jonesy

Verizon's Anti-iPhone PR Campaign

Verizon's campaign seems to indicate that they are feeling the impact of iPhone and AT&T. While the iPhone/AT&T combo is not flawless (3G drops, 3G/fetch battery life, app instability bug), Verizon still has no handset that competes.

Is AT&T An iPhone Sales Anchor?

As for Facebook for Blackberry, great first step, yay!.

But deep down, you and everyone know it's a reaction to the iPhone. No iPhone and we wouldn't have seen this for a longer while.

Is AT&T An iPhone Sales Anchor?

I understood your point and thought I already addressed it by explaining why Apple couldn't go to T, and sprint and VZ. First, Apple has to force certain changes in the industry.

In the long run, Mossberg is right. But getting that privilege without other fundamental changes is a hollow victory.

This is analogous to DRM and the music industry. Even though Jobs criticized DRM before iTunes ever existed, Apple went along with DRM (buying Fairplay pretty much at the last minute) just to get a foot in the door. Once industry and customer culture changes began to occur, Apple started to push for no DRM, even offering the industry a plum in a higher 1.29 price. Which the labels, other than EMI, has continue to reject. So be it.

Anyway, same steps for cellular and walled gardens and carrier reqts for handsets. Jobs has criticized the labels as orifices, but has now locked-in to one such company to effect the changes Apple thinks are needed.

Is AT&T An iPhone Sales Anchor?

It's un-jobsian only because you think Apple doesn't drop prices, but that's a lie. Macs ($999 iMacs went down to 799; others as well) and iPods (5GB iPod: $399 to $299; 10GB iPod: $499 to 399; photo: $599 to $449; mini: $299 to $249; shuffle: $149 to $129, $129 to $99, $99 to $69) have decreased in price without getting smaller. Though not always, Apple price reductions on current models are accompanied by the introduction a new lower or higher-capacity model; one can argue that the iPod touch is that new model.

Next, my point, which you missed completely, on the touch pricing was that all Sep 5 iPod pricing on was linked to the 4GB iPod nano going to 149, which caused the 8GB iPod nano to be 199, which caused the 8GB iPod touch to be 299, which caused the 8GB iPhone to be 399. Had the 4GB iPod nano been priced at 199 and the 8GB 249, then the touch could've been 349 or maybe even 399, and the iPhone 449 or 499. Don't you realize that all the variants are priced for upsell? So each model needs to have a solid value proposition for the price differential. But why 149 for the nano - because Apple wants a boatload of handheld video players in the market.

Since Apple was so focused on increasing the market presence of video players and iPhones, and the positive vibe of lower prices, they were surprised by the reaction of the mainstream iPhone buyers to the price cut.

Finally, were iPhone sales really "sluggish"? Would making its publicized goal (projected on Jul 25) of 1M total sold by Sep 29 (4Q end date) been considered "sluggish"? I'll spell this out: price cut on Sep 5 midday; 1M sometime on Sep 9; press release next morning. Assume supercharged run rate of about 25K for those 4.5 days. Which means 887K sold by Sep 4. At even a truly "sluggish" 5.5K a day run rate from Sep 5 to 29 (24 days), Apple would've reached 1M by Sep 29.

In any case, my calculations yield about 610K iPhones sold from Jul 1 to the day of the price cut, or approximately 10K a day; or about 200K more than yours; 89K of which you cut out by saying Apple sold just 1.3M instead of 1.389M.

Regardless, one survey says iPhone is in top 4 models, #1 for AT&T, and trending to #1 across all carriers in the US. I'm sure, even without the price cut, iPhone would still be in the top 10 models. I wouldn't consider that not a "hit".

Is AT&T An iPhone Sales Anchor?

I wasn't actually putting down Blackberries in my comment; I was simply trying to say that the Internet is way more than email. But since you bring it up, I think RIMM is fairly priced compared to other handset makers, but overpriced when I look at the bigger picture. RIMM hasn't done much (anything?) to make the rest of the mobile Web/Internet accessible, have they?

Is AT&T An iPhone Sales Anchor?

Here's another article Todd: www.reghardware.co.uk/.../

Echoing my point about data - Yahoo: "In terms of internet usage nothing is holding a candle to the iPhone."

Echoing my point about how the other carriers will follow - Motorola: "For us, it's been quite beneficial, because wireless carriers are now willing to talk about all kinds of new experiences on handhelds that they wouldn't consider in the past." Plus, "It opened up a whole new pricing tier. There are [people] who are willing to pay a lot for a phone. They're willing to do more than sign up for a wireless plan and get four phones for free - which is where the market was headed."

