|
iPhone serving Apple better than AT&T
Apple seems to have a growing problem on its hands – the size of which it may have grossly underestimated. According to last week’s earnings calls, Apple claims to have sold 3.7 million iPhone activations, whereas AT&T reports only 2 million. The 1.7 million discrepancy indicates that at least 1 million iPhones were unlocked, a number accounting for as much as one quarter of the company’s total iPhone sales to date.
Wirelessimports.com is one such company responsible for perpetuating the incongruity. The gray-market dealer sells both an unlocking solution for $179 or the unlocked version of the 8-gigabyte iPhone, advertised on its Web site for $599, the original price of the phone at launch time. Internationally, the company is selling between 500 and 1,000 unlocked iPhones per month, according to senior sales associated Shawn Zade.
Zade said the estimated 1.7 million unlocked iPhones should actually include anywhere between 250,000 and 500,00 more, made up of current AT&T customers who unlocked their phones to travel overseas or those former AT&T users who have since left or simply unlocked the phone for the sake of having access to another provider’s network. Even as Apple has attempted to make the lives of unlocking experts harder with new software updates and unlocking “blockers,” estimates have iPhone unlocks at about the same during the third and fourth quarter of last year.
Despite common misconceptions, unlocking the iPhone, or any wireless handset for that matter, is not illegal. Under an exception to the Digital Millennium Copyright Act passed in 2006, cell phone firmware that ties a phone to a specific wireless network is exempt from coverage for three years.
However, that doesn’t mean Apple welcomes it. Not surprisingly, it’s a thorn in the side of the new wireless player, which refuses to relinquish control, risk harm to the phone or lose an opportunity to make money on royalties. Furthermore, Apple has announced its software development will be made available this month, so third-party clients can get on Apple’s deck officially, with a security key and financial arrangement.
The minute an iPhone is unlocked, it becomes worth a fortune, Zade said. Many distributors, typically in Hong Kong, buy up as many devices as they can, often upwards of 1,000, and hold on to them with the knowledge that they’d be worth significantly more when software to unlock them became readily available. As a result, prices in the wholesale market have fluctuated to only about half of what they used to be.
AT&T may be lacking in the customer loyalty department. With
Verizon reporting solid earnings and an additional 2 million subscribers in last year’s fourth quarter, the wireless competitor beat AT&T in post-paid subscriber gains and revenue. The expected mass exodus of consumers from Verizon to AT&T’s iPhone never took place.
On the Apple side of things, the large amount of unlocked phones could be the catalyst to reaching its goal of selling 10 million devices this year. According to a Bernstein Research report this week, Apple forgoes $300 million to $400 million in future revenue profit with every 1 million iPhones unlocked. But as far as AT&T is concerned, no monthly carrier payments are in it for them, so the growing number of unlocked phones means nothing but a headache.
It is possible that as Apple increases the availability of phones to more countries, the number of unlockers will decrease. On the other hand, the availability of unlocked iPhones is a large part of what is driving the demand for the phones overseas, so it is a double-edged sword for Apple. Its choices, neither optimal, seem to be: crack down harder on unlocked iPhones and lose a significant amount of sales, or allow unlocked phones to infiltrate other markets and lose potential revenue streams in the future. The route they take may be out of their hands as so-called hackers and grey market dealers like Wirelessimports.com continue to beat the system.
|
iPhone Australia, iPhone hacks , iPhone news
Home
| 
Advertise with us
| 
Links
| 
iPhone Accessories (Soon)
| 
Sign Up | 
Glossary | 
Contact Us 
Unlocked iPhone market in shades of gray
File Attachments
User Comments 
Related Questions
Search Knowledge Base