We've long since known that Apple (as opposed to AT&T) was getting the better end of the pair's exclusive partnership here in America, but new research from Strand Consult has found that the situation is fairly similar all around the globe. According to the report, nary a single telecom operator it studied had seen a boost in market share, revenue or earnings as a result of introducing the iPhone, and some carriers even issued profit warnings due to the heavily subsidized handset. The study goes on to shed pity on firms like SingTel and TeliaSonera, both of which are purportedly seeing margins and ARPU (average revenues per subscriber) sink due to Apple's darling joining the fray. But really, we can't help but express our doubts about the all encompassing, almost sensationalized nature of this; we've watched AT&T's profits soar ever since it snagged the iPhone, and considering that every iPhone buyer also coughs up a significant monthly fee for a data plan, we can't imagine revenues tanking that severely. Or, you know, maybe we're all just getting a really good deal on our bloated iPhone plans.
Next time, you might consider an iPod Touch (or Zune HD, etc.) for your browsing and media needs, plus a cheap phone. Tell your ten friends who also have your usage patterns that they should consider the same.
I like my iPhone because it gives me connectivity in many places where I don't have access to free WiFi. My colleagues with iPhones have similar needs. We don't like paying $30 a month for the 3G access, but we do need the access.
I am guessing that none of these telecoms are looking to get out of their contracts. While I don't doubt the facts of this report I'd guess that any conclusions may not be as cut and dry as they seem.
TeliaSonera deserves it. They are relatively expensive and I really wish Saunalahti, the other big carrier here in Finland, would have gotten the iPhone.
I used to sell phones for a number of carriers and I can assure you that the iPhone is not subsidized more than any other major phone out there. ~$200 is the average amount per phone that is subsidized and it is generally made back in year one of the phone's contract which is why they sign most up for 2 years to ensure at least one year of solid profit (and why you generally pay an extra $100 for the phone if you only sign for one year). AT&T is taking no more of a hit on this than any higher-end Motorola or what-have-you. Puh-lease. Cell phone contracts in the U.S. are completely artificially high and a result of collusion between carriers, if anything is criminal THAT is it.
I don't see how they are losing money. Seeing as the minimum monthly fee is at least $70, $70 x 24 is $1680 plus the $100-$300 it cost to get the phone in your hands.
Maybe the reason AT&T is doing okay while other operates aren't is that US operators charge a lot more for cell phone service... (I'm surprised Engadget didn't point this out as they covered it last week!)
Crying wolf that's what this is. Please telecoms have no reason what so ever to complain about anything. They have been robbing us blind for years and giving us crappy service, and crappy customer service in return.
Also I manage the wireless accounts for my company through AT&T, 100+ phones in total. We have a $100K per year commitment and they give us an 8% discount per month, and at $1 million dollar commitment per year its a 20% discount per month. So if they can afford to give anyone a 20% discount on $1 million they're profit margin must be outrageous. So I don't understand what their complaining about.
I call BS that the iPhone is driving down ARPU. The iPhone drives customers to unlimited data plans and higher volume SMS packages, so there is no way adding the iPhone to a carrier's lineup is going to negatively impact ARPU.
which is true in markets where data usage wassnt high. However in markets where data usage far outstrips any other service, the model you suggested simply means fail, especially when u consider that telcos typically are much, much cheaper than in NA.
Iphone wont magically drive ppl to more sms Usage in markets likw singapore where sms use is already 2nd highest in the world behind philippines.
AT&T is the one raping the customers. Ya, the iPhone is expensive but AT&T makes that money back in no time. The minutes are fairly reasonably priced, all things considered, but only if that were all you were paying for. $30 for data is a huge rip off, especially since it's per line. If it was like texting and the $30 included everyone on the plan, or even if tethering were free included in that price, then maybe it would be more reasonable. The real cost they get you on is the texting. That should be free. That literally costs AT&T nothing... texts are carried in the carrier signal that's already there. It is literally zero tax on the network, yet its another $20 for unlimited. MMS would tax the system a little bit, but maybe that's why they can't get their act together and allow MMS. They're enjoying their $20 for nothing profit.