Really, Todd, the impact of the iPhone on carriers is being talked about and written about by "experts" everywhere except here. From these articles, Jobs' comments (at preview, All Things D, and at launch), and Stephenson's (AT&T CEO) comments (at launch), you can see where AT&T (and other iPhone partners) has to go.

Last point: The carriers are spending (and risking) really big bucks building out higher speed cell (and wifi) networks. Once built, almost all customer revenue goes toward paying off the investment, then when that is done, it is just profit. So until the network is completely saturated, every additional customer is beneficial (and desired). iPhone will bring in those customers who will pay for data use. (BTW, this is largely analogous to investing in expensive flash production factories.)

Is AT&T An iPhone Sales Anchor?

Did you listen to the call? It's arguable whether the stock price jump and subsequent analyst revisions are due to a) profit (yes, driven largely by Mac sales) in the last quarter, b) Apple's north-of-consensus forecast for this quarter, OR c) the huge cash flow being generated by sales, especially iPhone sales, that will become a torrent of profit in the coming years. Of course, it's all three, but I think it's mostly c) since a) is old news, and b) is short term news.

See www.blackfriarsinc.com...

Based on Gene Munster's and Dan Frommer's analyses, each iPhone sold and on contract is possibly generating over $800 in revenue (and $550 in profit) over 2 years, So 10 million phones leads to 5.5 billion in profit. Yes, there's iPhone software development cost that wasn't accounted for, but that will be almost negligible if they sell lots of iPhones, and because it's shared across Macs and iPods.

I don't think Apple conceded anything on price, since the drop was clearly preplanned, as there's no way Apple could sell a $599 8GB iPhone, when the 8GB iPod touch is priced at $299. And there's no way the iPod touch could be more expensive if the 8GB iPod nano is $199. And there's no way the 8GB iPod nano could be more expensive if the 4GB iPod nano is $149. So why is the iPod nano at 149 - because the number of mobile video players sold so far is really small, and Apple wants a huge huge market for mobile video. Why? To drive content owners to put video (esp. movies) into the iTunes Store, which will then drive future sales of AppleTV, which Apple hopes will turn its hobby into a business. And what does Apple's huge forecast tell us? That between Sep 5 and Oct 22, Apple has seen huge sales of its iPods (surely, nanos and up) and iPhones, thus, validating its pricing strategy.

Apple is not just a bunch of unrelated parts. This incredible Jobs-led strategy is thoroughly integrated in every which way, with each product driving other products, and leverage everywhere (i.e., OS X, Quicktime-based content, consuming devices-production devices).

Is AT&T An iPhone Sales Anchor?

Here's the easy ones that have already happened: Apple (handset maker) has established itself as the primary relationship with the customer (sale, activation, upgrades, warranty service). It's also established that wifi Internet is free (with some limitations) and that data must be included in the carrier plan. Just watch all the new iPhone ads - what do they emphasize?

So Todd, you really need to listen more to others, who are not even Apple "fans", objectively recognizing the impact of the iPhone and its relationship with the carriers.

Here's some reading for some more ideas:
communities-dominate.b... (site has other related articles as well)
www.news.com/8301-1357...
www.rcrnews.com/apps/p...

And this is what I think is the long-term change to AT&T and carriers? (Hasn't happened yet!) As soon as broadband data is somewhat viable over cell networks, (definitely not with EDGE, possibly with 3G, more likely with 4G or even WiMax), Apple will get the carrier to charge for being a pipe from your mobile device to anywhere on the Web (not just the walled garden), just like telcos/cablecoms charge for being the broadband pipe from your home to the Web (where those walled gardens have already disappeared). If iPhone is the best device for using the mobile Internet, it will persuade many who do not bother with data to become willing to pay from $20 to $200 for various speeds/capacities/serv... of mobile data. Especially corporations. So you can bet iPhone will be tying in to more and more enhanced data services, some through .Mac, some like Salesforce. As other carrier competitors see the writing on the wall, they'll have to also have open data plans (initially using other phones of course).

And if the carrier can bundle this with home broadband or corporate wired networking, this becomes even more valuable to the carrier. I'm sure you can imagine further tie-ins that will eclipse anything Blackberries do today.

Is AT&T An iPhone Sales Anchor?

First, note that the 23% is still higher than it was before iPhone was mentioned (14%). 22% in Jan was after iPhone preview. So it's not as bad as it looks.

Second, Apple is aiming to change the cellular industry, not just sell handsets. For now, it needs its carrier partners to make the change happen. You need to take a broader, big-picture, strategic view instead of such a short-sighted, tactical, next-quarter revenue view.