AT&T is the company that provides wireless cellphone service for the Apple’s revolutionary touchscreen phone called iPhone, which also plays music just like iPod. iPhone has literally swept the whole cell phone market; so far more than 75 million iPhone sets has been sold, so no wonder many people wonder how much profit is iphone helping at&t earn?
Many would be shocked to learn that at&t is actually losing money every time an iPhone 3g is sold, for it is the sole service provider this best selling phone ever. When it came out first, iPhone first and older version used to cost $399 for 8gb and $499 for 16gb plus taxes. But the latest one iPhone 3g cost $199 and $299 for 8 gb and 16 gb hard drive space, respectively. So why would Apple make the newer and better (in terms of Internet connectivity speed) iPhone 3g cheaper price? That is because so that more new customers would sign up for their service and eventually it pays off because of minimum two year contract.
Apple is still making profits from making and selling iPhone 3g for cheap price because AT&T has paid Apple over $900 million this past quarter year in subsidies to cover the cost of manufacturing them. Analysts estimate that at&t close to $400 for every new iPhone sold in the United States.
Although the revenue AT&T makes from iPhone is almost a twice higher than average one, it has affected the AT&T landline also known as wireline home phone business which has fall of by about 50%.
Yesterday AT&T posted a quarterly earning of 67 cents per share while taking out the one time cost. AT&T share has fallen in recent years to about $23 and is reaching three years lowest price of $22.42 per share.