To Cingular or not to Cingular, that is the question!

As everyone out there knows, the #1 place for Shakespeare combined with Apple Rumors is Apple Recon. Now allow us to go a bit further, quoting the bard:

“Whether ’tis nobler in the mind to suffer the slings and arrows of outrageous fortune”

(in other words, make a whole ton of money and be hated for it)

“Or to take arms against a sea of troubles, and by opposing, end them.”

(or fight the good fight and change the world)

That seems to be an appropriate quote for the situation Apple is in with the iPhone…and their choice…both!

First, Apple will recoup the marketing and R&D costs by selling them for $499 and $599…or actually, and here’s the thing folks, do you seriously think Cingular/AT&T is NOT giving Apple another couple hundred bucks on top of that for each one? Consider that the cell phone companies average $100 in subsidy for each year you buy a phone (in other words, a $200 phone becomes “free” with a two year contract, because Cingular/AT&T buys it from Motorola or Nokia or whoever for you). So, as Apple has always done in the past, and knows better than anyone, for the first few months they’re gonna sell as many as they can make, regardless of the price, to the Apple faithful. Say that Apple is getting $600 and $700 per phone wholesale from Cingular, they are making a steal considering iSuppli estimates they’ll cost around $250-275 for Apple to build. So indeed, they will suffer some slings and arrows of outrageous fortune, as the world (or at least the United States) complains that it is too expensive…but Apple doesn’t care for now, as they will still make lots of money (just like they did on the original iPod, which the world also said was too expensive).

Lots more after the break, keep reading…

Then, after Apple’s made a truckload of benjamins from the iPhone, it’ll be time to go for the long haul and really turn up the heat on the cell phone companies…aka take up the good fight, or oppose and end the control of Cingular/AT&T and all their friends (T-Mobile, Verizon, Sprint, etc.)…that will be by dropping the price ($299, anyone?) and unlocking it so it can be used on anyone’s network (well, as long as they’re GSM)…or better yet, with a SIM card that you can buy anywhere and pop in, just like in Europe. Now we’ve read the arguments that this won’t happen because of data networks and lock-in, but frankly, in another year or two with WiMAX on the horizon, data networks aren’t going to matter much. In fact, to really strike to the heart, iPhone will be fully VOIP capable by then, too, so you won’t even need a stinkin’ cellular network most places you go!

All around the web, pundits are back and forth on whether it will be Cingular forever or Cingular is just a temporary marriage of convenience. You really have to study the Cringely piece to see what makes sense about the iPhone…the writing is on the wall, Steve himself said it is coming to Europe. Once the iPhone arrives in Europe, knowing the way of the world there (unlocked phones, SIM cards sold at every convenience store you walk into, from vending machines, and given away like food samples at Costco), the true iPhone beauty will begin to shine…

Soon after Europe gets it, that beauty will be brought back to the states, and Apple will be ready to capitalize on it. Heck with $11.9 billion in the bank today, and probably another $1.5 billion in profit from the first few months of iPhone sales (presume $300 net profit per phone x 5 million phones sold is $1.5 billion right there), Apple could take a page from the XBOX and PS3 and sell some VOIP iPhones at a loss, and still come out way ahead! Why would you sell them at a loss? To change the world (which is what Apple likes to do), but better yet, to dominate yet another market, upsell games, content from iTunes, unlocked SIM cards with bulk wireless minutes, etc.

So, in summary, yet another thing you won’t find from the other guys, long-term thinking on how the iPhone is going to be a game changer, just like Steve said at the keynote (the other two were the Mac and the iPod)…it’s not about Cingular/AT&T, that is all just a marriage of convenience…the long term plan is much, MUCH bigger.

Can you Digg it?!?


4 Responses to To Cingular or not to Cingular, that is the question!

  1. ggwfung says:

    same story in Australia. Will Apple go with Telstra (the much hated market leader) in an exclusive deal? If so, people might think twice about mr iphone.

    bloody telcos đŸ™‚


  2. alex says:

    Of all the hatred at the iPhone I wanted to let out what kept wanting to get out of me. When Steve Jobs said they are here to revolutionize the phone industry with the iPhone, many people are so blind they think it’s now. Como’n the phone is not even out yet, Steve Jobs meant over time. Like he compared it to the Mac and iPod, they didn’t revolutionize the industry after they were just introduced. At this moment you can only taste this iPhone revolution. Just look ahead of what the iPhone could be in five years. Compare it to the iPod it has been five years since it’s introduction, now look how great it is comparing to the first generation, and Steve Jobs say’s the iPod revolutionized the music industry? It’s all six generations of the iPod that revolutionized the music industry. So don’t think the first generation iPhone will revolutionize the phone industry, GIVE APPLE SOME TIME.

  3. Ethan says:

    Completely agree with alex.

  4. Steve says:


    Real Estate and Tourism

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: