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Apple Says 250,000 iPhones Sold to Unlockers
Hugh Pickens writes "Timothy D. Cook, Chief Operating Officer at Apple, disclosed during Apple's conference call to discuss their fourth quarter earnings that they estimate 250,000 of the 1.4 Million iPhones that have been sold were bought by people intending to unlock the phone. 'The elasticity in demand with the price drop] enabled us to far surpass our expectation of hitting around a million units cumulatively by the end of the quarter. Some number of these were sold to people that have an intention to unlock and [while] we don't know precisely how many people are doing that, our current guess is there is probably 250,000 of the 1.4 million that we sold where people had bought them with the intention of doing that. Many of those happened after the price cut.' Apple knows how many iPhones have been sold and how many have been activated with ATT. The difference is the number that are unlocked."
Maybe its just me, but who cares about the iPhone? Normally I'm pretty excited about Apple products, but it really seems like just another phone. Yeah, it has a few more bells and whistles, but its not revolutionary or anything. And the whole AT&T lock in deal is a big downer. Maybe the next rev will be more exciting.
Couldn't some of that 250 000 just people not bothering activating them or planning on giving them away as christmass gifts or whatnot.
Does anyone else find it somewhat ironic that a company that has roots in defrauding Ma Bell is having these problems now?
ATT shareholders are the ones who should be paying attention.
25% of the affluent side of the market is willing to risk bricking a $400 phone to avoid their service.
How many more iPhones would have been sold if it was unlocked in the first place.
I'd like to know how many of those 250,000 phones were resold (on ebay?) for a premium? On one hand, those extra sales are obviously good for Apple. On the other hand, that could also be viewed as an opportunity cost for Apple...
I guess I'm one of many people that would be interested to see the numbers on the whole 'exclusive cingular deal' thing. I'm guessing there must be quite a hefty payment per unit by cingular to apple. Looking at these figures, apple were expecting 1 million sales at the end of Q4, and ended up with 25% more sales as a result of sales to unlockers, if they were expecting this then I'm guessing the payment per unit must be at least a third of the unit price.
I guess we'll know when it goes on sale in France (where due to law it must be sold unlocked). I assume they'll be whacking on the appropriate additional cost.
I also wonder why Apple really care? I mean they already signed the deal, and they're making 'reasonable' efforts to uphold their end of it, so why do they care enough about unlockers to bother with a patch aimed at preventing it? Esp. since they're getting more sales out of it....
Windows in 6 Bytes (IA-32) : 90 90 90 90 CD 19
From a business perspective, I understand the benefits of profit sharing especially when you have a lock on the market with your new product. However, when 18-20% of your market makes the active effort to purchase your product and create a workaround, I firmly believe that Apple could have printed their own money if they opened sales up to all companies that can handle a SIM card.
Being a T-Mobile customer, I wasn't an early adopter for the iPhone. I would have been if I was an AT&T customer, but having looked at it demographically I see this:
There are people who want an iPhone:
-And get it
-But have a different carrier
-And buy the hacked version for 90% of the functionality
-And can't justify the cost
-But won't pay the switching cost.
-But they really want a ZunePhone
.02
My
Missing from this oversimplified calculation are iPhones sold but not yet registered with AT&T. This would include (and is potentially a figure large enough to throw off their estimate) iPhones sold to non-registered resellers.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Once the web browser on the iPhone can support shockwave, flash, and javascript, I will be interested.
As it stands a lot of the sites that I visit won't work on the iPhone, because of that lack of support.
and that would be me. :)
:)
:P)
:)
As a Canadian, I didn't have much choice. It was unlock it, or wait until Apple and Rogers get their act together.(Rogers is basically the only GSM carrier in canada. Fido is the other one, but it's owned by rogers now)
There's no light at the end of the tunnel for Canadians either. There are 2 hurdles currently slowing down the release of the iphone in Canada:
1) the iPhone name is already trademarked by a voip company called Comwave. I know this because I'm an iphone customer in more ways than one!
2) the data rates in Canada are insanely stupid. I don't even subscribe to data and just rely on wifi around the big cities to fulfill my data needs. The best deal I can get from Rogers is $10 for 10MB. After that, it's $0.03/KB. Yes, you can do the math. The 2nd 10MB will cost you another $300**. Now you know why I don't subscribe to data.
