I am not saying that Verizon alone would do a lot of good for Apple. I am saying that if Apple had decided to sign with Verizon in the first place --- on Verizon's terms (i.e. low retail price and zero revenue sharing) --- then we would be seeing 50 million iphones sold by now because other carriers around the world would have signed on 1 year earlier.
This is pure speculation. Their is no evidence the phone would sold better worldwide under the conditions you cite. Apple did not even offer the original iPhone to as many countries as it offered the 3G.
It is believed that Apple is making just as much money subsidizing the phone as was made in revenue sharing. Either way the carrier is paying Apple a premium.
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What you willingly pretend doesn't exist, is that about 90% of Verizon customers are contract postpaid subscribers. It's the overall numbers that matters. For AT&T to pull in 750K iphone net new customers at $100 ARPU in Q4 2008 and pulling in 800K prepaid net new customers at $12 ARPU --- you are going to average out at $55. You make real money by targeting the middle class.
The other part you leave out is that Verizon charges more money for it's services and is truly the reason they have a higher ARPU.
They are differing business models. Both are clearly making money. I'm not sure why you are so hell bent on coloring Verizon under all circumstances as being so much better.
I noticed today on the Verizon website that the price of the Storm with a 2-year contract has dropped from $199 to $149. Desperation?
I'm a happy Verizon customer and am satisfied with my two device approach; a plain old cellphone for voice and an iPod Touch accessing free wireless for email and surfing the web. The Storm is definitely not for me.
I noticed today on the Verizon website that the price of the Storm with a 2-year contract has dropped from $199 to $149. Desperation?
I'm a happy Verizon customer and am satisfied with my two device approach; a plain old cellphone for voice and an iPod Touch accessing free wireless for email and surfing the web. The Storm is definitely not for me.
Also, the unlocked price is crazy!
Looking today at an Ad in the NYTimes for J&R, a big retailer here for phones, computers (including a long time Mac department), audio equipment, media, etc, had the Storm on SALE for a pithy $749 (reg. price $829).
Since Apple was criticized for having the iPhone for up to $600, unsubsidized, how do they expect to sell this at that price? I've already seen the N97 for $849.
I can only imagine the Palm Pre will be somewhere in that price range as well.
Obviously, Verizon is subsidizing the Storm more than AT&T is subsidizing the iPhone, they just haven't sold nearly as many.
This is pure speculation. Their is no evidence the phone would sold better worldwide under the conditions you cite. Apple did not even offer the original iPhone to as many countries as it offered the 3G.
It is believed that Apple is making just as much money subsidizing the phone as was made in revenue sharing. Either way the carrier is paying Apple a premium.
The other part you leave out is that Verizon charges more money for it's services and is truly the reason they have a higher ARPU.
They are differing business models. Both are clearly making money. I'm not sure why you are so hell bent on coloring Verizon under all circumstances as being so much better.
Apple would have signed more carriers worldwide much earlier if Apple killed the revenue sharing plan from the start. As you said it --- it appears that Apple makes as much money in the 3G iphone (without revenue sharing) than the original 2G iphone (with revenue sharing) --- so not signing Verizon hurts Apple much more than the other way around.
Verizon charges more money because they can (with their "network"). But that is not the reason why they have a higher ARPU. Verizon has a higher ARPU because Verizon has 67 million postpaid customers and AT&T has 60 million customers.
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Originally Posted by melgross
Obviously, Verizon is subsidizing the Storm more than AT&T is subsidizing the iPhone, they just haven't sold nearly as many.
Obviously that's not true because Verizon did not preannounce any profit warning. You can't assume that Verizon is subsidizing the Storm a lot, but also at the same time assume that Verizon expected the Storm to not sell well (therefore Verizon didn't preannounce any profit warning).
You can't have it both ways. If Verizon knows that the Storm would sell well with massive subsidy --- then they would have preannounced a profit warning. If Verizon knows that the Storm would not sell well with massive susbidy --- then they wouldn't have subsidized it massively in the first place.
Apple would have signed more carriers worldwide much earlier if Apple killed the revenue sharing plan from the start. As you said it --- it appears that Apple makes as much money in the 3G iphone (without revenue sharing) than the original 2G iphone (with revenue sharing) --- so not signing Verizon hurts Apple much more than the other way around.
Apple wasn't attempting to sign more countries to the original iPhone. Apple was working to sign more countries to the 3G, which largely worked. The one country that was giving Apple the most difficulty (China) still does not carry the iPhone. Verizon would not have made any difference in any of this.
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Verizon charges more money because they can (with their "network"). But that is not the reason why they have a higher ARPU. Verizon has a higher ARPU because Verizon has 67 million postpaid customers and AT&T has 60 million customers.
You do understand AT&T made $2.4 billion net income for the fourth quarter, $124 billion revenues for the year, adding 2.1 million subscribers.
