Apple to Allow iPhone Subsidies, Lower Revenue Sharing

In attempt to whet our 3G iPhone appetite as we wait in anticipation for Steve Jobs’ keynote on Monday, Apple has addressed and accepted some rumors that have been greatly circulated.

The Financial Times has reported that Apple is allowing mobile operators to subsidize the new iPhone but will lose a portion of the monthly revenue the operators have been giving to them.

The iPhone should be subsidized in both the US and in Western Europe, the report claims. Such a move would be a planned subsidy of around $200 enabling it to be sold with contract at $199 in the US.

This dramatic price drop will greatly increase Apple’s chances of achieving its goal of selling 10 million iPhones in 2008; Apple has claimed sales of 1.7 million iPhones so far this year.

Rumored subsidies of the latest iPhone is not breaking news by any means; we know that O2 in Britain is rumored to be subsidizing the cost of the hyped phone down to £100, and it could naturally be assumed that other iPhone carriers, including AT&T Mobility, will follow suit.

However, these answers bring up even more questions. It will be interesting to see how the iPhone’s smartphone competitors — especially top-of-the-line models — will react to the pricing. Arguably these competitors will have no choice but to lower their prices in order to maintain sales. Not as many consumers will be as willing to pay a higher price for smartphones that have the same (if not less) bells and whistles. Let us know your thoughts on that theory!

via The Financial Times (free registration required)

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Posted on 07 Jun 08 - Filed in Apple, Wireless - Comments - Written by bradmolen

  • nick
    If apple is going to subsidize the phones in the US, how will they be sold at the Apple stores. Do you think the Apple stores will have access to At&t systems to check if you are eligible for a discount or will you receive a 200 rebate check in the mail after you sign up through iTunes? It will be very interesting.
  • Well, we'll have to wait until tomorrows Steve Jobs keynote to know for
    certain. But my guess it would be rebates

    Stasys
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