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  1. #1
    SMS
    Guest
    The Bob wrote:
    > http://apple20.blogs.fortune.cnn.com...as-many-as-15-
    > million-iphones-were-hacked/
    >
    > Apple closes down 36% in a little over a month. This news certainly won't
    > help the stock price.
    >
    > Another botched Apple business plan.


    Interesting story, but I question the contention that "the number of
    unlocked iPhones won’t matter as much to Apple as it might to AT&T." If
    most of the hacked iPhones are leaving the U.S., then AT&T doesn't care
    about them, as they're not losing any revenue. It's not like the ones
    leaving the U.S. are causing any reduction in sales for iPhones on AT&T.

    Even the iPhones that are being used on T-Mobile USA would, in most
    cases, not have been purchased at all unless they could have been
    unlocked because those users had no intention of ever paying the monthly
    fees AT&T gets for the iPhone. So Apple is getting revenue that they
    would otherwise not have received as well.

    As to why Apple stock is down so much, it's more a matter of reality
    catching up with unrealistic expectations, market saturation for iPods,
    the failure of AppleTV to take off, the lack of any revolutionary new
    products since the iPhone, the stock market in general, the Republicans,
    and the recession. Those unactivated iPhone sales are _helping_ not
    _hurting_ the bottom line, plus they are making it into a cult product
    around the world.

    [alt.cellular.cingular removed. Cingular no longer exists. The proper
    venue for posts regarding AT&T's wireless service is alt.cellular.attws]



    See More: 1.5 million unlocked iPhones?




  2. #2
    The Bob
    Guest

    Re: 1.5 million unlocked iPhones?

    SMS <[email protected]> amazed us all with the following in
    news:[email protected]:

    > The Bob wrote:
    >> http://apple20.blogs.fortune.cnn.com...as-many-as-15-
    >> million-iphones-were-hacked/
    >>
    >> Apple closes down 36% in a little over a month. This news certainly
    >> won't help the stock price.
    >>
    >> Another botched Apple business plan.

    >
    > Interesting story, but I question the contention that "the number of
    > unlocked iPhones won’t matter as much to Apple as it might to AT&T."
    > If most of the hacked iPhones are leaving the U.S., then AT&T doesn't
    > care about them, as they're not losing any revenue. It's not like the
    > ones leaving the U.S. are causing any reduction in sales for iPhones
    > on AT&T.


    They both have reasons to care. Apple loses a ton of revenue on each
    unlocked phone, and AT&T loses that aura of exclusivity that they are
    paying dearly for.

    >
    > Even the iPhones that are being used on T-Mobile USA would, in most
    > cases, not have been purchased at all unless they could have been
    > unlocked because those users had no intention of ever paying the
    > monthly fees AT&T gets for the iPhone. So Apple is getting revenue
    > that they would otherwise not have received as well.


    But Apple is not getting ther revenue per unit they promised the investors,
    due to the loss of the deferred revenue on an uinlocked phone.

    >
    > As to why Apple stock is down so much, it's more a matter of reality
    > catching up with unrealistic expectations, market saturation for
    > iPods, the failure of AppleTV to take off, the lack of any
    > revolutionary new products since the iPhone, the stock market in
    > general, the Republicans, and the recession. Those unactivated iPhone
    > sales are _helping_ not _hurting_ the bottom line, plus they are
    > making it into a cult product around the world.
    >
    > [alt.cellular.cingular removed. Cingular no longer exists. The proper
    > venue for posts regarding AT&T's wireless service is
    > alt.cellular.attws]
    >


    alt.cellular.cingular restored. Don't tell me the "proper venue" for
    discussions, Steve. I've been doing this for quite a while and posted the
    article exactly where I wanted to. I have no intentions of participating
    in your little third-grade pissing match with John Navas. Please don't
    hijack a discussion because you don't like the group it is posted to. I
    fragments the discussion and makes it very unreadable.



  3. #3
    SMS
    Guest

    Re: 1.5 million unlocked iPhones?

    The Bob wrote:

    > They both have reasons to care. Apple loses a ton of revenue on each
    > unlocked phone, and AT&T loses that aura of exclusivity that they are
    > paying dearly for.