Verizon made $1.24 billion net income for the fourth quarter, $97 billion revenues for the year, adding 1.4 million subscribers.
You do make more money when you have more customers.
Obviously that's not true because Verizon did not preannounce any profit warning. You can't assume that Verizon is subsidizing the Storm a lot, but also at the same time assume that Verizon expected the Storm to not sell well (therefore Verizon didn't preannounce any profit warning).
You can't have it both ways. If Verizon knows that the Storm would sell well with massive subsidy --- then they would have preannounced a profit warning. If Verizon knows that the Storm would not sell well with massive susbidy --- then they wouldn't have subsidized it massively in the first place.
AT&T had a profit warning bcause of many factors as you know very well. The unexpectedly high iPhone sales were only one reason for that.
And what you are trying to pretend isn't true, is that that extra they paid out to Apple this quarter will be giving them much greater returns over the 2 year life of the contract. You're good at trying to twist things around. The fact is that AT&T was HAPPY to have had to pay out that extra cash. If they expected so many sales this quarter, they would have added that into their guidance for this quarter, and we woudn't be talking about "profit shortfalls".
Meanwhile, the difference between even the $749 that the Storm is going for on sale right now, and the $149 that Verizon feels they have to reduce the price of the Storm to, is much greater than the cost of the iPhone was originally ($600), and the subsequent $300 being asked for the 16G model.
Of course, Verizon sold far fewer of them than AT&T sold of the iPhone.
Apple wasn't attempting to sign more countries to the original iPhone. Apple was working to sign more countries to the 3G, which largely worked. The one country that was giving Apple the most difficulty (China) still does not carry the iPhone. Verizon would not have made any difference in any of this.
You do understand AT&T made $2.4 billion net income for the fourth quarter, $124 billion revenues for the year, adding 2.1 million subscribers.
Verizon made $1.24 billion net income for the fourth quarter, $97 billion revenues for the year, adding 1.4 million subscribers.
You do make more money when you have more customers.
Apple wasn't attempting to sign more countries with the original iphone --- because they designed a GSM iphone with a 2G chipset (and the rest of the world wasn't interested). It would have been a lot different if Apple signed Verizon and picked a Qualcomm worldphone chipset (like the Storm having a CDMA/GSM/HSDPA chipset).
You do understand that I am talking about ONLY the wireless unit --- where AT&T Wireless made $2.6 billion in operating income in Q4 vs. Verizon Wireless made $3.8 billion in operating income.
AT&T had a profit warning bcause of many factors as you know very well. The unexpectedly high iPhone sales were only one reason for that.
And what you are trying to pretend isn't true, is that that extra they paid out to Apple this quarter will be giving them much greater returns over the 2 year life of the contract. You're good at trying to twist things around. The fact is that AT&T was HAPPY to have had to pay out that extra cash. If they expected so many sales this quarter, they would have added that into their guidance for this quarter, and we woudn't be talking about "profit shortfalls".
Meanwhile, the difference between even the $749 that the Storm is going for on sale right now, and the $149 that Verizon feels they have to reduce the price of the Storm to, is much greater than the cost of the iPhone was originally ($600), and the subsequent $300 being asked for the 16G model.
Of course, Verizon sold far fewer of them than AT&T sold of the iPhone.
No --- AT&T made a profit margin warning ---- long before the 3G iphone was even launched. They didn't know whether the 3G iphone would sell well or not, but they issued the warning anyway.
It has nothing to do with twisting things around. AT&T may be happy to subsidize the iphone, but that's their issue. It has nothing to do with whether Verizon is wiling to subsidize iphone copycats at the high cost.
If you look at Apple's SEC filings --- Wall Street analysts have calculated that the average selling price for an iphone is a little more than $600 (i.e. carriers are actually paying $600+ to Apple). Verizon may be charging $749 for the Storm for non-contract customers, but that's not what Verizon pays to RIM.
As a consumer, I think people would prefer Verizon to spend that huge iphone subsidy on network improvements.
CDMA needs fewer towers than GSM. Arguably AT&T has been spending as much if not more on infrastructure as Verizon Wireless. AT&T 3G buildout should be pretty much complete this year and AT&T's network has improved.
Sufficiently that Telephia reported that AT&T has fewer dropped calls than Verizon.
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It was a strategic error for Apple not to sign Verizon in the first place. If Apple gave up sooner on the idiotic high iphone retail price and idiotic revenue sharing idea (which they eventually did) ---- we would be talking about Apple selling the 50 millionth iphone right now.
Yes, it was idiotic to make money.
It doesn't matter if we'd see the 50 millionth iPhone right now if Apple wasn't making any money. What would be idiotic would be to follow Motorola's model which is pretty much what you are advocating.
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Verizon has been number 2 for 4 years now --- and they could have EASILY overtaken AT&T by just selling more prepaid. Verizon didn't do it. So it has NOTHING to do with just "we are the largest carrier".
