Apple estimates 250,000 iPhones sold to SIM unlockers
By Ryan Block 
posted Oct 22nd 2007 5:51PM
posted Oct 22nd 2007 5:51PM
Interesting. Were you at all curious to know how many of the 1.4m iPhones Apple's sold went to US T-Mobile customers and exporters "with the intention to unlock" the handsets? Well, there's no way anyone will ever know for sure, but on today's Apple Q4 earnings call Apple COO Tim Cook (or we think that was Tim Cook) stated that "Apple estimates 250,000 iPhones were sold with intention to unlock," and that "many of those sales happened after the price cut". Definitely not an insignificant number of iPhones not on Apple-authorized networks paying out serious coin for the privilege, so is it any wonder Cupertino's working so hard to lock this stuff down?
On a positive note to that though, at least they did sell 250,000 phones which may have not otherwise been purchased.
and they made a pile of money off them. the margin on iphones is still reputed to be pretty high even at the new 400$ cost.
I suspect these numbers were announced more to reassure carriers than anything else. While at&t did lose some sales to unlockers the numbers weren't really that large.
I do agree though that these were found sales. The vaast majority of those customers would not have bought a phone at all if they couldn't unlock it.
Let's use pretend numbers here, since no one knows exactly what Apple is getting out of AT&T for activations + service. But let's say Apple gets $20 per activation, and a modest 10% per month with an average monthly bill of $100 per iPhone. For the standard two year agreement you have to sign up for, that $400 iPhone is actually worth an additional $240 to Apple (plus that $20 on activation). Multiply that by 250k = $65,000,000 -- not exactly chump change.
Does Apple want everyone to own iPhones? Yes. Will Apple do whatever it can to make sure it gets that extra money from its carrier agreements? Undoubtedly so.
>> ... Multiply that by 250k = $65,000,000 -- not exactly chump change.
>> ...
But I wouldn't have bought 2 of the 250k iphones if it couldn't be unlocked. And I'm sure most of the 250k customers would agree. That'd mean a big fat $0 instead of the $65M for Apple. In fact, by your calculation, Apple still gets $240 * 250k = $60M without activation. That ain't too bad compared to $0 if the customers don't buy at all.
The iphone is 400 dollars, it would be 400x250k for unlocked ones...
MR said:
But I wouldn't have bought 2 of the 250k iphones if it couldn't be unlocked. And I'm sure most of the 250k customers would agree. That'd mean a big fat $0 instead of the $65M for Apple. In fact, by your calculation, Apple still gets $240 * 250k = $60M without activation. That ain't too bad compared to $0 if the customers don't buy at all.
In reply: I believe Ryan's numbers was referring to $240 (their percentage from monthly bill of subscribers) * 250k so unlocked phone actually loses $60M, not gains since T-Mo doesn't hand over any percentage of monthly bills.
I guess the only way Apple could make some revenue from an unlocked phone would be with iTunes.
"...is it any wonder Cupertino's working so hard to lock this stuff down?"
Of course it's a huge wonder. I'm not gonna hack my damn phone, nor am I paying full retail price for a locked phone. Ever. No matter how good it looks, or what it does. It's pure stupidity. Apple would have made a lot more money just honestly selling phones that it will trying to be one of the shady characters for which the US cell market is famous. Personally I'm waiting for 3G, mainly because Australian 2G carriers charge $1/minute at the cheapest for GPRS data. Telstra, our biggest carrier charges 2c/kb for GPRS. Yes, you read that right, $20 a meg. But on 3 I'm paying $29 for a GB a month, not taking into account the fact it's much faster.
"But I wouldn't have bought 2 of the 250k iphones if it couldn't be unlocked. "
Exactly. It's like SW manufacturers who claim to "lose" billions in sales due to sw piracy. If the people who have pirated the SW wouldn't have bought your product in the first place, then you didn't "lose" any money at all.
Now that 3rd party app support is rightly on the way, I'll consider buying an iPhone, if the app selection process isn't locked down. However, I'm predicting Steve won't be allowing a Skype client anytime soon :/.
Does it matter either way? Apple gets their money. ATT doesn't. Sure they don't get monthly fee from ATT..but its better than nothing.
Wrong. Apple and AT&T split an extra $500--FIVE HUNDRED DOLLARS--for every phone that is not unlocked, because that is how much MORE AT&T's phone plan costs than a comparable plan from T-Mobile.
