Friday, June 20, 2008

Oppenheimer Says AT&T iPhone Subsidy Is $325

AT&T is paying a subsidy of $325 for the new Apple iPhone 3G, according to Oppenheimer analyst Yair Reiner. He also noted that the typical smartphone gets a subsidy of about $200. Apple and AT&T will sell the 3G iPhone at retail for $199 (8 GB), or $299 (16 GB).

The higher subsidy rate for the iPhone, he says, “reflects AT&T’s faith in the iPhone’s ability to attract new subs and increase ARPU.” Reiner says this results in a playing field that is tilted in Apple's favor. “Rivals must scramble to hit a lower, less profitable price point.”

Reiner also states that AT&T is paying Apple $100 for subscribers signed up in Apple stores, for a total commission of $425. It seems that Apple is getting approxiametly the same revenue as with the original iPhone; however, now payments are coming in upfront.

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