The True Cost of the new 3G iPhone
by Ewan Spence
Everyone (including Darla) has latched on to the upfront cost - the big headline… the new iPhone is only $199!!! Isn’t that fantastic, amazing, a third of the launch price of the now on the scrap-heap 2G model… Wait a minute though…
3G iphone, 8gb… $199
Plus…
Data plan: $30/month (up from $10 a month)
Voice plan: $39/month
…and that’s every month…
($30 + $39) x 24 = $1656
Total 3G iPhone price: $1855
So the long term commitment is almost as much as the MacBook Air’s $1899. What I find interesting is the price, and the extra dollars that AT&T are going to get. First up, the revenue sharing of the monthly bill that Apple attempted to pioneer with the mk1 has been dropped. Quite frankly that’s not a surprise, the rest of the networks worldwide didn’t want it, and AT&T are going to make more money now that it’s gone. I wonder if the ‘must make 10 million sales’ promise left Apple in a weaker position. And then there’s the data plan. It has went up from the first iPhone as well by $10 a month.
While everyone is used to paying a monthly bill, it’s worth pointing out that the small print is always the killer, and that the mobile market, certainly in terms of selling hardware, hasn’t been reinvented by Apple; which is a shame, last year they were in a position to do so if they had truly thought different - now shareholders won’t have it any other way than the norm.
So AT&T have the increase in data plan, and get 100% of the pie. Yet the hardware cost has dropped and Apple have lost their network Rev share. Where’s their increased profit coming from?
The app store.
With a 30% cut of every application sale going straight to them, no middle man (plus interest on the accumulated sales each month before cutting cheques) and I suspect they’ll be making more from the 3G iPhone than the 2G. After all, network rev share is just one fixed stream. Rev share on every application on the planet is potentially tens of thousands of long tail streams, constantly evolving and changing.
Not a case of thinking different, more a case of traditional sales and commission dressed up as only a Steve Jobs keynote can do it.
)that’s actually covered this instead of just taking the Apple PR line that the new phone is less expensive.