Apple gets MOST of that $500, as per the terms of its contract with AT&T. Why do you think Apple bothered with an exclusive dealer contract in the first place? Apple gets about as much money as the iPhone costs--probably about $400--every time someone buys an iPhone plan from AT&T. Apple makes MOST of its profit on the iPhone when people buy service from AT&T.
THAT is why Apple is obsessed with unlockers. It's not because Steve Jobs is a control freak (though he is). It's because he's greedy.
Umm.. shouldn't they be happy that they sold 250,000 more iPhones than they would have without the SIM unlock?
AT$T is most likely having a pissy fit, leading to the Apple (attempted)lockdown.
In keeping with the previous posts, and this is a Apple fan speaking, the $1 billion profit doesn't help their creditibility. That and the fact that after hours trading makes them wealthier than IBM.
Didn't Mossberg, the most influential consumer tech writer (according to Engadget) hail this very Apple deal with AT&T as something good for consumers?
Umm, actually there was a very long article written by Mossberg in the Wall Street Journal today...and he in fact stated that the US cellular industry is similar to AT&T back when it was a monopoly, stifling R&D. The exclusive agreement between AT&T and the iphone actually hurts consumers by limiting choices and forcing consumers to use AT&T, a negative for users with bad at&t service in their area who still want the iphone. (sure you could unlock it, but holistically, it is a negative).
The lack of proper government intervention he says resulted in two different cellular technologies in use (ie. CDMA and GSM), as opposed to one standard. The fact that the lobbyists and lawyers for the cellular industry in the US are so powerful limits how much the government can actually do. He also speaks about how the opening of the 700 mhz spectrum might open up the industry but he makes no promises.
I know that the WSJ online is subscription based so I'm not sure whether you can get the article for free, (sorry, no link) but if you get the WSJ hard copy check it out.
I would guess that AT&T is going to compare the number of activations with Apple's sale figures and then demand to renegotiate the contract based on the percentage that are being sold only to be unlocked
Well Ive had an iPhone working and unlocked in the UK for the past two months, so just another 249,999 to account for. Is running nicely on Orange now.
Do you mean that you've got internet and everything working with your Orange account?
Yes indeed.
Got one shipped from the states. Its on pay as you go as well and the data rates are very cheap. You really cant imagine my face when I unlocked it, sitting in my room at home and the little Orange word came up in the corner....more than that I got the E for EDGE coming up and have NEVER lost it. Am down in Kent and from what I can find out, the Orange Edge network is much much BETTER than O2's. For Orange web details I did a quick Google and found all the settings. Its the same on all phones. Works a charm I tell ya. Are you trying to set one up here? Will be happy to send you the settings if you want them.
yes, that would be nice.
send the details to cristatus [at] xemaps [dot] com
If 250k were sold to unlock, and they've sold about 1.3 million total, that's roughly 1 in 5 customers who want an iPhone, but would rather not use AT&T. What was that saying about the customer always being right?
cgrinolds
If 250k were sold to unlock, and they've sold about 1.3 million total, that's roughly 1 in 5 customers who want an iPhone, but would rather not use AT&T. What was that saying about the customer always being right?
That would mean 4 out of 5 people use it as intended. :|
You would think so wouldn't you. Lets see if ATT discloses the iPhone activation numbers. Anyone care to wager on what that number will be? I say it wont even come close to 1M :^(...
At least they can't "hack" the phone in such a way they don't have to give money to Apple.
So what is the bottom line here. I want to buy an IPHONE but dont want to use ATT. So can they still be used on TMOBILE without a problem?
Please respond on here or email me at crisilis @ hotmail.com
So why is Apple at war with 25% of their customers?
So my question is, how do these people get their hands on iPhones without an AT&T Contract? How do the people selling them on eBay for right around the retail price make any money if they have to pay a $175 cancellation fee for each phone they buy/sign up for and then sell?
If it's easy enough for these people to weasel out of the contracts and flip the phone at a profit, then AT&T shouldn't cry about people using the phone on other services. They should do something about their plan terms. There's already a special section in there for the iPhone . . .
You obviously don't know how activation works on the the iPhone....
No I don't. Don't have the extra $600 to spend on one (And I'm AT&T to boot!).
Care to enlighten me? I've read about 75% of Engadget's news about the iPhone but haven't seen how this works. . . .