Cingular got into a bidding war against Vodafone for AT&T Wireless. Verizon didn't get into a bidding war against the private equity firms for Alltel. Whether or not you would call it desperate --- Cingular is closer to the desperation scale than Verizon.
Which is why Cingular was a better partner than Verizon which means it was a strategically smart move for both Apple and iPhone users. I would be really annoyed to have to pay for VZ navigator on my 3G iPhone.
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Verizon didn't issue a profit warning on the Storm subsidy vs. AT&T issuing a profit warning on the iphone subsidy. Verizon thinks that a second rate copycat that doesn't cost an arm and a leg is good enough to compete with AT&T.
The point is that Apple and Cingular are good strategic partners that are highly competitive against Verizon, where, Cingular alone was not as competitive. It would have been in Verizon's interest to not let that strategic partnership to come into being and instead reap the rewards of being the exclusive iPhone carrier.
Had it not been for Cingular/AT&T and the iPhone I REALLY doubt that we'd see Verizon relaxing any of it's ham fisted controls on their phones. It has only been recently that they've done their "Open Network" thing to not artificially disable bluetooth and other phone capabilities in favor of their own stuff. Even so, most phones still are stuck on BREW vs Java even when Java is an option.
So, in summary, it was smart for Apple to go Cingular over Verizon because Verizon wanted to continue to be an ass toward it's customers and Apple is all about user experience. Both Apple and Cingular has done well at the expense of Verizon and other cell phone makers.
The winners have been customers on both networks given that Verizon has had to back off on it's more annoying "profit generation" schemes that work at the expense of their own customers.
Something that would NOT have happened if Apple acquiesced to Verizon's demands for control.
Apple wasn't attempting to sign more countries with the original iphone --- because they designed a GSM iphone with a 2G chipset (and the rest of the world wasn't interested). It would have been a lot different if Apple signed Verizon and picked a Qualcomm worldphone chipset (like the Storm having a CDMA/GSM/HSDPA chipset).
Seeing as how large the grey market for unlocked iPhones became. I don't think its true that carriers around the world would not have been interested.
Looking at the fact that less than one fourth of the worlds mobile phones use CDMA. I don't see how Apple using a hybrid CDMA/GSM chip would have made a great deal of difference.
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You do understand that I am talking about ONLY the wireless unit --- where AT&T Wireless made $2.6 billion in operating income in Q4 vs. Verizon Wireless made $3.8 billion in operating income.
I haven't seen their operating income. But in the end its the net income that counts. Somewhere between operating income and net income Verizon lost $2.56 billion. It doesn't count unless it hits the bottom line.
No --- AT&T made a profit margin warning ---- long before the 3G iphone was even launched. They didn't know whether the 3G iphone would sell well or not, but they issued the warning anyway.
That's not a profit "warning". That was telling investers that profits would be lower going on for a time because of the costs involved. That was the guidance being given.
The profit warning was because profits were lower than guidance, because of the much higher than expected sales of the iPhone this past quarter. Very different. The guidance already accounted for expected sales. If those sales levels were encountered (along with other higher than expected losses from weather and such), there would have been no profit warning.
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It has nothing to do with twisting things around. AT&T may be happy to subsidize the iphone, but that's their issue. It has nothing to do with whether Verizon is wiling to subsidize iphone copycats at the high cost.
I agree, but you're the one bringing up the Storm.
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If you look at Apple's SEC filings --- Wall Street analysts have calculated that the average selling price for an iphone is a little more than $600 (i.e. carriers are actually paying $600+ to Apple). Verizon may be charging $749 for the Storm for non-contract customers, but that's not what Verizon pays to RIM.
Those are just guesses, nothing more. I've seen others that show much smaller numbers.
CDMA needs fewer towers than GSM. Arguably AT&T has been spending as much if not more on infrastructure as Verizon Wireless. AT&T 3G buildout should be pretty much complete this year and AT&T's network has improved.
It doesn't matter if we'd see the 50 millionth iPhone right now if Apple wasn't making any money. What would be idiotic would be to follow Motorola's model which is pretty much what you are advocating.
Which is why Cingular was a better partner than Verizon which means it was a strategically smart move for both Apple and iPhone users. I would be really annoyed to have to pay for VZ navigator on my 3G iPhone.
The point is that Apple and Cingular are good strategic partners that are highly competitive against Verizon, where, Cingular alone was not as competitive. It would have been in Verizon's interest to not let that strategic partnership to come into being and instead reap the rewards of being the exclusive iPhone carrier.
Had it not been for Cingular/AT&T and the iPhone I REALLY doubt that we'd see Verizon relaxing any of it's ham fisted controls on their phones. It has only been recently that they've done their "Open Network" thing to not artificially disable bluetooth and other phone capabilities in favor of their own stuff. Even so, most phones still are stuck on BREW vs Java even when Java is an option.
