According to rumors, Apple is demanding 10% of the iPhone data and voice revenue from potential European carriers.
If the rumors are true, Apple will be on to a major financial winner in Europe with the iPhone. In an unprecedented deal, the company is said to be demanding 10% of the iPhone voice and data revenue from potential European carriers.
Will anyone bite? Yes, because consumers want the phone, and that means networks will bite the bullet and meet Apple’s terms. It worked before with the iPod, where the iTunes store was effectively able to dictate terms to record labels who wanted to sell music there.
For several months there’s been widespread speculation over who’ll sign up the iPhone in Europe. Currently the betting seems to be on Deutsche Telekom’s T-Mobile in Germany, Telefonica’s O2 in the United Kingdom, and France Telecom’s Orange in France. However, no one’s talking yet. It’s likely that the announcement will be made later this week at a Berlin trade show.
However, that date might prove premature. France Telecom executive Louis-Pierre Wenes said, “Several operators are still in talks with Apple. I think it will be several weeks beforewe have an announcement. A deal in September, as has been reported, seems impossible to me, if only for technical reasons.” In the U.S. Apple has an exclusive deal with AT&T for the iPhone, and reportedly receives $3 a month for each iPhone subscriber and $8 for each new subscriber.
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RSSHow are most Smart Phones sold? By a subsidy which is then paid for through a phone service contract. If you look at the price of competing smart phones plus the cost of using them them for two years, then the iPhone is between $150 to $400 dollars cheaper for worse hardware and services.
Apple does things differently. How? First, by demanding no up front subsidy. You pay the full price for the phone. This leads to real competition in hardware; who's afraid of that? For most people, this means that Apple wins hands down.
A huge percentage of the iPhone's buyers are polled as being satisfied or very satisfied. How much? In the high eightieth percentile. That is phenomenal for a new product. It shows how many people are not being served by their present phone companies.
Then, Apple demands a monthly subsidy from the service providers-- to do what? For providing periodic software upgrades, just as it does for its Apple computers.
Apple has set up the tax and financial systems for its phone business to compensate for these software upgrades. US tax law demands this.
Who loses from Apple's entry into the phone market? The customers? No, they get improvements to their iPhones just by syncing up to iTunes while being charged less than for other smart phones. AT&T? No, they get a hot product that weans people away from other phone providers. Apple? No, they get to provide an innovative product in a new business area where there is little real competition.
The other phone companies and service providers? Yes, they lose, because they don't have a hot product to sell. And most customers hate what the phone companies deliver now. The other phone companies are suddenly forced to compete on products and services. Are we supposed to be up-in-arms about that?
Of course, given your comments, you are naturally on the side of the other phone companies. Why is that? Are you a luddite?