Why The Unlocked iPhone Economy Won't Go Away* (AAPL)

Dan Frommer | June 9, 2008 5:27 PM

iphone-jack-johnson.jpgApple's new iPhone, launching July 11, will be some $200 cheaper and will (eventually) be available in 70 countries. In theory, this will curb the "unlocked" iPhone economy, in which people buy iPhones in the U.S., hack them so they can work with any cellphone operator, and sell them for big profits overseas.

Why? Lower prices and much wider availability will encourage many would-be unlockers to buy their iPhone legitimately, from the carrier in their country that Apple has partnered with.

But we don't think we've seen the end of the unlocked iPhone phenomenon. Why not?

First, the iPhone still isn't available everywhere -- most crucially, it still won't be sold (legally) in China. And second, there will still be people who want to use the iPhone on a low-cost, non-Apple-blessed carrier; Apple is still only teaming up with one or two carriers in each of the countries it will sell in.

But this is more an intellectual exercise than anything else. Now that Apple is giving up the most of the lucrative monthly kickbacks it used to get from carriers, unlocked iPhones won't be much of a financial concern to analysts who freaked out about all the money Apple was "losing" to unlockers.

Update: Helpful commenters note that during a conference call today, AT&T (T) said that in the U.S., you'll have to activate your new phone immediately -- not later, at home. (We'll tune into the archived call later for the exact wording.)

This adds an economic hurdle to the unlocking process -- AT&T's early termination fee, or riding out a 2-year contract -- meaning you'll have to work doubly hard to get an unlocked iPhone. Obviously this kills the deal for many of us, and will make it hard for individuals to "export" multiple phones. But we think that some buyers -- especially rich people overseas, who see the iPhone as a fashion item -- will still deal with that challenge to get their hands on an unlocked iPhone.

See Also:
Apple's New iPhone Strategy: More Units, Less Revenue
iPhone 3G No-Shows: Adobe Flash, Video Recording, Copy And Paste
Apple's iPhone 2.0: $199, 3G, On Sale July 11

Subscribe to SAI: RSS, email newsletter (no spam)

More:

Share:
Post to Del.icio.us


< Prev. Story
Next Story >

20 Comments

moo said:
The fact that you'll have to get a contract when buying now, rather than taking it away to activate it at home, should curb the unlocking rather more.
Do we know this is true? Will you not activate the phone at home anymore?
Geo said:
According to AT&T you will be required to activate the phone before leaving the Apple store. Listen to their afternoon conference call for details:

http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=113088&eventID=1873725

I think unlocking is over, which at least means the secondary market for the used 2G phones will be strong!
Tim F. said:
@moo As I said in the AT&T-focused post, this will just make the flow of the gray market shift from countries that require sim-unlocked phone be available INTO the U.S.
Thanks, missed their call. Will update.
Nate Westheimer (URL) said:
Can't wait to re-sell my 1st gen iPhone!
Updated; thanks again for the tip, all.
moo said:
I always figured most of the unlocking was done by organized groups buying in bulk. Sure the economic hurdles for an individual to unlock aren't much greater, as a mass operation it seems pretty dead.

As Tim F. says, I'm sure they'll just move to whichever country has the best economics for getting unlocked phones out.

The other factor here is that now Apple is no longer getting any cash on the back end, any incentive for them to keep unlockers out is greatly reduced (aside from whatever good faith effort is written into their carrier deals), so the phones could get a lot easier to unlock, or at least Apple won't be playing cat and mouse quite as hard.
chris said:
The ecomonics have not changed. They actually might have gotten better for Apple. Apple is now selling the item below or at cost, but gets paid a set fee from ATT or what ever carrier for the activation. Apple will not sell the phone at $199/$299 if you dont activate it since they will not be getting a commision from ATT (in the US). This in line with the wireless phone model in the US for the past 2 decades. Commisions can be anywhere from $200 to $350, depending on the plan you choose, so when all is done, Apple is still getting $400/$550 for the base and $500/$650 for the upgraded model. As much as Apple seemed to be loosing out when iphones were sold and unlocked in the past, from what I have read, the phones cost less than $180 to mfg, so all those unlocked phones being sold for $400 where still highly profitable, and allowed apple to sell far more phones than it could have on ATT alone. This model almost seems to be in ATTs favor, forcing people to actually use ATT......
EPS said:
Another fun thing about unlocking in the US- Thanks to North American spectrum allocation being different than Europe, the AWS band used by T-Mobile USA for their being-deployed 3G service is used by no other GSM carrier on the face of the earth. Thusly, the 3G iPhone doesn't have support, so even after paying for the phone, then an ETF on a short-lived at&t contract, you then get... EDGE! Might as well stick with the 2G iPhone, if you want to use T-Mobile.
Gary said:
O2 in the UK (o2.co.uk) has announced that it will be selling pay-as-you-go iphones that don't require a contract. Obviously they will be more expensive than the subsidised version but they will be the target of unlockers (as they will be presumably be locked to O2). Similar situations will exist in other markets no doubt.
wow gold (URL) said:
Farming for WOW GOld isn't easy,but you can buy cheap wow GoLd,
WOw golDpower leveling on sale. Looking to buy woW gOld,
or wOw Gold sell,Items or Accounts ? Please look here WOw gold,
wow gold, WOw GOld, woW goLD
WoW gold, WOw gold.
gotoebay said:
DVD Ripper for Mac ----Easy way to rip DVD to other video and audio formats on Mac OS X.