So, in summary, it was smart for Apple to go Cingular over Verizon because Verizon wanted to continue to be an ass toward it's customers and Apple is all about user experience. Both Apple and Cingular has done well at the expense of Verizon and other cell phone makers.
The winners have been customers on both networks given that Verizon has had to back off on it's more annoying "profit generation" schemes that work at the expense of their own customers.
Something that would NOT have happened if Apple acquiesced to Verizon's demands for control.
CDMA and GSM uses about the same number of cell towers on the same frequency. The only thing that affects number of cell towers is 800 Mhz vs. 1900 Mhz.
Apple makes as much money per 3G iphone (without revenue sharing) than the original 2G iphone (with revenue sharing). Imagine that --- only with 50 million iphones.
It's better to pay for Verizon Navigator on the iphone than right now --- in which we don't no turn-by-turn navigation software on the AT&T iphone.
How is Verizon affected by the iphone for "open phone" --- when the iphone has crippled bluetooth also. "Open phone" is a smoke screen (a useless PR exercise) by Verizon --- you won't see anything concrete.
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Originally Posted by TenoBell
Seeing as how large the grey market for unlocked iPhones became. I don't think its true that carriers around the world would not have been interested.
Looking at the fact that less than one fourth of the worlds mobile phones use CDMA. I don't see how Apple using a hybrid CDMA/GSM chip would have made a great deal of difference.
I haven't seen their operating income. But in the end its the net income that counts. Somewhere between operating income and net income Verizon lost $2.56 billion. It doesn't count unless it hits the bottom line.
Except --- that these grey market unlocked iphones don't usually subscribe to data plans at all (they just use wifi). The carriers don't care about the iphone if they can't get you to sign up for data plans.
CDMA may be small in the world phone market --- but they are concentrated in the first world (US, Canada, Japan and Korea). Who really cares if India has a billion+ people and they are all GSM users --- if only 10000 iphones were sold in India.
The only reason why Verizon has lower net income is because Verizon is spending $22+ billion on FIOS and AT&T is spending about $6 billion on fiber. Nothing to do with what we are talking about.
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Originally Posted by melgross
That's not a profit "warning". That was telling investers that profits would be lower going on for a time because of the costs involved. That was the guidance being given.
The profit warning was because profits were lower than guidance, because of the much higher than expected sales of the iPhone this past quarter. Very different. The guidance already accounted for expected sales. If those sales levels were encountered (along with other higher than expected losses from weather and such), there would have been no profit warning.
I agree, but you're the one bringing up the Storm.
Those are just guesses, nothing more. I've seen others that show much smaller numbers.
Whether you call it a profit warning or not for AT&T --- Verizon hasn't done it for the storm.
They are not guesses --- just go to Apple's SEC filings, they listed the iphone/Apple TV revenue (which Apple thinks it's a side hobby with negligable revenue) and divide by the number of iphones shipped.
Except --- that these grey market unlocked iphones don't usually subscribe to data plans at all (they just use wifi). The carriers don't care about the iphone if they can't get you to sign up for data plans.
My point wasn't about the grey market itself. My point is that the grey market shows their is demand for the iPhone and carriers would want to satisfy that demand.
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CDMA may be small in the world phone market --- but they are concentrated in the first world (US, Canada, Japan and Korea). Who really cares if India has a billion+ people and they are all GSM users --- if only 10000 iphones were sold in India.
The iPhone is in the US, Canada, Japan, Korea, as well as many other countries that have no CDMA.
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The only reason why Verizon has lower net income is because Verizon is spending $22+ billion on FIOS and AT&T is spending about $6 billion on fiber. Nothing to do with what we are talking about.
Net income is the bottom line. No one cares about operating income.
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Whether you call it a profit warning or not for AT&T --- Verizon hasn't done it for the storm.
Maybe they haven't sold enough Storms for it to be a problem.
My point wasn't about the grey market itself. My point is that the grey market shows their is demand for the iPhone and carriers would want to satisfy that demand.
The iPhone is in the US, Canada, Japan, Korea, as well as many other countries that have no CDMA.
Net income is the bottom line. No one cares about operating income.
Maybe they haven't sold enough Storms for it to be a problem.
No, your point was about carriers "being interested" or not --- carriers aren't in the business of selling hardware, they are in the business of selling phone services.
And Apple could have gotten a much bigger share of US, Canada, Japan and Korean market --- the very first world market that is important to the iphone.
No one cares about the whole AT&T or the whole Verizon --- when we are talking about the wireless division only. Operating income is far more important in telecom industries when they are constantly doing massive mergers and having merger-related write-offs left and right.
AT&T announced the profit margin warning BEFORE the 3G iphone was launched. Verizon hasn't announced anything on the Storm both before and after it was launched. There is no maybe --- either Verizon thinks that the Storm's subsidy is totally out of whack that requires them to tell Wall Street or the subsidy is not that bad.
Importantly, Verizon Wireless' profit margin went up substantially year to year --- not a sign that they over-extended themselves with massive Storm subsidy.
