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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: JP Sullivan who wrote (63625)	4/26/2007 10:48:02 AM
From: inaflash	Respond to of 213177

I wonder what the arrangement between AAPL and AT&T is. Someone at the call asked if the revenue was a result of hardware subsidy or a percentage of subscription. It would be a real coup for AAPL if the latter is the case -- I don't know of any phone maker that gets a slice of subscription revenue from a service provider. I'd look at the Yahoo/ATT deal as a model. Whether you call it a slice of the subscription revenue or an ongoing user fee charged thru, there are rational arguments for ATT going along with this. When was the last time you called Nokia or Motorola for a phone question versus ATT or Verizon? When was the last time you updated your firmware on your phone? As a computer product, iPhones will constantly get updated software, even 2-3 years and beyond, and the question is do you want to be talking to Apple customer service or ATT customer service? Some of the phone customer service representatives are nice and polite, but they'd probably be bank tellers in another era (whereas the Apple folk might have been auto mechanics).

To: JP Sullivan who wrote (63625)	5/1/2007 4:30:28 PM
From: Curt Whitaker	Read Replies (1) \| Respond to of 213177

FWIW, I'm expecting ~$7 per month/per phone in back-end revenue sharing. Tim Cook all but confirmed this on the last CC. He stated that "payments from AT&T would be booked when received." With the iPhone being amortized over 24 months, any sales spiff would have been similarly amortized, but this isn't the case. Therefore, the logical conclusion is a back-end revenue share along the lines that RIMM sees. IMO, AAPL provides more value than RIMM and will likely comman more, hence the $7/mo/phone vs. RIMM's $5/mo/phone. This is huge coup for AAPL as it provides recurring revenue that drops straight to the bottom line and only grows bigger with the more iPhones sold. If they can sell 8M phones in CY 2008, that's an additional $168M per year in profit coming in, 8M more in 2009 becomes $336M, etc. The question you have to ask is how much more than 8M will they sell by EOY 2008? If that weren't enough, look at what aTV could do with video rentals - another huge revenue/cash stream. I've been calling for this since January when aTV launched - another logical extension that only one analyst has picked up on so far - Shawn Wu.