    Apple only is losing revenue if those unlocked phones would have
    otherwise been purchased, and activated, on AT&T, which is not the case.
    In reality, they are selling iPhones that would otherwise not be sold at
    all, and are making more money because of the unlocking. They are not
    selling the iPhone hardware at a loss.

    For unlocked iPhones used in the U.S., AT&T does lose their "aura," but
    the vast majority of the unlocked iPhones are leaving the U.S., so their
    aura is pretty unaffected.

    Personally, even if I bought and activated an iPhone on AT&T, I wouldn't
    do it unless it could be unlocked because I use prepaid SIMs when
    traveling to avoid the high international roaming charges. So the
    locking of the iPhone even hurts AT&T and Apple in some ways.


    [alt.cellular.cingular removed, as Cingular no longer exists]



  4. #4
    John Navas
    Guest

    Re: 1.5 million unlocked iPhones?

    On Thu, 14 Feb 2008 08:54:54 -0600, The Bob <[email protected]> wrote in
    <[email protected]>:

    >SMS <[email protected]> amazed us all with the following in
    >news:[email protected]:


    >> Even the iPhones that are being used on T-Mobile USA would, in most
    >> cases, not have been purchased at all unless they could have been
    >> unlocked because those users had no intention of ever paying the
    >> monthly fees AT&T gets for the iPhone. So Apple is getting revenue
    >> that they would otherwise not have received as well.

    >
    >But Apple is not getting ther revenue per unit they promised the investors,
    >due to the loss of the deferred revenue on an uinlocked phone.


    What revenue per unit promise? Can you point to any such communication?
    Or are you really just talking about overall financial results? I doubt
    the amount is even noticeable at the bottom line, less than 1%.

    --
    Best regards,
    John Navas <http:/navasgroup.com>

    "Usenet is like a herd of performing elephants with diarrhea - massive,
    difficult to redirect, awe inspiring, entertaining, and a source of mind
    boggling amounts of excrement when you least expect it." --Gene Spafford



  5. #5
    The Bob
    Guest

    Re: 1.5 million unlocked iPhones?

    John Navas <[email protected]> amazed us all with the following
    in news:[email protected]:

    > On Thu, 14 Feb 2008 08:54:54 -0600, The Bob <[email protected]> wrote in
    > <[email protected]>:
    >
    >>SMS <[email protected]> amazed us all with the following in
    >>news:[email protected]:

    >
    >>> Even the iPhones that are being used on T-Mobile USA would, in most
    >>> cases, not have been purchased at all unless they could have been
    >>> unlocked because those users had no intention of ever paying the
    >>> monthly fees AT&T gets for the iPhone. So Apple is getting revenue
    >>> that they would otherwise not have received as well.

    >>
    >>But Apple is not getting ther revenue per unit they promised the
    >>investors, due to the loss of the deferred revenue on an uinlocked
    >>phone.

    >
    > What revenue per unit promise?


    $18/month for every activated unit from AT&T for the life of the contract.

    > Can you point to any such
    > communication?


    Yes- the joint annoucement from both companies on the rollout of the phone.

    > Or are you really just talking about overall financial
    > results?


    Nobody would read that into what I wrote.

    I doubt the amount is even noticeable at the bottom line,
    > less than 1%.
    >


    I don't expect you to get it, John. We're dealing with a market sector
    that you don't have any experience in, and factors of corporate economics
    that you've never had to consider before. A revenue leak of this size,
    while seemingly small in the big picture, can have devastating effects on
    the overall performance of a company the size of Apple, not to mention the
    negative light it casts them in with investors.



  6. #6
    John Navas
    Guest

    Re: 1.5 million unlocked iPhones?

    On Thu, 14 Feb 2008 10:04:53 -0600, The Bob <[email protected]> wrote in
    <[email protected]>:

    >John Navas <[email protected]> amazed us all with the following
    >in news:[email protected]:


    >I doubt the amount is even noticeable at the bottom line,
    >> less than 1%.

    >
    >I don't expect you to get it, John. We're dealing with a market sector
    >that you don't have any experience in, and factors of corporate economics
    >that you've never had to consider before. A revenue leak of this size,
    >while seemingly small in the big picture, can have devastating effects on
    >the overall performance of a company the size of Apple, not to mention the
    >negative light it casts them in with investors.