Going the unlock route might even make sense when indeed it does show up north of the border. You know they'll force you to subscribe to data, and you know they'll want a lock in for 2-3 years. So even if it was available in Canada now, I might still have unlocked an iphone anyhow.
Just my $0.02 CND. (And yes, it's actually worth more than your $USD now
** - Can someone double check for me, I'm still in disbelief at the $300 for the 2nd 10MB
AirSpeak - http://itunes.com/apps/AirSpeak
And if by killing you mean buying up all the companies that where making excellent clones and using their talent to build the iMac, G3 and Airport... then good for Apple.
"Slashdot, where telling the truth is overrated but lying is insightful."
I'm all for hacking around this kind of crap. Remember when Nintendo tried to sue Game Genie? In that case, the judge ruled that once you buy a piece of hardware, you can't force someone to use it the way the manufacturer intended, at least not through lawsuits.
I wish someone would explain to me, why they just don't sell the Iphone with a contract for AT&T service instead of trying to force people to use AT&T via locking the phone. I mean that's how it's done with all the other phones. If it is exclusive through a provider, you have to buy a service contract with that provider. Simple and no bricking... Mayby Apple and AT&T are just stupid.
That's MARKET penetration, for the dirty-minded of you out there.
Listen, I'm not going to buy an iPhone any time soon. I'm a grad student and just can't afford it. In fact, by the time I can afford one, every other cell phone manufacturer will have something that copies all its features, although Apple will also keep up and have some better phones, etc. But I think Apple is doing absolutely the right thing with the iPhone, and as annoying as some of their actions have been, they're ultimately going to our benefit as well as theirs. This isn't altruism. They want profit. It's just that they know about user demand, but they presently have their hands tied.
Here's something you need to realize: Apple doesn't like this lockin any more than you do. Oh, sure, they like the kickbacks, no doubt. But the lockin has caused them untold grief from both technical and PR angles. And the KNEW this even before setting out.
So why put us through all this bullshit? Because before there was an iPhone, there was no specific demand for it. As an idea, there was GENERAL demand, but there wasn't a phone from Apple already that you could play with to tell that you really want a phone from Apple. If Apple were to start out with an unlocked phone, they would shoot themselves in the foot--no carrier would pick up their phone, because there wouldn't be enough guaranteed profit in it. As it is, Apple and AT&T have going basically the only way to go about it and not have the iPhone be a total waste of time that tanked before it started. The key factors here are (1) to get users familiar with it and addicted do it, and (2) make significant profit. The only way to do these things is to sell them by the millions. The only way to sell by the millions AN UNPROVEN PRODUCT is to make a deal with a major carrier who will see enough profit in it to help push it on buyers.
In short, what Apple did was SMART. Oh, it wasn't NICE. But it was SMART, because frankly, it's the only way to meet these basic business requirements.
I guarantee you that before iPhone+AT&T, T-Mobile was only passingly interested in it, considering it to be a very risky thing to take on. NOW, they're shitting themselves and are about ready to beg Apple to sell to them. Apple knows this. This is why Apple did what they did. They had to prove themselves, and now everyone wants them. One way to prove yourself is to sell the product successfully. The best way for them to sell the iPhone successfully THE FIRST TIME was to take another route.
Apple is smart and is going to take advantage of their popularity. Once AT&T becomes dependent on the iPhone because they see it as highly profitable, they'll agree to terms more favorable to Apple, which is that Apple will sell to other carriers, and the phones they sell will be unlocked! Apple is not only aware of what the users want; they've ancipated what the users want and are preparing to give us those features. They just can't yet. Apple is fighting tooth and nail with the unlockers, not because they give a shit about unlocking. They WANT unlocking. In fact, they're probably elated that users are able to use the phones on other networks. But they have to put on a good show for AT&T! They have a contract with AT&T that requires them to maintain the lockin. And they MUST maintain that lockin, because they have not YET achieved that critical mass of adoption.
Oh, BTW, if Apple doesn't do as I predict, users will become jaded and lose interest in the iPhone as the competition catches up and DOES provide what people want. I don't think Apple is that blind or stupid. Otherwise, they wouldn't get half their Mac sales from people who've never before owned a Mac.
Well your 'other circumstances' CAN apply for some products, but not the full 250k+
Fell off the truck: those wouldn't be 'sold', they were shipped and lost (or they are still showing up as 'in-stock'), money has not been received for those items.