@ryantrevisol
You buy the phone and walk of of the store with your unopened phone still in the shrink wrap. It is up to you to activate the phone using itunes at which point you sign up for the contract with AT&T (or renew as the case may be). If you buy a phone to unlock you don't sign up for the contract with AT&T (by not using itunes to activate the phone) and use a 3rd party activating solution.
you just buy the iphone for $399 from apple store or apple.com, then connect it to your mac or windows (better mac) and instead of running itunes to activate it and purchase an at&t plan just hack it. you may even buy it from an at&t store and tell the clerks that it is a present, so you don't want to sign any contract and the real user will sign "someday" it and then just unlock it
alright, so wheres the instruction on how to hack it? engadget has endless stories about hacked iphones but never a real link to do them :(
and fyi, an unlocked iphone can be found for $1100 in asia. not bad huh?
Well then I have no pity for AT&T. If they're willing to let them walk out the store without so much as signing up for a GoPhone plan, so at least they can get $50 out of them, then they're stupid.
A GSM phone being completely unlockable and able to work on any other GSMs network. This is news?
No its not news, which is why that isn't what this article is about =).
Irrelevant comments FTL.
If they were "working so hard to lock this down" I think you'd see more updates.
The TIFF hack is well known and the only way in at the moment, so if they were taking a hard stance on the issue they would have patched it the next day.
I have a feeling they are taking their time to make sure there are no other easily discovered vulnerabilities hackers could discover to free the iPhone. They don't want the PR that hackers are constantly easily breaking through their protection.
I think the message to Apple is pretty strong.. We want the iPhone. We don't want it locked.
Guys, here's a newsflash: The world is a much bigger place than just the U.S. alone.
And that very large percentage of the world's population that's living outside the U.S. can _only_ get the iPhone hacked and unlocked. Those are the people - I amongst them - that buy iPhones and unlock them.
Not the three people who actually think T-Mob is better than AT&T.
wow, there's no need to be so rude about it nikster. I've never even been to the US, and I find that very patronising and provocative. Nobody said the rest of the world didn't exist - cool down and ease your tone.
Apple shipped 1,119,00 iPhones in Q4. Which means...
If it wasn't for the unlockers, they wouldn't have reached the 1 million mark.
Those dirty, stickin' unlockers! Helping Apple to reach their sales goals. Damn them to Hades!
Apple sold 1.3m since launch... subtract 250k and you still have over 1m.
...sure, they wouldn't have hit 1m *in the 4th quarter* if you ignore the tail end of the 3rd quarter when the product launched... but that's sort of splitting hairs.
Apple sold 1.3m since launch... subtract 250k and you still have over 1m.
...sure, they wouldn't have hit 1m *in the 4th quarter* if you ignore the tail end of the 3rd quarter when the product launched... but that's sort of splitting hairs.
Just think of how many MORE would have been sold if Apple wasn't a as$Hole about locking and 3rd party apps!!
Another happy unlocked iPhone running flawlessly on Mexico's Telcel!!!
Woopeedeedoo!!!
john @ Oct 22nd 2007 8:27PM
"Just think of how many MORE would have been sold if Apple wasn't a as$Hole about locking and 3rd party apps!!"
But poor AT&T wouldn't get much out of unlocked Iphones, would they. Thats why they lock them dowm
I wasn't concerned w AT&T, I'm talking about Apple itself.
For AT&T this is a huge non-issue. They basically negotiated for Apple to stick with the GSM-enabled device. Thus, regardless of any unlocking device; leaves Verizon Wireless - The only competition AT&T has out in the cold. Trust me, AT&T is not worried about T-Mobile. The other GSM US provider; who leases a majority of their Wireless Spectrum from AT&T anyways. On top of that, T-Mobile's rate plans are more expensive than AT&T's.
Let me see if I understand...I want to violate my warranty; hack the phone so I could use T-Mobile (The only other GSM provider in the US). Who (by the way) leases most of their network from AT&T. Now once I'm on T-Mobile, I could sign up for their $39.99 Total Internet Data Plan + $39.99 myFaves 300 talk plan....Instead of AT&T $59.99 iPhone plan that includes talk/data. I think the 250K phones are just a bunch of noise in the system that dominates chat rooms like this. If folks are using this phone in other markets besides the US; I don't see how AT&T will care. That's the US Market view. Internationally...I see your point a little clearer. However, if the manufacturer (Apple) wants to limit their user base. That's their business. Countless products (Electronics and others) do exactly the same thing.
Did you forget the fact that AT&T sucks??
FYI: T-Mobile Total Internet is $19.99/mo as an add-on service (unlimited EDGE + Hotspots). If you have a grandfathered family plan (2 phones @ $50/mo) with more minutes for less money than a switch to AT&T, you'd save a LOT of money.
