Even if the numbers of a million iPhones being unlocked are correct, that’s a MILLION iPhones walking around all over the world as FREE marketing and advertising for Apple – the most effective advertising of all – because it gives those users the cachet of doing something “not quite legal.” That they are “above the law,” and of course, eager to show off they know how to break the rules of normal society … (in reality, they just bought a phone but shhh, don’t tell them that 😉 )
Has Apple sold them a phone subsidized like nearly every phone on Earth at a 75-100% discount? No. Apple got full list price – even if someone marked it up, Apple made at least $399 or £299.
As for the revenue they are giving up that is recorded as future revenue in monthly chunks? Sure, but when you have to service cash, there are costs associated with servicing that cash …
Conversely, they also give up a lot of costs associated with it and saves them a lot of money. They don’t have to offer any tech support or service for these 1-million phones. How much accounting reserve is set aside normally for phone tech support that are locked to a service?
But it’s all just a gray number because how many tech-gadget companies would turn down an opportunity to seed a product in dozens of countries to build awareness & word of mouth? How much money would they have to spend to demo this product in dozens of countries – and less efficient than a “worldly” fan using word-of-mouth and a live demo to his/her friends? What could be better chachet than spending full price to own an “illegal” phone? AND then when the phone is available legally in that country? Won’t they be likely the first to convert anyway to get all the feature sets?
Isn’t all this worth the $10 dollars in revenue per month Apple “loses” (per person) if the phone were locked to its native carrier? Might this not be the CHEAPEST advertising possible AND Apple gets all the revenue upfront without having to share with anyone?
And of course, an “unlocked” phone is still entitled to the full range of services that the iTunes store sells. Of course, that varies from country to country but the most convenient choice is still the iTunes store. So it really a tragedy if Apple trades $10 from AT&T or Orange and instead sells a few iTunes movies, music tracks or videos?
It’s like anything else. When you sell something, you hope to garner a revenue stream down the line – as a car dealer hopes you always bring it back to them for service but at the end of the day, if you sold it at full price, then the rest is gravy.
Sure, you can view the future revenue stream as a 100% loss in accounting terms but if you look at the broader implications, it’s simply a tradeoff in overhead, advertising, marketing and a shift in revenues and expenses.
NY Times readers chime in on doing their part in advertising the iPhone everywhere around the world.