People buying extras in case they break: There is a one-year full warranty and for a few bucks you can get a 3-year replacement warranty. Spending $400 just so I wouldn't have to buy the warranty, doesn't make sense for anyone.
Buying for kids/boyfriend/girlfriend: Well, they still need activated (or hacked) before we can use them
Buying but waiting for contract to expire: Why? They will still be available (probably cheaper) within a few months. Sure, you can sit on them, but again doesn't make sense unless you hack them and use the functionality without the phone in the mean time.
Buying but pissed/waiting for unlock: There are unlocks for both the old and the new firmware, those would be counted as 'hacked'
Buying for use outside US: again, how is this not hacked then?
Try and unlock/analyze/reverse engineer: again, how is this not hacked?
Miscounted or in transit: Miscounts are difficult since they're either sold or not, that number they DO know (otherwise their finances wouldn't be right) they can indeed be in transit or waiting to be unlocked, but not 250,000, probably not even 10,000.
Employees/associates who bought it up to make a killing: Well, eventually they are re-sold and either activated or hacked, they won't sit on it until eternity
People who want revenge by making them loose money: There are better ways to do it (go into the stock market, buy lots of stock, then dump them) than to buy a non-subsidized phone
Interviewing will be more problematic because hacking is 'illegal' in the US, so people won't be forthcoming about it nor can you round up everybody that bought a phone.
Custom electronics and digital signage for your business: www.evcircuits.com
I'm currently a Cingular customer, since 2004. So, I'm not under a contract, and I don't want to enter another in order to I buy a non-subsidized phone at full price. So, if I were to buy an iPhone, I would be fine with keeping my Cingular service, but I would use the activation hack. So, according to Apple, I'd be an unlocker as well?
A sentence you'll never see on an Internet discussion board: "You know what? You're right."
People aren't going to just swap out Windows for Mac OS on their PCs. If it was that simple and easy then Linux would be the #1 OS by now, its friggin free!
Yes, they will, because the software base for Mac OS is there (to some extent). If Apple announced Mac OS for commodity PCs, every software company would produce a version of their software within months. People use applications, not operating systems, which is why Linux is a non-starter. You can't get shrink-wrapped Linux software.
Under the clones Apple was losing money.
Absurd. Exactly how can Apple "lose" money? Are they selling the software below the cost of the CD-ROM it was supplied on?
Oh, they "lost" money because some accountant decided that every clone sale was a missed Apple sale. By that logic, Microsoft loses money every time Dell sells a box.
What part of "Selling Mac OS alone would not make Apple as much money as selling Mac OS on Macs" do you not understand?
The part where Apple sells 10x more copies of Mac OS to the general market, and it's 100% profit! Sheesh, do you think the 10s of billions of dollars Microsoft has socked away fell from a tree? Somehow they managed to make a small profit, yet they don't sell their own PCs.
Sometimes it's best to just let stupid people be stupid.
Welcome to what Smartphone and Pocket PC owners have been enjoying for over 5 years, plus quite a bit more since there are over 3000 games, 5000 applications, GPS, and 100's of devices which support the windows mobile platform.
Sure the WM platform has its problems, it just amazes me people are stunned when can use a web browser, read PDF, and view video on a phone when it has been around for so long, and oh yeah, you can get a better equiped Smartphone for about $200 less than an iPhone, and most of them are already unlocked.
Yes, they will, because the software base for Mac OS is there (to some extent). If Apple announced Mac OS for commodity PCs, every software company would produce a version of their software within months. People use applications, not operating systems, which is why Linux is a non-starter. You can't get shrink-wrapped Linux software.
You can't get much shrink-wrapped Mac OS software either, except at the Apple store and that one half-aisle at the few remaining CompUSA stores. If Apple announced Mac OS for commodity PC's, every software company would shrug and write Apple off as dead. And rightly so.
Exactly how can Apple "lose" money? Are they selling the software below the cost of the CD-ROM it was supplied on?
Developers don't work for free. The Mac OS is a feature packed in with Macintosh hardware. Apple would lose money because sales of Macs weren't (and still aren't) high enough to justify dropping the hardware division, meanwhile, the hardware division was struggling against the clones. That means that every clone sale was a missed Apple sale. And it would be today, too.
