iPhone Revisited

04 Aug

A little over a year ago, I published a post entitled, Catalyst of Change, regarding the newly introduced iPhone and the anticipated impact the exclusive AT&T/Apple would have on the wireless market and technology, as a whole.

This week, I picked up a USA Today newspaper while traveling on business and the Money section had a substantial article on AT&T’s relatively new CEO, Randall Stephenson

USA Today

Stephenson is pictured with Apple’s new iPhone 3G and the article by Leslie Cauley explains that the affordable $199 pricetag on the new sensation is his brainchild.  Now, consider this…analysts estimate that AT&T is paying about $300 per device, so they are basically taking a $100 loss on each “unit” sold.  However, the “Unlimited” plan, which most subscribers sign up for goes for $129.99 per month, so AT&T recovers their “loss” in the first month, with an upside of nearly $3,000 per user over the 24 month contract.  AT&T has estimated that it has doubled it’s 3G users in the past year (from 8% to 18%, with substantial potential), so there has been tremendous movement to higher priced plans that are more than paying for infrastructure and any subsidies on equipment.

While I still think that the iPhone has forever changed the landscape of the cellular phone industry despite no previous experience in that arena, the initial hype has not proved to deliver the goods.  AT&T indicates that is has sold more than 2 million original iPhones in the last year.  While this figure makes the iPhone the best-selling by a country mile, it’s far short of the Goldman Sach’s prediction of 14 million sold by the end of 2008 through the exclusive AT&T channel.  Also, 1.4 million (or 70%) of those were sold in the first 90 days of release.  That means that while AT&T averaged over 450,000 units per month for the first 90 days, that number drops dramatically to an average per month of 65,000 for the remaining 9 months.

Now, perhaps many consumers were waiting on the next generation of iPhone as it has been reported that first weekend sales of the iPhone 3G doubled the initial launch (estimated 500,000, compared to an estimated 270,000 for the original iPhone).  I personally know four people who stood in line.  No doubt, the $199 vs. the $599 price tag helped.  However, Apple has once again created a “must have” in the marketplace.  Stephenson was astute enough to realize that if he drops the price point for a time and provides more “evangelists” out there, demand may actually increase instead of falling off as the original device did.   Either way, Apple needs to keep the innovations coming. 

Stephenson also announced that Apple and AT&T have extended their “exclusivity” agreement through the year 2010, replacing the deal originally struck between AT&T and Apple that gave Apple a cut of the iPhone service revenue.   Not only does this exclusivity hurt other wireless providers in the present tense, it forces them to spend development dollars on 3G and 4G capabilities when they can’t even provide the premier Smart Phone product, on their network.  Sure, there are/will be other 3G and 4G handsets, but let’s face it…Apple has set the standard, particularly at the low $199 price point set by AT&T.  That’s comparable to the cost of my BlackBerry, that has tons less functionality.  And, just think if Apple and AT&T agree to extend the exclusivity past 2010?

AT&T self-proclaims that it is “all about wireless”.  I take this to mean that traditional land-line telephones will continue to be replaced by Voice-Over Internet Protocol (VOIP) and wireless technologies.  I can envision the day when each person will have one universal phone number that can be accessed via computer, Smart Phone and even, TV.  And, speaking of those innovations….it appears that Steve Jobs and Apple have that well in hand….

Apple Patent for Broadcasting via iPod/iPhone

Perhaps finally, we’ll come into the 21st century.


Posted by on August 4, 2008 in apple, iPhone, ipod, Marketing, technology


9 responses to “iPhone Revisited

  1. Shrewspeaks

    August 6, 2008 at 11:17 am

    I still want one.

  2. Shrewspeaks

    August 6, 2008 at 3:00 pm

    I still want one…problem is my contract isn’t up until next year.

  3. shrewspeaks

    August 6, 2008 at 7:40 pm

    Okay I have posted three times…I want one

  4. music maven

    August 7, 2008 at 7:17 am

    Oh, I want one too, Shrew. Problem is I just got my BlackBerry in January and work pays for it so there’s no way they’ll let me change until my two years are up.

    Perhaps by the time we can get one, it’ll be the iPhone 10G and it will have broadcast capabilities.

  5. shrewspeaks

    August 7, 2008 at 3:34 pm

    I can see a need now, in the fact that my Blackberry is so restricted that I can’t check my personal email…so instead I end up carrying my own laptop. An iPhone would solve all of that.

    Next July, that is.

  6. marymagdalene

    August 7, 2008 at 4:06 pm

    I would like to get an iPhone also, but I just upgraded my contract and got a really cool LG phone in May…
    Anyway, so far, the iPhone has been way over-priced for my budget (such as it may be)…

    Now that it is only (yeah, right… ONLY!) $199, I can see myself purchasing it much easier, but it will have to wait until 2010!

    I have been thinking of getting an iTouch, which is basically an iPhone without the phone capability…
    But the biggest iTouch is 32gigs, and my current iPod is 80gigs, and that is more than a 50% drop in capacity!

  7. ivoryhut

    August 7, 2008 at 6:27 pm

    I have the iPod Touch, and I must say that I love it for instant email, checking blogs, playing Sudoku and backgammon (I’m sad, yes), or just quickly checking anything online. I love its Google maps that can give you driving directions, and its search feature that pulls up info about a business and lets you instantly import it into your address book. I also keep a bunch of my best photos there, and my favorite songs and a few playlists. (I know a number of pro photographers carry the iPod Touch loaded with their portfolios.)

    That said, I still intend to get the 160gb iPod because, well, my iTunes library is over 80gb now and that’s about half or less of my entire collection.

    I do have a few grips about the iPod Touch though. The only way to view flash videos is to launch its dedicated YouTube application. Which means if MM posts a Vimeo or Daily Motion clip on her blog, I can’t check it out.

    My other gripe: why is it that only the first generation iPods have the capability of being connected to your digital camera via a special cable so you can offload your memory card contents directly onto your iPod? That is such a useful feature especially when on the road, but the newer iPods don’t support it anymore. Why, Apple, why??

  8. Karel santral

    March 12, 2010 at 9:30 am

    Nice. Thanks for sharing…

  9. fred

    March 17, 2010 at 4:41 am

    nice and very informative writeup keep it up.


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