Plus, I just love to hear these AT&T users whine about international roaming. About how that can't afford to even check their email and end up with a 500-page bill. When I've traveled to Austria and Germany, data roaming costs me nothing. I'm not tethering--just checking email and low-bandwidth sites.
Where I live, t-mo has excellent coverage and roaming is free (even on AT&T in the boonies), to boot. My only complaint is that there phone lineup isn't all that exciting or competitively priced. That's where the iPhone fits into the puzzle.
So, there are definite advantages of using t-mo vs. at&t.
What I am not getting here is why is Apple cribbing about lost revenue from unlocked iPhones. Didn't they make up for it by charging early adopters $200 premium?
To be precise Apple didn't refund its customers it just gave them store credits. Therefore Apple's revenue = 1.39M x profit per iPhone @ $199 / $399 + 1.14M * revenue from AT&T per iPhone + $100 * Early Adopters (NOT Refunded) + $100 * Early Adopters (Store Revenue).
I think the last 2 items have can easily offset any potential Loss of Revenue because of unlocking.
ATT will always complain when something undermines their monopoly. They were hoping to extend their monopoly to even individual, high profit devices like the iPhone - but now that common people have challenged their authority, they are fuming.
Don't worry, though, like ATT loves doing, they will go crying to big mommy FCC, give them some backdoor "donations" and the FCC will probably do something anti-consumer about it.
Devil's Advocate again...
Which would you rather have?
1. Amazingly nice phone made by Apple with cool features but locked to AT&T.
OR
2. No iPhone at all.
Because if AT&T don't get their way, we could see Apple just say "fuck it" and scrap the iPhone completely because of all the network complications and contracts. I'm sure Apple's not happy about having to lock down the iPhone, but they're part of a system that requires a carrier to OK their hardware, and if they want to play on the existing mobile networks, they have to play by their rules.
So the way I see it, Apple could keep working with AT&T to make the iPhone a great experience for the users, or they could scrap the whole project out of sheer frustration after AT&T puts horrible restrictions on them, imposes penalties on them, and basically makes it impossible to sell the iPhone because Apple didn't do their best to lock it to AT&T.
This is an American mobile phone network problem, not an Apple problem. Apple has to work with the system that exists, and as we all know what exists in America is a locked-down, strictly-controlled, tit-for-tat group of networks that are rabidly competing with each other and holding sway over the hardware manufacturers.
Apple made a damn nice piece of kit. It's up to you to determine if you want them to be able to continue making the iPhone, or if you're going to hack it, screw with AT&T's bottom line, and ultimately destroy the iPhone's ability to find a mobile carrier. If the deal with AT&T becomes troubled because Apple can't reel in the hackers, then the other networks will not be quick to work with Apple in the future.
Nokia, Motorola, and all the others KNOW this, and they don't do anything to piss off the mobile networks. They cripple phones all the time because the cellphone overlords told them to.
Apple isn't working with their network this time. They're in someone else's playground, and that means the games are played the way the playground bully says they're played.
When it comes to mobile networks, you simply aren't ALLOWED to "Think Different." Apple's doing the best they can by making the hardware compelling.
Uh...wrong.
Apple could avoid this altogether by just selling unlocked phones. The "American mobile phone network" doesn't keep them from doing that. It's because Apple is greedy and wants a kickback of the phone's plan cost from AT&T.
Nokia cripples phones? Hello, Nokia has some of the most expensive (and best) unlocked phones there are - see the Nokia E70. They don't even sell them through a carrier.
Please try again.
american misconception that you couldn't sell unlocked phones that work with any sim on any (compatible techwise) network. of course you can, you can't just fool the customer into thinking that they get the phone for cheap or free. funny thing with iphone is that people think it's unsubbed, even though it's HEAVILY subbed.
apple had NO NEED to play the operator game EXPECT that their business plan is to get a cut from the operators thus making it possible to sell their device for much higher price per unit(of which the customer observes just the initial price and blames the evil at&t for the rest). of course they have a possibility to sell much fewer units this way, but thats their choice, the uber locked in way, the modern apple way. had they gone the operator independent route, or multiple operators + unlockeds, they could have gone for a global launch from day 1. as it is now they're limiting themselfs heavily to just certain countries, they might have thought that nobody would buy it if it cost 800$ or so unlocked, which might have been true, so they limit the markets it's available to get these revenue share deals with which they think they will get most money out.
just order online from sites like http://www.mobileplanet.com/ if you can't find a local phone shop that sells unlockeds and gives you choice.