Mac Video Converter----Fasy way to convert videos on mac os x.
selamler (URL) said:
sohbet chat sohbet chat çet sohbet chat özcan sarıca ile kurtlar vadisi pusu 3.sezon 1.seo yarışması aytug akdogan ödüllü 1. seo yarışması ve yurtta barış dünyada barış sesli chat sesli sohbet sesli görüntülü chat görüntülü sohbet kameralı sohbet kameralı chat bayan arkadaş görüntülü çet sesli muhabbet kızlarla sohbet kızlarla chat kameralı çet kameralı sohpet kızlarla çet chat gizli kamera güvenlik sistemleri kamera güvenlik kamerası cilt bakımı cilt bakım ürünleri ıslak mendil kolonyalı mendil kolonyalı mendil güvenlik kamerası gizli kamera kamera canlı sohbet sohpet sohbet sesli sesli chat sesli sohbet kameralı sohbet kameralı chat görüntülü chat görüntülü sohbet bayanlarla sohbet sesli muhabbet bayanlarla chat kızlarla sohbet bayan arkadaş görüntülü çet sesli çet sesli sohpet seslichat sesliçet kameralı sohpet kameralı çet kızlarla sohpet kızlarla çet sesli sohbet sesli sohbet sesli sohbet sesli chat sesli chat chat çet ek iş ek gelir mirc avşa adası avşa avşa adası avşa tatil tatil köyleri "Trkycmhrytllbtpydrklcktr" Trkycmhrytllbtpydrklcktr Trkycmhrytllbtpydrklcktr "Trkycmhrytllbtpydrklcktr" "Trkycmhrytllbtpydrklcktr" Trkycmhrytllbtpydrklcktr özcan sarıca ile kurtlar vadisi pusu 3.sezon 1.seo yarışması özcan sarıca ile kurtlar vadisi pusu 3.sezon 1.seo yarışması aytug akdogan ödüllü 1. seo yarışması ve yurtta barış dünyada barış aytug akdogan ödüllü 1. seo yarışması ve yurtta barış dünyada barış "adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması" adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması "adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması" "adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması" adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması ıslak mendil ıslak mendil kolonyalı mendil kolonyalı mendil paketleme ambalajlama paket web tasarım seo refreshing towel perde tatil kozmetik haber joy türk radyo aşk haber video tatil tekstilkent yabancı personel çalışma izni

sohbet
sohbet
sohbet
chat
msn
peyzajci
villa dekorasyon
magaza dekorasyon
ofis dekorasyon
elektrik ustasi
dekorasyoncular
boya ustasi
arsa borsa
ayrimenkulcu
kapalicarsi emlakci
arazi borsasi
arazi borsasi
satilik arazi
arazi bankasi
emlak bankasi
kapalicarsi borsa
satilik arsa
Chat
maria said:
dvd cutter is a multifunctional and easy-to-use DVD cutter software, it enables you to cut DVD files easily by setting the start time and the end time with high quality.
We are sure that you cant get such an outstanding wow power leveling,service as ... Such as the Burning Crusade comes,wow power leveling, we provide a cheap wow power leveling, Spending points on the Elemental tree helps wow power leveling,to improves offensive spells and totems; WoW Gold,the Enhancement tree improves melee skills,and Restoration helps with healing.If your priority is towow power levelingyour,Shaman as quick as possiblewow gold, spend points on talents that will increase your damage. World Of Warcraft gold,Whether you prefer to kill enemies with ranged spells,World Of Warcraft gold, or up close with brutal melee World Of Warcraft gold, is entirely up to you World Of Warcraft gold, You will soon have to complete your Shaman class quests,WoW Gold, the first being the “Call of the Earth”.WoW Gold, Orcs and Trolls will be able to get WoW Gold, this quest from Canaga Earthcaller World of warcraft Power Leveling,World of warcraft Power Leveling,wow power level,wow power leveling,wow power level,ffxi gil,ffxi gil,ffxi gil,ffxi gil,final fantasy xi gil,final fantasy xi gil,final fantasy xi gil,final fantasy xi gil,guildwars gold,guildwars gold,guild wars gold,guild wars gold,lotro gold,lotro gold,lotr gold,lotr gold,maplestory mesos,maplestory mesos,maplestory mesos,maple story mesos,maplestory mesos,runescape gold,runescape money,aoc gold,age of conan gold,aoc gold, age of conan gold,aoc gold,FFXI Gil,final fantasy gil,everquest plat,eq2 plat,eq2 gold,everquest platinum,rs gold,silkroad gold,Chinese Tea,Green Tea,China Tea,Black tea,Oolong Tea,White tea,Herbal Tea,Jasmine tea,Chinese Tea,Green Tea,Childrens Clothes,Childrens clothing,Baby Clothing,Pet products,dog bed,pet supply,pet product,Dog Collar,Dog carrier,Dog Clothes,Baby Clothes,newborn clothes,infant clothes,boys clothes,boys clothing,girls clothing,girls clothes,baby boy clothes,baby boy clothing,baby girl clothes,baby girl clothing,dog clothes,dog collars,buy warhammer gold,buy warhammer gold,buy warhammer gold,warhammer gold,warhammer gold,warhammer gold,礼品公司,商务礼品,礼品采购,礼品,
kathryn (URL) said:
640-802 Why The Unlocked iPhone Economy Won't Go Away* (AAPL) Relax. How about this instead!

Join the discussion



Copyright © 2008 Silicon Alley Media, Inc. All rights reserved. Registration on or use of this site constitutes acceptance of our Terms of Service and Privacy Policy.