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Apple's New Business Model is AT&T's Old Business Model
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Apple iPhone
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When Apple first released the iPhone, it was supposedly the first phone with a new business model: Apple assumed the device was so desired, that carriers would kick back a proportion of their monthly data revenues. Carriers, on their parts, thought it was so desired that they wouldn't have to subsidize it. Consumers would be allowed to activate it at home, avoiding lines at the cell phone store.
Whoops.
With the iPhone 3G, it's back to the old ways. AT&T is treating this as a standard, run of the mill smart phone. You'll have to activate it at the store. You'll have to get it with a two-year contract. You'll pay for the same data plans that Windows Mobile owners pay for. And AT&T will subsidize -- is subsidizing -- the phone.
AT&T is taking an immediate financial hit from this; they now need to pay big subsidies up front, which they'll make back over the course of two year contracts. But the real losers, sadly, are consumers who were hoping for cell phone business models that weren't dependent on exclusivity and lock-ins. If AT&T is dependent on recouping subsidies over the course of a two year contract, you bet they're going to get a lot tougher on people trying to unlock iPhones. And they'll run out their whole rumored five year exclusivity deal.
A more interesting international lesson will play out over the next few months. One of the reasons Apple wasn't able to get more partners for the original iPhone was that Apple demanded a particular business model, with exclusivity, major revenue sharing, and affordable unlimited data plans. They seem to have gotten a lot more flexible.
That may mean unlocked, prepaid iPhones in Italy, iPhones with competing carriers in Asia, and, of course, $9,000 a month data plans on Rogers in Canada. (Rim shot please!)
http://www.gearlog.com/2008/06/appl..._model_is_a.php
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