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I am not saying that Verizon alone would do a lot of good for Apple. I am saying that if Apple had decided to sign with Verizon in the first place --- on Verizon's terms (i.e. low retail price and zero revenue sharing) --- then we would be seeing 50 million iphones sold by now because other carriers around the world would have signed on 1 year earlier.
This is pure speculation. Their is no evidence the phone would sold better worldwide under the conditions you cite. Apple did not even offer the original iPhone to as many countries as it offered the 3G.
It is believed that Apple is making just as much money subsidizing the phone as was made in revenue sharing. Either way the carrier is paying Apple a premium.
What you willingly pretend doesn't exist, is that about 90% of Verizon customers are contract postpaid subscribers. It's the overall numbers that matters. For AT&T to pull in 750K iphone net new customers at $100 ARPU in Q4 2008 and pulling in 800K prepaid net new customers at $12 ARPU --- you are going to average out at $55. You make real money by targeting the middle class.
The other part you leave out is that Verizon charges more money for it's services and is truly the reason they have a higher ARPU.
They are differing business models. Both are clearly making money. I'm not sure why you are so hell bent on coloring Verizon under all circumstances as being so much better.
I'm a happy Verizon customer and am satisfied with my two device approach; a plain old cellphone for voice and an iPod Touch accessing free wireless for email and surfing the web. The Storm is definitely not for me.
I noticed today on the Verizon website that the price of the Storm with a 2-year contract has dropped from $199 to $149. Desperation?
I'm a happy Verizon customer and am satisfied with my two device approach; a plain old cellphone for voice and an iPod Touch accessing free wireless for email and surfing the web. The Storm is definitely not for me.
Also, the unlocked price is crazy!
Looking today at an Ad in the NYTimes for J&R, a big retailer here for phones, computers (including a long time Mac department), audio equipment, media, etc, had the Storm on SALE for a pithy $749 (reg. price $829).
Since Apple was criticized for having the iPhone for up to $600, unsubsidized, how do they expect to sell this at that price? I've already seen the N97 for $849.
I can only imagine the Palm Pre will be somewhere in that price range as well.
Obviously, Verizon is subsidizing the Storm more than AT&T is subsidizing the iPhone, they just haven't sold nearly as many.
This has got to hurt.
This is pure speculation. Their is no evidence the phone would sold better worldwide under the conditions you cite. Apple did not even offer the original iPhone to as many countries as it offered the 3G.
It is believed that Apple is making just as much money subsidizing the phone as was made in revenue sharing. Either way the carrier is paying Apple a premium.
The other part you leave out is that Verizon charges more money for it's services and is truly the reason they have a higher ARPU.
They are differing business models. Both are clearly making money. I'm not sure why you are so hell bent on coloring Verizon under all circumstances as being so much better.
Apple would have signed more carriers worldwide much earlier if Apple killed the revenue sharing plan from the start. As you said it --- it appears that Apple makes as much money in the 3G iphone (without revenue sharing) than the original 2G iphone (with revenue sharing) --- so not signing Verizon hurts Apple much more than the other way around.
Verizon charges more money because they can (with their "network"). But that is not the reason why they have a higher ARPU. Verizon has a higher ARPU because Verizon has 67 million postpaid customers and AT&T has 60 million customers.
Obviously, Verizon is subsidizing the Storm more than AT&T is subsidizing the iPhone, they just haven't sold nearly as many.
Obviously that's not true because Verizon did not preannounce any profit warning. You can't assume that Verizon is subsidizing the Storm a lot, but also at the same time assume that Verizon expected the Storm to not sell well (therefore Verizon didn't preannounce any profit warning).
You can't have it both ways. If Verizon knows that the Storm would sell well with massive subsidy --- then they would have preannounced a profit warning. If Verizon knows that the Storm would not sell well with massive susbidy --- then they wouldn't have subsidized it massively in the first place.
Apple would have signed more carriers worldwide much earlier if Apple killed the revenue sharing plan from the start. As you said it --- it appears that Apple makes as much money in the 3G iphone (without revenue sharing) than the original 2G iphone (with revenue sharing) --- so not signing Verizon hurts Apple much more than the other way around.
Apple wasn't attempting to sign more countries to the original iPhone. Apple was working to sign more countries to the 3G, which largely worked. The one country that was giving Apple the most difficulty (China) still does not carry the iPhone. Verizon would not have made any difference in any of this.
Verizon charges more money because they can (with their "network"). But that is not the reason why they have a higher ARPU. Verizon has a higher ARPU because Verizon has 67 million postpaid customers and AT&T has 60 million customers.
You do understand AT&T made $2.4 billion net income for the fourth quarter, $124 billion revenues for the year, adding 2.1 million subscribers.
Verizon made $1.24 billion net income for the fourth quarter, $97 billion revenues for the year, adding 1.4 million subscribers.
