So, really, all that happened was a very popular, expensive, handset came along with the demand that made it possible for the carriers to further pursue an existing business model?

That's Apple's fault because? If it wasn't them, it'd have been someone else.

There's an oil spill in America at the moment - DAMN YOU APPLE!!

TBH with increasing handset costs it was likely that something had to give - be it contract length, or monthly cost.

Yes but offset that against lower call costs and huge profit margins on texts. Calls and texts are very very profitable for the companies, so even with higher phone costs they can still make a huge profit. They are among the most profitable companies in the country. Longer contracts are a way to tie customers in at high margins.

Has a payback from AT&T ever been confirmed? I know they are an exclusive carrier but the reasons for it as far as I know are still unknown. Also the "fortune off each phone" is it much more than Apples usual 30% ish mark up on hardware? I have not seen any recent figures on that aspect of the business.

Discounting the AT&T bit (because I've no idea how their contracts work) there's a lot of R&D gone in to the iPhone4, so initially Apple will just be recouping costs. I'm not saying that Apple won't be making a profit on each handset eventually, but initially all it will be doing is recouping R&D costs.

Mark

Yes but how much did it cost to develop this version? Unless there is a lot of new ultra expensive tech in their it could be minimal. The screen is possibly a major expense but that can be recovered over the years plus if used on desktop and laptops as well it could be recovered even faster. There will be engineering R&D such as the new aerial layout etc which could be patented and used for future models. The shrinking chips will probably have to be recovered quickly because it may not be transferred to another design. Usually R&D is written off immediately against taxes as it is tax efficient and simpler. In a few days we should find out how much it actually costs to make and what profit they make on each.

You talk about "new ultra expensive tech" and then go on to cite examples which you write off as tax losses. I don't see how you can do that.
There's the higher pixel camera sensor, the screen, the chasis, the chip the completely redesigned interior for a much slimmer case and then don't forget about the software that's running on it.
I never said in time Apple wouldn't make large amounts of profit, I simply said that initially it will want to recoup it's R&D costs.
I don't get how you just write that lot off as a tax loss.

Mark

Yes, at the launch of the first iPhone, they were taking something like $10 a month back from AT&T...

There are a number of ways that they can do this. They could have written off any R&D against profits as they occurred. So the cost of iOS 4 would have been written off each quarter when it was incurred. In which case it would have depressed the last quarters profits but will not be incurred this quarter. Really high R&D can be written off over a number of years but this would need to be really substantial. Like the costs of developing a new drug which runs into billions. I doubt that in the case of the iPhone or its components, though they might do that with the screen over the course of a year or so so will split the development costs over each of the quarters. Plus much of the development of the iPhone could have been written off over the last few years already. The new chassis is an example of engineering R&D, and would probably be around a million dollars or so but not worth amortising in the overall scheme of things. Don't forget that the development has been incremental so many of the costs could have been written off already. The initial iPhone benefited from the previous developments of the iPod and so its actual R&D will have been lower than you might imagine.

Based on figures I've seen for comms systems, re-designing the whole aerial system for a mass-produced consumer device would be damn expensive!

They bought PA Semi for $278m too.

O2 tariffs just published...

http://shop.o2.co.uk/new-iphone/tariffs.html

Not too different from the rest, frankly.

Did you expect them to be that different?

I expected the to be the right way round for a start.

Why is it more expensive to get the phone on a 24m contract than an 18m contract?!?!

Also, I think someone forgot to mention that they don't have the monopoly any more.