All of this would be a little less relevant if they had good coverage. Verizon rapes you on cost too, but at least they have decent coverage in the country. 4 years with Verizon and I only dropped one call. That includes when I'm up in the mountains skiing or whatever. I now drop 2-3 calls a month on AT&T. The iPhone makes it worth it, but it's still kind of ridiculous. Apple might be charging a little too much for the phone, but at least they deliver on a product. If AT&T wants to play that game, they need to straighten some things out.
I live in the only EU country without iPhone (Slovenia) and it seems to be Apple's fault. All three major mobile operators thought that Apple's offer was unfair and promptly declined. So people go to Italy and buy them without contracts (but 600 € for a phone is very, very steep).
Actually, my phone bill went down when I got my iPhone. When I had my 8125 (WinMo), my data plan was $40 a month, and with the iPhone it went down to $30.
I think the problem that carriers are having with the iPhone is Apple's wholesale rate for the handsets. In the UK the iPhone tariffs are the same as the tariffs for other handsets.
The introduction of the 3GS in the UK saw O2 effectively increase the price on the handset. Looking at the Pay As You Go price of the iPhone shows that the handset is not that competitively priced against unlocked version of rival phones. This all points to the Apple wholesale rate being more than other handsets.
An influx of new subscribers all getting a bigger subsidy than other handsets would effect the ARPU for certain carriers.
If a cellular company can't make back the iPhone subsidy through fees, inflated data charges, overages, inflated text charges, overages, etc. then they don't deserve to be in business. If Asian and European telecoms aren't seeing a spike in market share or profits it's because the iPhone isn't a "state of the art" phone at all and other models and brands are generating more excitement and sales. The iPhone, in its 3GS form is the first to be able to work at 4G speeds, something that Asian and European phones and companies have been offering for years. Only in the U.S. is this technology even sort of "state of the art". Although, where's MMS and Tethering and so on and so forth? [full disclosure - I have an iPhone 3G and, yes, I'm an AT&T hater]
I wish it was only that. Beside some of the issues with the iphone I personally have the UI is a pleasure to use and its native to the base software instead of slapped over it. The system is extremely convenient (meaning if you can search it online you most likely can find an app for it)
There was a significant infrastrucure investment that was needed for the iPhone to handle all the data plans etc. that Apple does not have to pick-up or pay for. The idea is that the users will be customers for life and that AT&T will make money over the long term.
Apple does not pay for the stores or kiosks, the infrastructure, the customer service, the billing costs, the returns etc. Nor does Apple share in the Apple Store revenue. Everyone wants the iPhone because of the branding not because its a good deal. Image is everything these days, and Apple is the IT thing with all the mind share even if the iPhone is crap as a phone.
I am not saying poor, poor AT&T -- but the story is not balanced and Engadget FAR too often makes Apple the great white horse that is fair and good and does no harm.
its no surprise. Several ppl outside NA have stated over and over that the system by which apple sells its iphone are a decade old. These telco hotshots should have known this would adversly affect their bottom line. they are trying to peddle this nonsense on asian consumers who are extremely tech and mobile savvy. on top of that, apple is eating directly from whatever amount they earn meaning they make little to no to negative profit from this arrangement.
Unlike NA, not every country have throngs of millions of apple fans. In the case of Singtel, i am not surprised they went and made beds with apple with this kind of arrangement. Of all the telco here, singtel can be pretty draconian with its main rival, starhub, simply giving them a thrashing on both price, service offerings and superior value and being more customer centric. Singtel is like a more advanced ATT.
The only party that benefits is apple at both consumer and carrier expense. They bought into the marketting rather than the business n got burned. Instead of trying to understand their market, they thought that transplanting a very outdated business model would somehow work with consumers who are far more educated than in the NA markets. .
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posted August 17th 2009 2:31PM
I agree with you, but for the fact that the 3G never sticks around long enough to use it realistically.
It's so prone to screwing up I wait till I'm around wifi to do anything.
awesome avatar, sepirioth
Next time, you might consider an iPod Touch (or Zune HD, etc.) for your browsing and media needs, plus a cheap phone. Tell your ten friends who also have your usage patterns that they should consider the same.
I like my iPhone because it gives me connectivity in many places where I don't have access to free WiFi. My colleagues with iPhones have similar needs. We don't like paying $30 a month for the 3G access, but we do need the access.