apple could just as well have sold unlockeds, though probably then their price would have (isupplis price estimate is bullsh**) been much higher(700$-800$, if you look at comparables from others).
the only special thing iphone "needs" from network is visual voicemail since it's an added hack.
or apple could have released a SIM card cellphone independent of ANY network.
oh my, an unlocked phone?
yeah, you MUST be from the US to think that it's unheard of. because in the rest of the world (a lot of europe, notedly.) locked phones aren't allowed to be sold.
the us government is completely controlled by big business; whether it's the pharmaceutical companies or the phone companies, us gov't gets pushed around, and won't stand up for itself, or what's best for the country.
so, it's not phone+activation or no phone at all.
it's apple being greedy and not wanting to release it as unlocked, because god forbid they're going to give up the money that they're making through at&t for activation and service.
Dude Apple is very much happy with the current arrangement. So happy that they are pulling this sh%t all over the world. O2, T-Mobile, Orange...
Apple is making huge profits from each iPhone sale. The profit from sale of hardware + revenue from AT&T + Ringtone revenue.
Lastly, the 2nd greatest feature of iPhone is Visual Voice Mail. AT&T invested huge amount of Time / Money / Resources for that. Frankly, I was surprised that AT&T decided to stick with Apple after the sh%t they pulled with Moto ROKR or whatever...
In this unholy marriage, Apple is the very much the master...
Also, the 1.1.1 thing... It was more about Apple trying to protect its revenues than helping AT&T keep it's customer. For all they care.
I think AT&T is at a loss here for every unlocked iPhone because they are getting $0 while Apple still gets away with profits from hardware sale.
This is why I did not buy an iPhone!!!!!
Apple and AT&T suck. Apple alone is awesome, but the money thirsty partnership SUCKS....
Scott
THat's why i'm not updating my iphone, I like tmobile. I aint paying 500 for ATT service. Plus what are they going to do when they have to start selling already unlocked phones in Europe. People will just buy them from there over the net.
The big picture everyone seems to be missing is this...
What about the people that played around with 3rd party apps maybe even a sim unlock and then decided they finally wanted to use att mobile service. They update to 1.1.1 and the phone is bricked due to tampering with the baseband on purpose by apple code nazis.
Now att really loses new customers and apple gets a class action suit.
I bought a 4gig for 300 the day I heard about a software jailbreak that was user friendly.
I never planned to activate and use it as a pmp.
Now I want to use it as my primary mobile and can't.
I'll be using alltel again and stuck with a 1.0.2 brick even when apple lets 3rd party go on feb.
I'm pretty sure there was some free unlocking app somewhere... Google it I guess.
You have to virginize the baseband to apple factory firmware and there is no user friendly way of doing this as of yet.
You also have to study unix code and understand its command structures to tinker with current virginizing solutions.
I'm so tired of wading through crap iphone news. bleh
This is news. This means that is a huge market for unlocked iPhones, and Apple will be selling unlocked phones in the near future. It would be pretty strange if their shareholders did not pressurize them to do that.
If I get an unlocked phone in Europe...and during a trip to the US want to use a pay as you go local card can I still use AT&T even though the phone is hacked? I know I could use T-Mobile..and forgive the tech newb ignorance...but would AT&T somehow "know" I was unlocked and refuse service? I know I know maybe stupid but I honestly don't know the details.
Also...if I buy an "unlocked" iPhone here...should it matter how it is unlocked or could I get myself into a bind later if they used a poor method?
Thanks all
"Ryan Block @ Oct 22nd 2007 6:37PM
Let's use pretend numbers here, since no one knows exactly what Apple is getting out of AT&T for activations + service. But let's say Apple gets $20 per activation, and a modest 10% per month with an average monthly bill of $100 per iPhone. For the standard two year agreement you have to sign up for, that $400 iPhone is actually worth an additional $240 to Apple (plus that $20 on activation). Multiply that by 250k = $65,000,000 -- not exactly chump change."
While I'll admit that I haven't read anything on the iPhone saga and Apple's relationship (bed-partner) with AT&T, why are we to assume Apple is getting anything for an activated phone? I'd think that if Apple was deciding to make a cellular telephone and they wanted to maximize hardware sales in the USA they would go with the largest network provider therein (which is evil AT&T).
Has it been reported somewhere by Apple and or AT&T that Apple is receiving activation monies and or recurring revenues for services? If so, I was unaware of this (my ignorance).
if they weren't, why on earth wouldn't they just sell it unlocked?
they'd sell a TON more that way.