Apple iPhone Price Cut Estimated To Cost AT&T About $1 Billion

Posted Jun 10, 2008

The price of a 3G iPhone will be $199-$299 according to Steve Jobs, CEO of Apple Inc. (NASDAQ:AAPL).  In order to support the lower cost of the iPhone, users will have to sign a 2 year agreement with AT&T.  AT&T Inc. (NYSE:T) revised their deal with Apple to support this new price.  Instead of sharing revenue for iPhone customers with Apple, AT&T will now have to “buy” iPhones from them and sell it for a lower price.

“The device is built, and priced, to sell,” stated Ralph de la Vega, the chief executive of AT&T Mobility. Tom Watts, an analyst at Cowen & Co. stated that it will cost AT&T $1 billion to subsidize the phone over the course of the year.  AT&T is the exclusive supplier of the iPhone.

AT&T hopes that millions of customers will switch to their service and then sell their data plans at $40/month+.  Sprint/Nextel, Verizon/Alltel, and T-Mobile better come up with something quick otherwise AT&T will poach their customers left & right.

Information Source:
[1] UPDATE: AT&T’s iPhone Shift To Cost Up To $1 Billion A Year by Dow Jones