More reason why this phone should be banned. All it does is turn people into douches.
That's quite an interesting power...
hmmmm iDouche... is there an app for that?
hahaha
/singletear
I am guessing that none of these telecoms are looking to get out of their contracts. While I don't doubt the facts of this report I'd guess that any conclusions may not be as cut and dry as they seem.
TeliaSonera deserves it. They are relatively expensive and I really wish Saunalahti, the other big carrier here in Finland, would have gotten the iPhone.
Elisa is the other big carrier in Finland and DNA the third one. Saunalahti, which is owned by Elisa, + big carrier does not compute.
I'm sure Rogers isn't hurting one bit... those beasts suck all the money out of us Canadians.
Oh... and to emphasize how much money they've stolen. Rogers drives around Lamborghini with Rogers ads all over it.
http://www.youtube.com/watch?v=ELHtYpO47LA&feature=related
I used to sell phones for a number of carriers and I can assure you that the iPhone is not subsidized more than any other major phone out there. ~$200 is the average amount per phone that is subsidized and it is generally made back in year one of the phone's contract which is why they sign most up for 2 years to ensure at least one year of solid profit (and why you generally pay an extra $100 for the phone if you only sign for one year). AT&T is taking no more of a hit on this than any higher-end Motorola or what-have-you. Puh-lease. Cell phone contracts in the U.S. are completely artificially high and a result of collusion between carriers, if anything is criminal THAT is it.
BOO! ARPU is not the same as profit. Sure, per user, perhaps, but over all, like said, AT&T is doing quite well.
I don't see how they are losing money. Seeing as the minimum monthly fee is at least $70, $70 x 24 is $1680 plus the $100-$300 it cost to get the phone in your hands.
Zero study. iPhone means pretty much nothing to TeliaSonera figures.
Btw. 2 months long waitlist for iPhone 3GS with TeliaSonera Finland.
Maybe the reason AT&T is doing okay while other operates aren't is that US operators charge a lot more for cell phone service... (I'm surprised Engadget didn't point this out as they covered it last week!)
http://www.engadget.com/2009/08/12/us-canada-and-spain-win-the-battle-for-most-expensive-cellph/
Crying wolf that's what this is. Please telecoms have no reason what so ever to complain about anything. They have been robbing us blind for years and giving us crappy service, and crappy customer service in return.
Also I manage the wireless accounts for my company through AT&T, 100+ phones in total. We have a $100K per year commitment and they give us an 8% discount per month, and at $1 million dollar commitment per year its a 20% discount per month. So if they can afford to give anyone a 20% discount on $1 million they're profit margin must be outrageous. So I don't understand what their complaining about.
I'm certain no Brazilian operator is seeing any of these effects. Not charging 1000+ dollars (I kid you not) per iPhone.
I call BS that the iPhone is driving down ARPU. The iPhone drives customers to unlimited data plans and higher volume SMS packages, so there is no way adding the iPhone to a carrier's lineup is going to negatively impact ARPU.
which is true in markets where data usage wassnt high. However in markets where data usage far outstrips any other service, the model you suggested simply means fail, especially when u consider that telcos typically are much, much cheaper than in NA.
Iphone wont magically drive ppl to more sms Usage in markets likw singapore where sms use is already 2nd highest in the world behind philippines.
AT&T is the one raping the customers. Ya, the iPhone is expensive but AT&T makes that money back in no time. The minutes are fairly reasonably priced, all things considered, but only if that were all you were paying for. $30 for data is a huge rip off, especially since it's per line. If it was like texting and the $30 included everyone on the plan, or even if tethering were free included in that price, then maybe it would be more reasonable. The real cost they get you on is the texting. That should be free. That literally costs AT&T nothing... texts are carried in the carrier signal that's already there. It is literally zero tax on the network, yet its another $20 for unlimited. MMS would tax the system a little bit, but maybe that's why they can't get their act together and allow MMS. They're enjoying their $20 for nothing profit.
All of this would be a little less relevant if they had good coverage. Verizon rapes you on cost too, but at least they have decent coverage in the country. 4 years with Verizon and I only dropped one call. That includes when I'm up in the mountains skiing or whatever. I now drop 2-3 calls a month on AT&T. The iPhone makes it worth it, but it's still kind of ridiculous. Apple might be charging a little too much for the phone, but at least they deliver on a product. If AT&T wants to play that game, they need to straighten some things out.