You do make more money when you have more customers.
Obviously that's not true because Verizon did not preannounce any profit warning. You can't assume that Verizon is subsidizing the Storm a lot, but also at the same time assume that Verizon expected the Storm to not sell well (therefore Verizon didn't preannounce any profit warning).
You can't have it both ways. If Verizon knows that the Storm would sell well with massive subsidy --- then they would have preannounced a profit warning. If Verizon knows that the Storm would not sell well with massive susbidy --- then they wouldn't have subsidized it massively in the first place.
AT&T had a profit warning bcause of many factors as you know very well. The unexpectedly high iPhone sales were only one reason for that.
And what you are trying to pretend isn't true, is that that extra they paid out to Apple this quarter will be giving them much greater returns over the 2 year life of the contract. You're good at trying to twist things around. The fact is that AT&T was HAPPY to have had to pay out that extra cash. If they expected so many sales this quarter, they would have added that into their guidance for this quarter, and we woudn't be talking about "profit shortfalls".
Meanwhile, the difference between even the $749 that the Storm is going for on sale right now, and the $149 that Verizon feels they have to reduce the price of the Storm to, is much greater than the cost of the iPhone was originally ($600), and the subsequent $300 being asked for the 16G model.
Of course, Verizon sold far fewer of them than AT&T sold of the iPhone.
Apple wasn't attempting to sign more countries to the original iPhone. Apple was working to sign more countries to the 3G, which largely worked. The one country that was giving Apple the most difficulty (China) still does not carry the iPhone. Verizon would not have made any difference in any of this.
You do understand AT&T made $2.4 billion net income for the fourth quarter, $124 billion revenues for the year, adding 2.1 million subscribers.
Verizon made $1.24 billion net income for the fourth quarter, $97 billion revenues for the year, adding 1.4 million subscribers.
You do make more money when you have more customers.
Apple wasn't attempting to sign more countries with the original iphone --- because they designed a GSM iphone with a 2G chipset (and the rest of the world wasn't interested). It would have been a lot different if Apple signed Verizon and picked a Qualcomm worldphone chipset (like the Storm having a CDMA/GSM/HSDPA chipset).
You do understand that I am talking about ONLY the wireless unit --- where AT&T Wireless made $2.6 billion in operating income in Q4 vs. Verizon Wireless made $3.8 billion in operating income.
AT&T had a profit warning bcause of many factors as you know very well. The unexpectedly high iPhone sales were only one reason for that.
And what you are trying to pretend isn't true, is that that extra they paid out to Apple this quarter will be giving them much greater returns over the 2 year life of the contract. You're good at trying to twist things around. The fact is that AT&T was HAPPY to have had to pay out that extra cash. If they expected so many sales this quarter, they would have added that into their guidance for this quarter, and we woudn't be talking about "profit shortfalls".
Meanwhile, the difference between even the $749 that the Storm is going for on sale right now, and the $149 that Verizon feels they have to reduce the price of the Storm to, is much greater than the cost of the iPhone was originally ($600), and the subsequent $300 being asked for the 16G model.
Of course, Verizon sold far fewer of them than AT&T sold of the iPhone.
No --- AT&T made a profit margin warning ---- long before the 3G iphone was even launched. They didn't know whether the 3G iphone would sell well or not, but they issued the warning anyway.
http://news.cnet.com/8301-10784_3-9963999-7.html
It has nothing to do with twisting things around. AT&T may be happy to subsidize the iphone, but that's their issue. It has nothing to do with whether Verizon is wiling to subsidize iphone copycats at the high cost.
If you look at Apple's SEC filings --- Wall Street analysts have calculated that the average selling price for an iphone is a little more than $600 (i.e. carriers are actually paying $600+ to Apple). Verizon may be charging $749 for the Storm for non-contract customers, but that's not what Verizon pays to RIM.
As a consumer, I think people would prefer Verizon to spend that huge iphone subsidy on network improvements.
CDMA needs fewer towers than GSM. Arguably AT&T has been spending as much if not more on infrastructure as Verizon Wireless. AT&T 3G buildout should be pretty much complete this year and AT&T's network has improved.
Sufficiently that Telephia reported that AT&T has fewer dropped calls than Verizon.
It was a strategic error for Apple not to sign Verizon in the first place. If Apple gave up sooner on the idiotic high iphone retail price and idiotic revenue sharing idea (which they eventually did) ---- we would be talking about Apple selling the 50 millionth iphone right now.
Yes, it was idiotic to make money.
It doesn't matter if we'd see the 50 millionth iPhone right now if Apple wasn't making any money. What would be idiotic would be to follow Motorola's model which is pretty much what you are advocating.
Verizon has been number 2 for 4 years now --- and they could have EASILY overtaken AT&T by just selling more prepaid. Verizon didn't do it. So it has NOTHING to do with just "we are the largest carrier".
