Blame it on AT&T

[mairving]

Apple shares fall on iPhone numbers

AT&T — the iPhone's exclusive carrier — said it activated 146,000 iPhones on June 29 and 30, a number that disappointed investors following some analyst forecasts that Apple would sell 500,000 or more iPhones in its first weekend. Also weighing on Apple's stock Tuesday was a report from CIBC World Markets that said demand for the iPhone has experienced a "significant decline" in the past 10 days, a slowdown driven in part by dissatisfaction with the slow data transfer speeds on AT&T's network. CIBC used store visits and a survey of iPhone buyers to reach its conclusions.

I am still not sure why Apple didn't choose to go with Verizon or a better network than AT&T.

[XenaWP]

Maybe because they're more interested in sucking money out of people to buy the unit ... once it's sold, they don't get anything out of it, do they?

[David M]

AAPL gets a percentage of the service contract. The share price fell from 144 and is now trading around 136 as of this morning. Which puts it back to where it was 8 trading days ago. When the iPhone went on sale AAPL was trading around 122. This means the stock has gained 14 points(10.2%) since the iPhone went on sale. Sell offs on stocks which have made rapid rises are normal. Personally, I think this is a buying opportunity.

It is a mystery as to why Apple chose the slower carrier. Jobs has yet to explain this. Software exists inside the iPhone for 2G service which people are guessing will be used in the overseas markets. It is easy to forget that the US will not be the only market for the iPhone and AT&T will not be one of the overseas carriers. I don't think it would take much to do a software upgrade to 2.5G or 3G for certain overseas markets.

[HAL9000]

Why would Apple choose one network over another? A better contract deal... a better kickback... probably better promises that apparently cannot be met as well.

[mairving]

Originally Posted by HAL9000 Why would Apple choose one network over another? A better contract deal... a better kickback... probably better promises that apparently cannot be met as well.

I think that it is mostly a means of keeping the price inflated. If other carriers have the phones the IPhone may be discounted. I think also that it is to create a buzz for a hot new product that not everyone can have.

[Floppyman]

Originally Posted by David M AAPL gets a percentage of the service contract. The share price fell from 144 and is now trading around 136 as of this morning. Which puts it back to where it was 8 trading days ago. When the iPhone went on sale AAPL was trading around 122. This means the stock has gained 14 points(10.2%) since the iPhone went on sale. Sell offs on stocks which have made rapid rises are normal. Personally, I think this is a buying opportunity. It is a mystery as to why Apple chose the slower carrier. Jobs has yet to explain this. Software exists inside the iPhone for 2G service which people are guessing will be used in the overseas markets. It is easy to forget that the US will not be the only market for the iPhone and AT&T will not be one of the overseas carriers. I don't think it would take much to do a software upgrade to 2.5G or 3G for certain overseas markets.

I personally think that at 136, it's quite a bubble already. Remember 122 came about because of anticipated iPhone penetration and sales, not because Apple had announced record profit margins all of a sudden. IIn my opinion, I do not think that the iPhone will be to cellular phones as the iPod was to mp3 players. Unlike the mp3 player market at the time, the cellular phone market is already well established with several key players, and the competition is much fiercer. Yes, we would all love to see AAPL hit $200/share, especially with the European release of the iPhone yet to come, but somehow I'm doubtful. Then again, I'm young and haven't followed the company long enough to know better, so I could very well be wrong.

[HAL9000]

Originally Posted by mairving I think that it is mostly a means of keeping the price inflated. If other carriers have the phones the IPhone may be discounted. I think also that it is to create a buzz for a hot new product that not everyone can have.

I would be willing to bet that AT&T gave them good kickbacks in exchange for exclusive rights.

[David M]

HAL,
Apple gets a percentage of each subscription and that is well published. Generally kickbacks are under the table illegal transactions. It is pretty hard to hide kickbacks at that level of accountancy with publicly traded companies. People go to jail for that. It is also very easy to trace who did what when the books are audited, and all publicly traded companies are audited.