I live in the only EU country without iPhone (Slovenia) and it seems to be Apple's fault. All three major mobile operators thought that Apple's offer was unfair and promptly declined. So people go to Italy and buy them without contracts (but 600 € for a phone is very, very steep).
"...maybe we're all just getting a really good deal on our bloated iPhone plans."
I'm getting a much better deal by not buying an iPhone at all.
Actually, my phone bill went down when I got my iPhone. When I had my 8125 (WinMo), my data plan was $40 a month, and with the iPhone it went down to $30.
I think the problem that carriers are having with the iPhone is Apple's wholesale rate for the handsets. In the UK the iPhone tariffs are the same as the tariffs for other handsets.
The introduction of the 3GS in the UK saw O2 effectively increase the price on the handset. Looking at the Pay As You Go price of the iPhone shows that the handset is not that competitively priced against unlocked version of rival phones. This all points to the Apple wholesale rate being more than other handsets.
An influx of new subscribers all getting a bigger subsidy than other handsets would effect the ARPU for certain carriers.
Yes, now I really want to HURT YOU!
In this case us.
If a cellular company can't make back the iPhone subsidy through fees, inflated data charges, overages, inflated text charges, overages, etc. then they don't deserve to be in business. If Asian and European telecoms aren't seeing a spike in market share or profits it's because the iPhone isn't a "state of the art" phone at all and other models and brands are generating more excitement and sales. The iPhone, in its 3GS form is the first to be able to work at 4G speeds, something that Asian and European phones and companies have been offering for years. Only in the U.S. is this technology even sort of "state of the art". Although, where's MMS and Tethering and so on and so forth? [full disclosure - I have an iPhone 3G and, yes, I'm an AT&T hater]
I can't imagine the $100/mo I'm paying for phone service is driving AT&T out of business.
What the hell is going on here?
Its a whole idol thing.......
I wish it was only that. Beside some of the issues with the iphone I personally have the UI is a pleasure to use and its native to the base software instead of slapped over it. The system is extremely convenient (meaning if you can search it online you most likely can find an app for it)
Revenue increase in reaction to Iphone:
58%
Out of that increased revenue used to make S.Jobs bionic:
175%
Theres your profit margin right there......
what's with this Putin picture?
OMG, Engadget's been hacked
There was a significant infrastrucure investment that was needed for the iPhone to handle all the data plans etc. that Apple does not have to pick-up or pay for. The idea is that the users will be customers for life and that AT&T will make money over the long term.
Apple does not pay for the stores or kiosks, the infrastructure, the customer service, the billing costs, the returns etc. Nor does Apple share in the Apple Store revenue. Everyone wants the iPhone because of the branding not because its a good deal. Image is everything these days, and Apple is the IT thing with all the mind share even if the iPhone is crap as a phone.
I am not saying poor, poor AT&T -- but the story is not balanced and Engadget FAR too often makes Apple the great white horse that is fair and good and does no harm.
Whatever.
Who's the cute genius in glasses?
Is that Vladmir Putin?! First with Reagan in Moscow, not with the tiger! This guy is EVERYWHERE!
its no surprise. Several ppl outside NA have stated over and over that the system by which apple sells its iphone are a decade old. These telco hotshots should have known this would adversly affect their bottom line. they are trying to peddle this nonsense on asian consumers who are extremely tech and mobile savvy. on top of that, apple is eating directly from whatever amount they earn meaning they make little to no to negative profit from this arrangement.
Unlike NA, not every country have throngs of millions of apple fans. In the case of Singtel, i am not surprised they went and made beds with apple with this kind of arrangement. Of all the telco here, singtel can be pretty draconian with its main rival, starhub, simply giving them a thrashing on both price, service offerings and superior value and being more customer centric. Singtel is like a more advanced ATT.
The only party that benefits is apple at both consumer and carrier expense. They bought into the marketting rather than the business n got burned. Instead of trying to understand their market, they thought that transplanting a very outdated business model would somehow work with consumers who are far more educated than in the NA markets.
.
It's too late, years from now you will be sitting on a plush couch pointing on a stuffed bear where the carrier touched you.