Cingular got into a bidding war against Vodafone for AT&T Wireless. Verizon didn't get into a bidding war against the private equity firms for Alltel. Whether or not you would call it desperate --- Cingular is closer to the desperation scale than Verizon.
Which is why Cingular was a better partner than Verizon which means it was a strategically smart move for both Apple and iPhone users. I would be really annoyed to have to pay for VZ navigator on my 3G iPhone.
Verizon didn't issue a profit warning on the Storm subsidy vs. AT&T issuing a profit warning on the iphone subsidy. Verizon thinks that a second rate copycat that doesn't cost an arm and a leg is good enough to compete with AT&T.
The point is that Apple and Cingular are good strategic partners that are highly competitive against Verizon, where, Cingular alone was not as competitive. It would have been in Verizon's interest to not let that strategic partnership to come into being and instead reap the rewards of being the exclusive iPhone carrier.
Had it not been for Cingular/AT&T and the iPhone I REALLY doubt that we'd see Verizon relaxing any of it's ham fisted controls on their phones. It has only been recently that they've done their "Open Network" thing to not artificially disable bluetooth and other phone capabilities in favor of their own stuff. Even so, most phones still are stuck on BREW vs Java even when Java is an option.
So, in summary, it was smart for Apple to go Cingular over Verizon because Verizon wanted to continue to be an ass toward it's customers and Apple is all about user experience. Both Apple and Cingular has done well at the expense of Verizon and other cell phone makers.
The winners have been customers on both networks given that Verizon has had to back off on it's more annoying "profit generation" schemes that work at the expense of their own customers.
Something that would NOT have happened if Apple acquiesced to Verizon's demands for control.
Apple wasn't attempting to sign more countries with the original iphone --- because they designed a GSM iphone with a 2G chipset (and the rest of the world wasn't interested). It would have been a lot different if Apple signed Verizon and picked a Qualcomm worldphone chipset (like the Storm having a CDMA/GSM/HSDPA chipset).
Seeing as how large the grey market for unlocked iPhones became. I don't think its true that carriers around the world would not have been interested.
Looking at the fact that less than one fourth of the worlds mobile phones use CDMA. I don't see how Apple using a hybrid CDMA/GSM chip would have made a great deal of difference.
You do understand that I am talking about ONLY the wireless unit --- where AT&T Wireless made $2.6 billion in operating income in Q4 vs. Verizon Wireless made $3.8 billion in operating income.
I haven't seen their operating income. But in the end its the net income that counts. Somewhere between operating income and net income Verizon lost $2.56 billion. It doesn't count unless it hits the bottom line.
No --- AT&T made a profit margin warning ---- long before the 3G iphone was even launched. They didn't know whether the 3G iphone would sell well or not, but they issued the warning anyway.
http://news.cnet.com/8301-10784_3-9963999-7.html
That's not a profit "warning". That was telling investers that profits would be lower going on for a time because of the costs involved. That was the guidance being given.
The profit warning was because profits were lower than guidance, because of the much higher than expected sales of the iPhone this past quarter. Very different. The guidance already accounted for expected sales. If those sales levels were encountered (along with other higher than expected losses from weather and such), there would have been no profit warning.
It has nothing to do with twisting things around. AT&T may be happy to subsidize the iphone, but that's their issue. It has nothing to do with whether Verizon is wiling to subsidize iphone copycats at the high cost.
I agree, but you're the one bringing up the Storm.
If you look at Apple's SEC filings --- Wall Street analysts have calculated that the average selling price for an iphone is a little more than $600 (i.e. carriers are actually paying $600+ to Apple). Verizon may be charging $749 for the Storm for non-contract customers, but that's not what Verizon pays to RIM.
Those are just guesses, nothing more. I've seen others that show much smaller numbers.
CDMA needs fewer towers than GSM. Arguably AT&T has been spending as much if not more on infrastructure as Verizon Wireless. AT&T 3G buildout should be pretty much complete this year and AT&T's network has improved.
It doesn't matter if we'd see the 50 millionth iPhone right now if Apple wasn't making any money. What would be idiotic would be to follow Motorola's model which is pretty much what you are advocating.
Which is why Cingular was a better partner than Verizon which means it was a strategically smart move for both Apple and iPhone users. I would be really annoyed to have to pay for VZ navigator on my 3G iPhone.
The point is that Apple and Cingular are good strategic partners that are highly competitive against Verizon, where, Cingular alone was not as competitive. It would have been in Verizon's interest to not let that strategic partnership to come into being and instead reap the rewards of being the exclusive iPhone carrier.
Had it not been for Cingular/AT&T and the iPhone I REALLY doubt that we'd see Verizon relaxing any of it's ham fisted controls on their phones. It has only been recently that they've done their "Open Network" thing to not artificially disable bluetooth and other phone capabilities in favor of their own stuff. Even so, most phones still are stuck on BREW vs Java even when Java is an option.
