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

To: slacker711 who wrote (69131)	9/24/2007 1:28:30 PM
From: inaflash	Read Replies (1) \| Respond to of 213177

Another complicating factor is the system that Apple has set up for payments directly from the operator. These subsidies dont go into the wholesale pricing of the handset....so if Apple is giving the iPhone away for free next year, how will royalties be determined? I expect that there's floor pricing to royalties. So if a chip goes for $20 now, the royalty might be 5% or $0.25, whichever is higher. Initial royalty is $1 and when price of chip goes down to $10, there's still $0.50. If the chip cost goes below $5, then the floor price kicks in. Similarly, if there is a phone royalty, they just need to set $50 or $100 as the minimum calculation cost. The IP licensing companies are very familiar with the free cell phone concept and I'm sure they've adapted well.