Apple no longer receiving monthly revenue from At&t

At&t announced to investors today on their “iPhone 3G Conference Call” revealed that their deal with Apple has changed, and as a result, Apple will no longer be receiving monthly revenue from iPhone subscriptions.

This could have a big impact on the future of the iPhone. Currently, iPhone users get updates to their software for free. The reason that iPod Touch users are charged is reportedly for “accounting purposes”.

If that’s true, then Apple’s accounting is going to have to be adjusted to no longer include monthly revenue from iPhone subscribers, and it is very likely that future updates will come at a cost.

Comments

  1. could this mean that the iPhone 3G plan prices could go down?
    since apple is no longer receiving any profit, the plans could go down

  2. Didn’t steve or someone said the revenue from an iPhone was being spread out over the course of 2 years or something along those lines. If that is the case then it won’t be that big of a deal because the revenue from each iPhone is going to be spread out and realized in different quarters allowing them to continue to update the software.

  3. could this mean we’ll be seeing a “legally” carrier-free iPhone soon??? (in the US)

  4. james Walker says:

    I Want to know if we will see iPhone rate plan changes. Will unlimited plans be the same as other phones? Will TEXT be as cheap as others?

  5. Looks like the data plan for the 3G will bump up to $30

  6. @Chris,

    The plans won’t go down, the PRICE did. Apple doesn’t get the monthly revenue and AT&T is subsidizing the new low cost.

    @John and @ The Author,

    Apple recognizes iPhone revenue on a subscription basis over 24 months. This has nothing to do with the revenue they received from AT&T in terms of how they provide free updates. Those will continue because Apple will still continue to recognize the (lower) price over 24 months.

    iPod revenue is NOT recognized over 24 months (like most sold goods, iPod revenue is recognized at the POS), which is why iPod touch updates have a nominal fee.

    @James,

    Actually, since the new iPhone now uses 3G, and has third-party apps with which people will presumably be hammering the 3G network, the data plan rates are going UP $10 a month. This is the same rate AT&T charges BlackBerry users, so I guess it’s welcoming iPhone to the big leagues.

  7. Let’s not jump to any inaccurate conclusions here. Even with the new one-time compensation scheme, Apple can still recognize revenue over time. And most accountants find Apple’s conservative treatment of charging for updates to be bogus.

  8. If Apple went to a OS X strategy for the iPhone OS X I could see paying for Major Updates – 3.0, 4.0, etc. While receiving minor updates for free – 3.1, 3.2, 3.2.1, etc. That would more make up for the loss of AT&T subscription sharing. 10 million iPhones x $10 for a major update would equal a lot more money than what AT&T was sharing.

  9. Brian Cowan says:

    The $30/month data plan is pretty much the same as all the other PDA’s, so I’m not too upset about that. I would be paying the same price for the data if I bought a Palm Centro from AT&T. But for $100 more, to get an iPhone… All I have to do now is wait for someone to come up with a way to sync it with my corporate email…

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