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?
Reader Comments (Page 1 of 2)
Optimus Rhyme @ Oct 22nd 2007 5:58PM
On a positive note to that though, at least they did sell 250,000 phones which may have not otherwise been purchased.
bombastinator @ Oct 22nd 2007 6:06PM
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.
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.
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.
MR @ Oct 22nd 2007 6:55PM
>> ... 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.
Nomi @ Oct 22nd 2007 7:15PM
The iphone is 400 dollars, it would be 400x250k for unlocked ones...
Belmin @ Oct 22nd 2007 7:41PM
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.
Mr Funk @ Oct 22nd 2007 7:51PM
"...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.
Don @ Oct 23rd 2007 11:03AM
"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 :/.
Fatima @ Oct 22nd 2007 5:58PM
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.
Daryl Herbert @ Oct 23rd 2007 4:03AM
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 $400--every time someone buys an iPhone plan from AT&T. Apple makes MOST of its profit on the iPhone when people buy service from AT&T.
THAT is why Apple is obsessed with unlockers. It's not because Steve Jobs is a control freak (though he is). It's because he's greedy.
adam @ Oct 22nd 2007 6:08PM
Umm.. shouldn't they be happy that they sold 250,000 more iPhones than they would have without the SIM unlock?
AT$T is most likely having a pissy fit, leading to the Apple (attempted)lockdown.
Jon @ Oct 22nd 2007 6:13PM
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?
copacetic @ Oct 22nd 2007 10:34PM
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.
John @ Oct 22nd 2007 6:26PM
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
dk @ Oct 22nd 2007 6:30PM
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.
Cristatus @ Oct 22nd 2007 7:14PM
Do you mean that you've got internet and everything working with your Orange account?
dk @ Oct 22nd 2007 7:21PM
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.
Cristatus @ Oct 23rd 2007 1:00PM
yes, that would be nice.
send the details to cristatus [at] xemaps [dot] com
cgrinolds @ Oct 22nd 2007 6:33PM
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?
MrWhite @ Oct 22nd 2007 6:42PM
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. :|
Frankenstein Black @ Oct 22nd 2007 6:57PM
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 :^(...
madmax @ Oct 22nd 2007 6:51PM
At least they can't "hack" the phone in such a way they don't have to give money to Apple.
Oscar5453 @ Oct 22nd 2007 6:59PM
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
ryantrevisol @ Oct 22nd 2007 7:12PM
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 . . .
Nomi @ Oct 22nd 2007 7:17PM
You obviously don't know how activation works on the the iPhone....
ryantrevisol @ Oct 22nd 2007 7:20PM
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. . . .
jodosh @ Oct 22nd 2007 7:31PM
@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.
fpyyh @ Oct 22nd 2007 7:38PM
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
darkstar @ Oct 22nd 2007 8:19PM
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?
ryantrevisol @ Oct 23rd 2007 6:52AM
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.
david @ Oct 22nd 2007 7:25PM
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.
Joey Geraci @ Oct 22nd 2007 8:15PM
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.
Andreas @ Oct 22nd 2007 7:29PM
I think the message to Apple is pretty strong.. We want the iPhone. We don't want it locked.
nikster @ Oct 22nd 2007 8:00PM
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.
KarlW @ Oct 22nd 2007 8:58PM
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.
Reg Muffet @ Oct 22nd 2007 7:32PM
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!
Jeff @ Oct 22nd 2007 7:49PM
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.
Jeff @ Oct 22nd 2007 7:48PM
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.
Ian @ Oct 22nd 2007 8:12PM
So why is Apple at war with 25% of their customers?
TJ @ Oct 22nd 2007 8:25PM
In keeping with the previous posts, and this is a Apple fan speaking, the $1 billion profit doesn't help their creditibility. That and the fact that after hours trading makes them wealthier than IBM.
john @ Oct 22nd 2007 8:27PM
Just think of how many MORE would have been sold if Apple wasn't a as$Hole about locking and 3rd party apps!!
Rayan @ Oct 22nd 2007 8:33PM
Another happy unlocked iPhone running flawlessly on Mexico's Telcel!!!
Woopeedeedoo!!!
Sam @ Oct 22nd 2007 8:35PM
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
john @ Oct 22nd 2007 8:37PM
I wasn't concerned w AT&T, I'm talking about Apple itself.
Buckaroo Bonzai @ Oct 22nd 2007 9:41PM
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.
Jared @ Oct 22nd 2007 10:16PM
Did you forget the fact that AT&T sucks??
foobarino @ Oct 23rd 2007 12:26AM
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.
IndiaTech @ Oct 22nd 2007 10:02PM
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.
paul34 @ Oct 22nd 2007 10:22PM
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.
The ZeroCorpse @ Oct 22nd 2007 11:02PM
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.