    Nonsense.

    --
    Best regards,
    John Navas <http:/navasgroup.com>

    "Usenet is like a herd of performing elephants with diarrhea - massive,
    difficult to redirect, awe inspiring, entertaining, and a source of mind
    boggling amounts of excrement when you least expect it." --Gene Spafford



  7. #7
    Tinman
    Guest

    Re: 1.5 million unlocked iPhones?

    The Bob wrote:
    >> John Navas wrote:
    >>> The Bob wrote:
    >>>
    >>> But Apple is not getting ther revenue per unit they promised the
    >>> investors, due to the loss of the deferred revenue on an uinlocked
    >>> phone.

    >>
    >> What revenue per unit promise?

    >
    > $18/month for every activated unit from AT&T for the life of the
    > contract.


    What does that have to do with iPhones sold that would never have been on
    AT&T anyway? Your logic assumes every iPhone sold was to someone who would
    have otherwise went with AT&T. That is of course incorrect. It's like a
    music label claiming every download was a lost sale. It just ain't true.

    And what, pray tell, is the alternative? Had the iPhone not been unlocked
    there would be 25%-33% less iPhones sold. How exactly would that be better
    for Apple? Now you might claim the iPhone is being sold at a loss, or close
    to cost, so without the extra revenue it becomes a financial drag. But I
    have seen nothing to suggest Apple is losing money on each iPhone sold.


    --
    Mike





  8. #8
    Ray Goldenberg
    Guest

    Re: 1.5 million unlocked iPhones?

    In article <[email protected]>,
    John Navas <[email protected]> wrote:

    > On Thu, 14 Feb 2008 08:54:54 -0600, The Bob <[email protected]> wrote in
    > <[email protected]>:
    >
    > >SMS <[email protected]> amazed us all with the following in
    > >news:[email protected]:

    >
    > >> Even the iPhones that are being used on T-Mobile USA would, in most
    > >> cases, not have been purchased at all unless they could have been
    > >> unlocked because those users had no intention of ever paying the
    > >> monthly fees AT&T gets for the iPhone. So Apple is getting revenue
    > >> that they would otherwise not have received as well.

    > >
    > >But Apple is not getting ther revenue per unit they promised the investors,
    > >due to the loss of the deferred revenue on an uinlocked phone.

    >
    > What revenue per unit promise? Can you point to any such communication?


    It's at the same site that has references to extended GSM. You should
    be able to find that, John.

    So tell us again where that is?




  9. #9
    Tinman
    Guest

    Re: 1.5 million unlocked iPhones?

    The Bob wrote:
    >
    > I don't expect you to get it, John. We're dealing with a market
    > sector that you don't have any experience in, and factors of
    > corporate economics that you've never had to consider before. A
    > revenue leak of this size, while seemingly small in the big picture,
    > can have devastating effects on the overall performance of a company
    > the size of Apple, not to mention the negative light it casts them in
    > with investors.


    The real revenue leak was leaving money on the table, that they could have
    had by selling unlocked iPhones at a premium. That money


    --
    Mike






  10. #10
    SMS
    Guest

    Re: 1.5 million unlocked iPhones?

    The Bob wrote:

    > I don't expect you to get it, John. We're dealing with a market sector
    > that you don't have any experience in, and factors of corporate economics
    > that you've never had to consider before. A revenue leak of this size,
    > while seemingly small in the big picture, can have devastating effects on
    > the overall performance of a company the size of Apple, not to mention the
    > negative light it casts them in with investors.


    If Apple expected that revenue on every iPhone they manufactured, then
    indeed the investors would be upset. But they knew in advance that not
    every iPhone sold would be activated on a network from which they would
    get additional revenue.

    The sales of iPhones that were unlocked is all upside revenue, it didn't
    mean any less iPhones were activated on AT&T as a result.

    iPhone sales and activations are in a slump, but it's not the unlocking
    that's the cause.



  11. #11
    The Bob
    Guest

    Re: 1.5 million unlocked iPhones?