I think you need to find some solid evidence before you accuse Apple of such a thing. Do you have any evidence?

Apple does get a percentage of each subscription and there is nothing wrong with that.

[mbossman2]

without knowing the specifics of the contract, I am willing to bet that for ease of processing, Apple will be compensated along the same lines (and mechanics) as a cell phone agent:

Depending upon the sales agents volume, they usually receive between 6-12% of the monthly (pre-tax) contract fee and a larger percentage of the junk services they have activated at the time of purchase.

This usually works out to $2.50 - $5 per phone per month. It'll be interesting to see if Apple was able to strongarm AT&T to front that money immediately or take the monthly residual and how the future renewals will be dealt with.

[SonicVanguard]

Answers to the why going to AT&T deal: http://www.usatoday.com/tech/wireles...t-iphone_N.htm

Even if AT&T can roll out a G3 network it will still be incredibly slow as compared to Verizon and Sprint. Both Verizon and Spint will roll out EV-DO v.B by fall - they will triple their speeds overnight. AT&T's G3 roll out will take them at least three years (by their own admission). AT&T's network speed is terribly evident with Apple's exclusive YouTube contract - watching those video's is almost tedious on a iPhone.

Jobs and Apple made a huge mistake - over 6 dozen known bugs in the iPhone (most of which won't get fixed in the next generation roll out according to Apple), 1/3 of the expected sales, exceedingly slow network that will be tied to the iPhone for 5 years and the two competitors with the blazing fast networks both have competing phones coming out from trusted manufacturers (Moto, LG and Samsung) by the fall. Sprint already has the Mogul which has all most all the the capabilities that the iPhone has plus a real keyboard.

The iPhone is definitely one of those thrown an idea against a wall and see if it sticks happenings - it stuck for a few seconds.

[Strider]

Personally I don't think it's AT&T fault, I think the iPhone is way over price for the capabilites that it has. Just my Opinion.

[HAL9000]

Originally Posted by David M HAL, Apple gets a percentage of each subscription and that is well published. Generally kickbacks are under the table illegal transactions. It is pretty hard to hide kickbacks at that level of accountancy with publicly traded companies. People go to jail for that. It is also very easy to trace who did what when the books are audited, and all publicly traded companies are audited. I think you need to find some solid evidence before you accuse Apple of such a thing. Do you have any evidence? Apple does get a percentage of each subscription and there is nothing wrong with that.

You're reading more between the lines than I have said... nowhere have I said concrete proof, I said I'm willing to bet on it.. by kickback, I mean LEGAL compensation. There is a reason they went with them over another company.... it's called doing business. If I can deal between you and company B, and you're offering me more return on my investment with you in exchange you get the exclusive rights... it would be my decision to see if the compensation outweighs exclusivity... if it does, then I sign the deal... makes sense doesn't it?

[XenaWP]

Originally Posted by SonicVanguard ... The iPhone is definitely one of those thrown an idea against a wall and see if it sticks happenings - it stuck for a few seconds.

Makes the iPhone sound like a Newton ....

[David M]

Bad news for the iPhone bashers. Apple reported for Q3 this evening. Apples profit is up 73% and is trading at $150/share on a 14 point gain after the market close. iPhone sales met or exceeded most of the analysts expectations. 270,000 iPhones were sold during the first day and a half.

"Oppenheimer (Apples CFO) also said Apple would name its initial European wireless-network partners for the iPhone later this quarter, and would begin selling the iPhone in Europe during the fourth quarter of the year."

Apple expects to sell 730,000 iPhones by September, one million by the end of Q4 and 10 million in 2008.

http://money.cnn.com/news/newsfeeds/...1_FORTUNE5.htm

http://www.bloomberg.com/apps/news?p...MMw&refer=home

It appears that people who are buying the phone really don't care about this "slow" data transfer rate that so many here are concerned with...nor about the $600 price tag. " I think that if you are into this stuff, then data transfer rates and all that tech stuff matter more to techies than the general public who know nothing about it nor care anything about it....all they care is if it works.