The part where Apple sells 10x more copies of Mac OS to the general market, and it's 100% profit! Sheesh, do you think the 10s of billions of dollars Microsoft has socked away fell from a tree? Somehow they managed to make a small profit, yet they don't sell their own PCs.
Apple wouldn't sell 10x more copies of Mac OS (see my first argument above). It wouldn't be 100% profit (see my second argument above). And Microsoft's billions came from locking OEM's into only selling Windows then ratcheting up the price to a hair below the breaking point, and repeating that for every OEM they could find. That's slowly drying up, too. Microsoft is soon to be in a world of hurt. I give them 10 years of relevance, and a further 10 years of death throes. Apple, OTOH, has a longer future ahead of it, assuming they continue to keep up the good work they've been doing for the last 10 years or so.
Have you seen the value of the dollar? The people who aren't American ARE the affluent ones now ;-)
So tell me what you think what have transpired had Apple simply sold the iPhone already unlocked right from the start without having any contract with any provider at all? Do you think cell carriers would have turned down the signups they get? You can buy imported unlocked phones now and signup with a carrier. How many more iPhones would have sold had it
Traditionally, locked phones are sold by the carrier at a deep discount, or in some cases given away, with cost recovery through term service as the lockin justification. If I get a phone from party A, I pay party A for it, whether that be all at once now, or through a time payment plan, or some combination of that. But with the iPhone we have a case of party A selling phones that require service from party B. I don't know where any anti-trust laws prohibit that now, but IMHO they ought to (so that means if they don't, I favor changing them so they do).
now we need to go OSS in diesel cars
What about people who hacked their iPhones but are still on the ATT network? My boyfriend was already an AT&T customer when the iPhone came out and wanted one really badly... only to discover that because he was a corporate customer, he couldn't have one because the iPhone wasn't able to be activated for corporate accounts. Pretty lame really, at least from a PR standpoint. I mean, all these corporate customers hauling around iPhones is some of the best damned advertising a company could get!
Anyways, when the hacks started coming out, he bought an iPhone and did the hack so that he could use the phone with his corporate AT&T account. AT&T is getting their money, Apple got their money... and yet he's one of those quarter million phones that was bought to be hacked which is apparently bad. I wonder how these people fit into this discussion of hacked iPhones.
...if they were planning on this, why did they sign up for a *five* year deal with AT&T?If they'd managed to sign a two year deal, AT&T would currently be downplaying the iPhone and trying to push other models to prevent Apple from gaining to much leverage on them. AT&T needs to feel secure that the iPhone will be making them a lot of profit for some time to come. Also, a longer term deal means a better share of the profits for Apple, and Apple needs the iPhone to pay for itself and be proven successful in the long term.
In future, Apple will do whatever will make them the most money. If other device manufacturers step up and compete, that will almost certainly be multiple carriers and may be complete unlocking. Apple goes with the market. When the market demanded DRM that did not get in the way and allowed for CD burning, they provided it. When the market demanded no DRM, Apple provided that. The trick is getting enough competition in these locked down, cartel controlled markets (music, phone service) so that people can find some innovative provider. I'm hoping for a Google cell phone and service, myself.
Marketshare may have been increasing, but they were losing Billions. Marketshare is not the only thing that matters to corporate health.
-Darkshadow (There was a thing called Heaven; but all the same they used to drink enormous quantities of alcohol.)
iPhones are being sold, and Apple gets that money.
.22 or a .500 big-game rifle shot to the chest to ATT has yet to be seen.
if they are supposed to get a weekly steering fee/kickback from SBC/ATT/Cingular = ATT, that's an annoyance, depending on the size of the steering fee/kickback.
what this is saying is that 20% of the geek population won't go with ATT wireless even at the pain of not being able to use the latest wonder toy.
this is not a problem for Apple. this is a shot to the chest for ATT. the single hottest device on the planet, and 20% of customers will risk turning it into a brick to avoid them.
whether it's a
if this is supposed to be a new economy, how come they still want my old fashioned money?