    SMS <[email protected]> amazed us all with the following in
    news:[email protected]:

    > The Bob wrote:
    >
    >> I don't expect you to get it, John. We're dealing with a market
    >> sector that you don't have any experience in, and factors of
    >> corporate economics that you've never had to consider before. A
    >> revenue leak of this size, while seemingly small in the big picture,
    >> can have devastating effects on the overall performance of a company
    >> the size of Apple, not to mention the negative light it casts them in
    >> with investors.

    >
    > If Apple expected that revenue on every iPhone they manufactured, then
    > indeed the investors would be upset. But they knew in advance that not
    > every iPhone sold would be activated on a network from which they
    > would get additional revenue.


    But they never expected a 40% rate of defection. Their numbers were less
    than 5%. It is basic Business 101- you manufacture and sell a product
    expecting a certain level of revenue to be generated by each unit, minus an
    acceptable level of shrinkage. The business plan of the iPhone calculated
    an expected revenue of $432 per activated unit, with the expectation that
    roughly 50,000 (or less) phones per million would not generate that
    revenue. The number of defects in the process is now approaching 400,000
    per million.

    And you and John can continue to obsess about whether this is truly lost
    revenue, but you both seem to have missed the true weakness in the business
    plan. The iPhone has been on the market for almost eight months now and is
    only available for retail sale in four countries around the world, with
    sales in those countries falling below all estimates. Care to guess why
    more agreements haven't been made?

    >
    > The sales of iPhones that were unlocked is all upside revenue, it
    > didn't mean any less iPhones were activated on AT&T as a result.
    >
    > iPhone sales and activations are in a slump, but it's not the
    > unlocking that's the cause.
    >



    True- it's because the iPhone isn't the showstopper that Apple touted it to
    be. The lack of common functionality has outweighted the glitzy UI.



  12. #12
    Tinman
    Guest

    Re: 1.5 million unlocked iPhones?

    The Bob wrote:
    >
    > True- it's because the iPhone isn't the showstopper that Apple touted
    > it to be. The lack of common functionality has outweighted the
    > glitzy UI.


    This explains the convoluted logic...


    --
    Mike







  13. #13
    John Navas
    Guest

    Re: 1.5 million unlocked iPhones?

    On Thu, 14 Feb 2008 11:05:59 -0600, The Bob <[email protected]> wrote in
    <[email protected]>:

    >And you and John can continue to obsess about whether this is truly lost
    >revenue, but you both seem to have missed the true weakness in the business
    >plan. The iPhone has been on the market for almost eight months now and is
    >only available for retail sale in four countries around the world, with
    >sales in those countries falling below all estimates. ...


    The consensus estimate is 1.85 million iPhone sales for the quarter, a
    very good performance by any reasonable standard, and some analysts
    (e.g., Shaw Wu, American Technology Research) are forecasting over 2
    million. Whether this is below or above analyst expectations is largely
    meaningless unless you're a short term market speculator.

    --
    Best regards,
    John Navas <http:/navasgroup.com>

    "Usenet is like a herd of performing elephants with diarrhea - massive,
    difficult to redirect, awe inspiring, entertaining, and a source of mind
    boggling amounts of excrement when you least expect it." --Gene Spafford



  14. #14
    SMS
    Guest

    Re: 1.5 million unlocked iPhones?

    On Feb 14, 9:05 am, The Bob <[email protected]> wrote:
    > SMS <[email protected]> amazed us all with the following innews:[email protected]:
    >
    > > The Bob wrote:

    >
    > >> I don't expect you to get it, John. We're dealing with a market
    > >> sector that you don't have any experience in, and factors of
    > >> corporate economics that you've never had to consider before. A
    > >> revenue leak of this size, while seemingly small in the big picture,
    > >> can have devastating effects on the overall performance of a company
    > >> the size of Apple, not to mention the negative light it casts them in
    > >> with investors.

    >
    > > If Apple expected that revenue on every iPhone they manufactured, then
    > > indeed the investors would be upset. But they knew in advance that not
    > > every iPhone sold would be activated on a network from which they
    > > would get additional revenue.

    >
    > But they never expected a 40% rate of defection. Their numbers were less
    > than 5%. It is basic Business 101- you manufacture and sell a product
    > expecting a certain level of revenue to be generated by each unit, minus an
    > acceptable level of shrinkage.