[mairving]

Originally Posted by David M Bad news for the iPhone bashers. Apple reported for Q3 this evening. Apples profit is up 73% and is trading at $150/share on a 14 point gain after the market close. iPhone sales met or exceeded most of the analysts expectations. 270,000 iPhones were sold during the first day and a half. It appears that people who are buying the phone really don't care about this "slow" data transfer rate that so many here are concerned with...nor about the $600 price tag. " I think that if you are into this stuff, then data transfer rates and all that tech stuff matter more to techies than the general public who know nothing about it nor care anything about it....all they care is if it works.

Not really bashing the IPhone just some of the mistakes that I think that Apple made by choosing AT&T as it's sole US partner. It's like buying a Ferrari and only being able to drive it a 15mph while everyone else is going 70. Pretty soon some of that coolness is going to wear off once reality hits.

[jimmyrules712]

From what I've read in some news articles the reason apple went with at&t is because verizon and sprint and others are more strict on what software runs on their phones. They want it to be their software. Apparently at&t is more open and allows non-at&t software.

From what I gathered at&t was willing to be a lot more flexible with apple and let apple do things how they want to do it while the other carriers wanted it their way.

[Floppyman]

Originally Posted by David M Bad news for the iPhone bashers. Apple reported for Q3 this evening. Apples profit is up 73% and is trading at $150/share on a 14 point gain after the market close. iPhone sales met or exceeded most of the analysts expectations. 270,000 iPhones were sold during the first day and a half. "Oppenheimer (Apples CFO) also said Apple would name its initial European wireless-network partners for the iPhone later this quarter, and would begin selling the iPhone in Europe during the fourth quarter of the year." Apple expects to sell 730,000 iPhones by September, one million by the end of Q4 and 10 million in 2008. http://money.cnn.com/news/newsfeeds/...1_FORTUNE5.htm http://www.bloomberg.com/apps/news?p...MMw&refer=home It appears that people who are buying the phone really don't care about this "slow" data transfer rate that so many here are concerned with...nor about the $600 price tag. " I think that if you are into this stuff, then data transfer rates and all that tech stuff matter more to techies than the general public who know nothing about it nor care anything about it....all they care is if it works.

Well, that 73 percent gain is primarily due to strong Mac/iPod sales, not solely due to the iPhone. And how do you explain Apple saying 270,000 were sold in the first couple days with AT&T claiming only ~150,000 activations during that time? Don't tell me 120,000 people bought the phone just to look at it. Something here doesn't make sense.

[HAL9000]

That could be fudging of numbers... Apple may have sold 270,000 units to stores for distribution, but the stores have only sold 150,000 for activation at this time... possibly?

[mairving]

Originally Posted by HAL9000 That could be fudging of numbers... Apple may have sold 270,000 units to stores for distribution, but the stores have only sold 150,000 for activation at this time... possibly?

Hmm, maybe those other 120,000 are trying to get activated. If so that is even further proof of AT&T as a bad choice or a bug in the phone.

Maybe I should amend my story above to 'Parked in their Ferrari'.

[David M]

I was messing with you guys calling you iPhone bashers.

Apples Third Quarter ended two and a half days after the iPhone went on sale. So the third quarter results only reflected 2 1/2 days worth of sales and activations. There were problems with getting the phones activated mostly in bugs with the website and demand which overwhelmed the website. The difference between the number of phones sold and the number of activations reported over that weekend I would guess reflect the snafu with the website. It should be noted that the website also required a mandatory download of some software before the phone could be activated. The problem with the website has been cleared up. Basically, the third quarter report showed a point in time where there were more phones sold than activations because of the website problems.

At one point AT&T was telling customers it could take 24 to 72 hours to activate the phone during the first weekend of sales.

http://www.iphonefaq.org/archives/97150

http://www.ilounge.com/index.php/new...pread-serious/