So, in summary, it was smart for Apple to go Cingular over Verizon because Verizon wanted to continue to be an ass toward it's customers and Apple is all about user experience. Both Apple and Cingular has done well at the expense of Verizon and other cell phone makers.
The winners have been customers on both networks given that Verizon has had to back off on it's more annoying "profit generation" schemes that work at the expense of their own customers.
Something that would NOT have happened if Apple acquiesced to Verizon's demands for control.
CDMA and GSM uses about the same number of cell towers on the same frequency. The only thing that affects number of cell towers is 800 Mhz vs. 1900 Mhz.
Apple makes as much money per 3G iphone (without revenue sharing) than the original 2G iphone (with revenue sharing). Imagine that --- only with 50 million iphones.
It's better to pay for Verizon Navigator on the iphone than right now --- in which we don't no turn-by-turn navigation software on the AT&T iphone.
How is Verizon affected by the iphone for "open phone" --- when the iphone has crippled bluetooth also. "Open phone" is a smoke screen (a useless PR exercise) by Verizon --- you won't see anything concrete.
Seeing as how large the grey market for unlocked iPhones became. I don't think its true that carriers around the world would not have been interested.
Looking at the fact that less than one fourth of the worlds mobile phones use CDMA. I don't see how Apple using a hybrid CDMA/GSM chip would have made a great deal of difference.
I haven't seen their operating income. But in the end its the net income that counts. Somewhere between operating income and net income Verizon lost $2.56 billion. It doesn't count unless it hits the bottom line.
Except --- that these grey market unlocked iphones don't usually subscribe to data plans at all (they just use wifi). The carriers don't care about the iphone if they can't get you to sign up for data plans.
CDMA may be small in the world phone market --- but they are concentrated in the first world (US, Canada, Japan and Korea). Who really cares if India has a billion+ people and they are all GSM users --- if only 10000 iphones were sold in India.
The only reason why Verizon has lower net income is because Verizon is spending $22+ billion on FIOS and AT&T is spending about $6 billion on fiber. Nothing to do with what we are talking about.
That's not a profit "warning". That was telling investers that profits would be lower going on for a time because of the costs involved. That was the guidance being given.
The profit warning was because profits were lower than guidance, because of the much higher than expected sales of the iPhone this past quarter. Very different. The guidance already accounted for expected sales. If those sales levels were encountered (along with other higher than expected losses from weather and such), there would have been no profit warning.
I agree, but you're the one bringing up the Storm.
Those are just guesses, nothing more. I've seen others that show much smaller numbers.
Whether you call it a profit warning or not for AT&T --- Verizon hasn't done it for the storm.
They are not guesses --- just go to Apple's SEC filings, they listed the iphone/Apple TV revenue (which Apple thinks it's a side hobby with negligable revenue) and divide by the number of iphones shipped.
Except --- that these grey market unlocked iphones don't usually subscribe to data plans at all (they just use wifi). The carriers don't care about the iphone if they can't get you to sign up for data plans.
My point wasn't about the grey market itself. My point is that the grey market shows their is demand for the iPhone and carriers would want to satisfy that demand.
CDMA may be small in the world phone market --- but they are concentrated in the first world (US, Canada, Japan and Korea). Who really cares if India has a billion+ people and they are all GSM users --- if only 10000 iphones were sold in India.
The iPhone is in the US, Canada, Japan, Korea, as well as many other countries that have no CDMA.
The only reason why Verizon has lower net income is because Verizon is spending $22+ billion on FIOS and AT&T is spending about $6 billion on fiber. Nothing to do with what we are talking about.
Net income is the bottom line. No one cares about operating income.
Whether you call it a profit warning or not for AT&T --- Verizon hasn't done it for the storm.
Maybe they haven't sold enough Storms for it to be a problem.
My point wasn't about the grey market itself. My point is that the grey market shows their is demand for the iPhone and carriers would want to satisfy that demand.
The iPhone is in the US, Canada, Japan, Korea, as well as many other countries that have no CDMA.
Net income is the bottom line. No one cares about operating income.
Maybe they haven't sold enough Storms for it to be a problem.
No, your point was about carriers "being interested" or not --- carriers aren't in the business of selling hardware, they are in the business of selling phone services.
And Apple could have gotten a much bigger share of US, Canada, Japan and Korean market --- the very first world market that is important to the iphone.
No one cares about the whole AT&T or the whole Verizon --- when we are talking about the wireless division only. Operating income is far more important in telecom industries when they are constantly doing massive mergers and having merger-related write-offs left and right.
AT&T announced the profit margin warning BEFORE the 3G iphone was launched. Verizon hasn't announced anything on the Storm both before and after it was launched. There is no maybe --- either Verizon thinks that the Storm's subsidy is totally out of whack that requires them to tell Wall Street or the subsidy is not that bad.
Importantly, Verizon Wireless' profit margin went up substantially year to year --- not a sign that they over-extended themselves with massive Storm subsidy.