanks for the reply. Still, one can hope the pricing models will some day change.
Seems like no one here remembers that Apple is part of this equation too. Subsidies will happen ONLY if Apple approves the idea. Apple doesn't want the iPhone to become so cheap that ANYONE can get one.
Yep... just like the iPod...
D
Yep... just like the iPod...
D
Unless Apple is willing to totally eviserate the iPhone's feature set the way they did with the Shuffle, I don't see the price dropping to those levels.
others seem to think that apple's gonna be happy with people holding onto the same iPhone for 5 years with free software updates. come on. apple is cool and all, but they're a corporation.
Actually, it really depends on how the system is set up.
If Apple simply makes money on the iPhone hardware and that's it, sure, they'll want you to upgrade that iPhone, and they won't have an incentive to make the iPhone particularly durable either. But if the system was set up so that Apple simply breaks even on the initial sale of the iPhone hardware, but makes its profit by getting a cut of the monthly wireless service fees, then Apple has an incentive to make the iPhone very durable and reliable hardware-wise, and to provide a steady steam of updates on the software side.
That kind of system would seem to be a win-win-win... the customer wins because they get a great phone with great reliability in both hardware and software, and they don't have to buy another phone every year or two because their old one crapped out on them.
ATT wins because said happy customer is not going to churn on over to another carrier once their contract is up, and customer churn is a MAJOR problem and major cost to wireless carriers (ATT loses about 20% of its customers per year due to churn, and its expensive to attract enough customers to replace them).
And Apple wins because the iPhone's reputation/brand will be built in an awesome way, and they'd be making mad profit off of their cut of the monthly wireless service fees.
It's not my model though.... Solipism pointed out the idea first. I'm just commenting on the possibilities.
.