    I think you flunked the course.

    They may not have expected the large number of unlocked phones, but
    they didn't lose revenue that they otherwise would have had. The
    shortfall in sales and revenue is not due to the large number of
    unlocked iPhones.

    They're essentially selling into two totally different channels. One
    is through the carriers with which they have a revenue sharing
    agreement, and the other is to the sophisticated users that want to
    use the product in a different way than they intended.

    Some companies spend a lot of money separating their channels, through
    different product names, different types of retailers, and different
    pricing schemes (rebates, coupons, subsidies, etc.). Apple had none of
    those hassles, and did not have to have confusing pricing schemes to
    differentiate the channels. They may have even expected this to have
    occurred.



  15. #15
    The Bob
    Guest

    Re: 1.5 million unlocked iPhones?

    SMS <[email protected]> amazed us all with the following in
    news:[email protected]:

    > On Feb 14, 9:05 am, The Bob <[email protected]> wrote:
    >> SMS <[email protected]> amazed us all with the following
    >> innews:[email protected]:
    >>
    >> > The Bob wrote:

    >>
    >> >> I don't expect you to get it, John. We're dealing with a market
    >> >> sector that you don't have any experience in, and factors of
    >> >> corporate economics that you've never had to consider before. A
    >> >> revenue leak of this size, while seemingly small in the big
    >> >> picture, can have devastating effects on the overall performance
    >> >> of a company the size of Apple, not to mention the negative light
    >> >> it casts them in with investors.

    >>
    >> > If Apple expected that revenue on every iPhone they manufactured,
    >> > then indeed the investors would be upset. But they knew in advance
    >> > that not every iPhone sold would be activated on a network from
    >> > which they would get additional revenue.

    >>
    >> But they never expected a 40% rate of defection. Their numbers were
    >> less than 5%. It is basic Business 101- you manufacture and sell a
    >> product expecting a certain level of revenue to be generated by each
    >> unit, minus an acceptable level of shrinkage.

    >
    > I think you flunked the course.
    >
    > They may not have expected the large number of unlocked phones, but
    > they didn't lose revenue that they otherwise would have had. The
    > shortfall in sales and revenue is not due to the large number of
    > unlocked iPhones.
    >
    > They're essentially selling into two totally different channels. One
    > is through the carriers with which they have a revenue sharing
    > agreement, and the other is to the sophisticated users that want to
    > use the product in a different way than they intended.
    >
    > Some companies spend a lot of money separating their channels, through
    > different product names, different types of retailers, and different
    > pricing schemes (rebates, coupons, subsidies, etc.). Apple had none of
    > those hassles, and did not have to have confusing pricing schemes to
    > differentiate the channels. They may have even expected this to have
    > occurred.
    >


    And with that, you show that I'm not the one who flunked anything.

    Those revenue estimates are used to determine budgets for things like
    advertising and R&D, and revenue forecasts are one area where companies
    can lose Wall St. confidence with.

    Apple's necessity to lock each phone and sign exclusive carrier
    agreements in each market makes the large number of unlocked phones
    couterproductive to the business model. With retail channels only
    available in four countries, their sales potential is severely hampered
    and the large number of unlocked phones floating around the world makes
    it almost impossible to gain entry into new markets. No other phone in
    the world enjoys the same hinderences to sale in all markets where the
    texchnology is viable.

    And with over four years to go before they can provide unlocked devices
    to the mass market, the phone will be obsolete before it is available
    worldwide. And with Google platform phones just months away from
    hitting the market, Apple is in peril of losing any momentum that they
    could have gained with the iPhone.

    Apple has released two "new" technology products in the last year- the
    new Macbook and the iPhone, and continues to try and market a decade-old
    product in AppleTV. None of these products are gaining the foothold in
    the market that the Company anticipated. My reference to Sony in an
    earlier post come into play here- Sony's inability to successfully
    introduce new technologies after the demise of the walkman and cathode-
    ray televisions led to the decline of the company as an industry leader.
    Apple is doomed to be a third-tier computer manufacturer and mp3 player
    company and ride off into irrelevence.



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