Analyst: AT&T paying $325 subsidy for iPhone 3G
Posted by Dennis Sellers 
Jun 19, 2008 at 3:20pm
Barron’s reports that AT&T is paying a subsidy of US$325 for the iPhone 3G, according to Oppenheimer analyst Yair Reiner. He notes that the typical smartphone gets a subsidy of about $200. The new phone will be sold at retail for $199 for 8 GB of memory, or $299 for 16 GB. It goes on sale July 11.
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.” The analyst also says it has positive implications for Apple, since it effectively results in a playing field that is tilted in their favor. “Rivals must scramble to hit a lower, less profitable price point,” he wrote in a note to clients.
Reiner also says that AT&T is paying Apple an extra $100 for subscribers signed up in Apple stores, for a total commission of $425, notes Barron’s. Reiner says that, with all things considered, Apple is getting the same revenue for the 3G iPhone as it received for the old version, only now all the payments are coming up front.
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Contributor
Dennis Sellers
Dennis has been a newspaper editor/reporter (seven years) and teacher (seven years). He has over 4,000 magazine, newspaper and online articles to his credit. He has also covered the Mac and tech industries for over a decade for such online publications as MacCentral, MacMinute and now MacsimumNews.