If Apple had just sold unlocked phones, there MIGHT have done just fine. But I think this deal with AT&T dramatically improved their chances. A lot of the process of rolling out a new product is publicity, and making this deal with AT&T gave them an immediate advertizing channel. Plus, Apple is very careful about this "experience" thing, where they control the environment so as to minimize problems. MacOS is awesome for the novice, but to make it usable for an expert does require a fair amount of tweaking with some add-on programs and such. The thing is, if Apple were to ship with these things, they'd be increasing their chances of problems. If you install a third-party app, and the system does something funny, then it's your fault or the fault of the app developer. But Apple does not by any means PRECLUDE these add-ons when you know what you're doing.
This goes along with the current lack of dev kit or the iPhone. The launch MUST go smoothly, with minimal problems. Delaying the introduction of a dev kit gives Apple the opportunity to demonstrate how a virgin iPhone works. If a dev kit had been released with the phone, the market would have been flooded with 3rd part apps that would muddy the waters--people won't necessarily be able to distinguish whether a major problem was the fault of Apple or the 3rd party. People are most likely to blame Apple. Once we're used to virgin iPhones, then when 3rd party apps break things, Apple benefits because we automatically blame the app developer instead.
So, back to the locking issue, supporting a single carrier is FAR easier than supporting everyone. For one thing, AT&T were actually willing to work with Apple in order to support interesting features like the visual voice mail. That is, certain features exist ONLY because of the relationship. If Apple had tried to work with every carrier, then some carriers would not provide services that are an integral part of the iPhone experience that is making everyone drool over it. Add to that the complications of activating a phone. With one carrier, it's trivial. With every carrier, just associating the phone with the network requires technical knowledge that many people don't have. Even if the problems were relatively slight, they would have MASSIVE impact on adoption.
So, I maintain that stricking a deal with a carrier (any carrier, but a specific one) was CRITICAL to the market penetration of the iPhone. This gives Apple the control they need over the network. The contract with AT&T goes both ways. If you can't use your unlocked iPhone with T-Mobile's feature X, you're screwed. If you can't get it to work with AT&T, you call customer service, and they fix it for you. Indeed, you're not going to want to have an iPhone with a carrier that Apple doesn't have a contract with. You WILL run into some technical problem along the way, and you're going to want to have a supported device on a supported carrier. The only difference is that all the carriers use the same phone and would let you migrate between them. (Or they better, else Apple will be doing something stupid or inexplicably failing in the market.)
BTW, those who already own iPhones probably hope that, once the AT&T contract is over, Apple will provide a way to unlock your phone. This might or might not happen. Apple's far better than other PC makers about supporting older hardware, but they also engage in tactical obsolescence. A first-gen iPod will work fine with the latest iTunes, but there are no firmware updates for it, so you don't get, for instance, memory as to where you left off when you were last listening to an audiobook or podcast. Every time you patch a device's firmware, you take a risk of breaking it, so there are not just profit but also engineering reasons to not provide an "it ain't broke" update like that, even if the newer iPhones are unlocked.
I tend to disagree. First off, it's not merely kickbacks, Apple gets a portion of the monthly fees during the contract. That is revenue for years after the initial product sale. Compare this to an ipod in which they only get their money for the initial sale. You can't think that Apple wasn't drooling over this. And, in fact, they took the same deal to the carriers in Europe. To the people that say they don't want to sign up for a contract for an unsubsidized phone, its actually kind of the reverse. Instead of the carrier using a portion of your fees to make the phone cheaper for you, they are using a portion of your fees to pay off Apple. I don't think the parent is right when he says that Apple's actions are going to our benefit.
There absolutely was specific demand for it. People were clamoring for it well before it was announced. You can even look at it as an evolution of the ipod and forecast the demand. There is no way that a company like Apple can't do the proper market research and figure that out. And, as mentioned, they are pulling the same tricks in Europe after they have tons of forecasting data to build upon.
Apple doesn't need carrier lock in for market penetration. Again, this is APPLE, not HTC or something like that. They have etablished marketing and distribution channels for consumer electronics.
For Apple, this is only about maximizing profit. They know the end user will pay and they know that AT&T will pay, so they're milking it. I think that AT&T only signed up as a defensive move.
Apple's locking is to benefit their bottom line and nothing else. They could have released it unlocked with no carrier tie in and they would have sold a lot more than they have now, but they wouldn't still be reaping the benefit for two years. I think the iPhone is a cool device and am still considering getting it, but I don't for a moment think that Apple cares about wireless freedom; they care about what's in my wallet.
Now, if you want to talk about the price cut tactic with regard to market penetration/share, I'm all with you.