Apples (New?) business model

July 26, 2007 at 5:33 pm Leave a comment

Have been quite for the last eight weeks as we went through the Trolltech acuiqistion. So now that I am officially a Troll (and growing long hair) its time to  blog again

From ZDNet
“The 270,000 iPhones only include units sold to AT&T for distribution in its stores, units sold by Apple through its network of retail stores, and some number of units that might have been in transit as the clock turned on the third quarter, Oppenheimer said. An Apple representative confirmed the number doesn’t include online sales of the iPhone during the 30 hours before the quarter ended on 30 June.

Oppenheimer confirmed that Apple is receiving payments from AT&T related to the sale of iPhones, but he didn’t want to discuss the specifics of the agreement between the two companies. Gene Munster, an analyst with Piper Jaffray, believes AT&T is paying Apple about $11 a month per new iPhone customer, or about $3 a month for existing AT&T customers who switched to the iPhone “

Lets do some math.

.25M units first few weeks. So I think 5M Units first year is very conservative.

Lets say half are new AT&T subs and half are existing. That is $7/Month. $84/year.  Or $126 per device for 18 month life.

These are $126 of 100% margin to the bottom line. The iPhone margins are amazing as is (~$500 retail with $250 BOM)  but if you count the additional $126 per device – this kind of margins are unheard of in the handset world.

What would it do to Apple bottom line? I am on pushing my accounting skills here – but lets say $84 per year, 5M devices spread over a year, we are looking at additional $210M dollars for Apple on the iPhone business.  I think I should buy some stock…

Wonder what is going through Nokia top execs as they do this math…

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Entry filed under: Apple, Cellular, Devices, iPhone, Mobile, Nokia.

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