Apple’s stock took a dip today back below $600 a share. Some are citing concern that carriers will cut the subsidies they pay Apple for the iPhone as the reason for the drop.
There hasn’t been much in terms of tangible evidence that this is even a possibility, but the writing does seem to be slowly appearing on the wall. The carriers are all still extremely profitable and they do very well selling the iPhone, but they do better on a per-device basis selling other phones because of the subsidy they must pay Apple.
Because the iPhone is the most popular single device across the carriers, they’re all seeing certain numbers slip as a result. The question becomes do the three U.S. carriers with the iPhone (Verizon, AT&T, and Sprint) have enough leverage to push back and make Apple take a lower cut?
I don’t know, but I do know the leverage they will try to use: Android.
But the fact that Apple has a fourth carrier, T-Mobile, chomping at the bit to pay them the same subsidy, doesn’t speak well for this strategy. Collectively, they all still need the iPhone more than Apple needs any one of them. So unless they team up (collusion?) to put Apple in a position with no carriers willing to pay them what they want, I just don’t see things changing.
Sadly, I still think the carriers will keep on screwing with customers (rate hike here, rate change there) before they screw with Apple.
Just imagine if the product hadn’t been such a massive letdown for everyone.
Snark aside, it is sort of interesting that Apple didn’t issue a release touting any actual numbers. They tend to do that when they have something to crow about. Instead we just get Tim Cook saying it was a “record weekend” when talking about the stock dividend/buyback this morning.
That’s almost an Amazon-like move.
I can confirm: my AT&T iPhone shows “4G” now, and I just benchmarked the connnection at a blazing 0.63 Mbps down and 0.07 Mbps up.
Yeah, that is total bullshit. AT&T has been doing this on Android phones for months, but Apple had been keeping it real — 3G label only. Now it looks like Apple caved and let AT&T call their really shitty 3G service “4G” in iOS 5.1.
I am disappoint. Total crap.
1) The LTE data rates are in-line with the 3G rates. This is a very pleasant surprise. Still commitment-free. No contract required.
2) Of course Verizon is including the hotspot functionality with their plans while AT&T isn’t. AT&T seems to be doing everything in their power to ensure you don’t buy service from them. That’s one way to fix a crap network: drive people away.
Rene Ritchie nailed the date of the iPad event, no reason to think he hasn’t nailed this as well (from the same source).
But I still wonder about the price points. Apple got AT&T (and later Verizon) to offer some pretty killer 3G deals. Will they be able to do the same for 4G?
Dan Frommer lays out why we should stop bitching about AT&T throttling its users. Some of the points are fair — essentially, AT&T is a company that needs to make money in order to survive — but it overlooks something fundamental: AT&T are the ones that offered the unlimited plans in the first place. If they didn’t know that would be a problem down the road, they’re idiots.
It’s true that nothing in your unlimited contract guarantees the fastest speeds possible, but let’s be honest: that’s what customers were expecting when they signed those contracts. You know it. I know it. AT&T knows it.
Now they’re in the position where they’re punishing their best customers, which is never a good idea.
It sucks that AT&T is so bad at maintaining its network. I’ve long since switched over to Verizon and their (3G) network is great (though slightly slower at peak speeds — but nothing like AT&T’s throttling speeds). Yes, AT&T is particularly bad in cities like San Francisco and New York, but it’s constantly rated behind Verizon nationwide as well.
AT&T is essentially throwing their customers under the bus for their own ineptitude. The company lost money last quarter, but that was mostly related to their giant fuck-up in trying (and failing) to acquire T-Mobile. Normally, this is a profitable company. They just want to be more profitable (yes, like all companies do).
People are mad and complaining because the way AT&T has handled all of this is pretty inexcusable. They just look like greedy buffoons as a result.
“Eventually you start to think that AT&T executives should just stop thinking before they hurt someone or themselves. If AT&T put half as much energy into running a top-flight network with quality support as they did cooking up hare-brained troll toll schemes — they might just stop coming in last place in all major customer satisfaction studies.”
AT&T now wants to charge app developers data fees to ease customers running into their imaginary data caps. It’s an idea so bad it’s almost comical. Writes Karl Bode:
It’s an idea we’re sure AT&T will pitch as a cost-saving endeavor for consumers, but given this is AT&T, you’d be naive to think cost savings will be in the equation. You’ll still pay the same data rates, content companies will now just pay a fee to obtain preferred “reduced cap impact” status, then pass the higher development costs on to you. It’s a ridiculous and dangerous idea, and the fallout will likely be similar to AT&T’s “free ride” comments. AT&T executives either don’t care how bad these ideas make them look, or don’t realize it thanks to too many isolated meetings at headquarters packed with telco-think yes men.
Have I mentioned how happy I am that I’m no longer an AT&T customer?
Spencer Ante and Jessica Vascellaro report:
Verizon Wireless and AT&T Inc. will sell a version of the coming iPad that runs on their newest fourth-generation wireless networks, according to people familiar with the matter, as the battle to cash in on big investments in mobile broadband heats up.
Of the supposed new features, this is number two on my excitement list — right behind that screen. I wonder how much service will cost? Apple cut a special deal for 3G rates, will they be able to do the same for 4G?
Reports Brian X. Chen for The New York Times:
Mr. Siegel said that even if you do exceed 2 gigabytes of data usage and qualify as one of the top 5 percent, that doesn’t absolutely mean you’re going to be throttled. AT&T will only reduce speeds for the top 5 percent of users in areas where network capacity or spectrum is insufficient, he said.
Read: only in areas where AT&T is completely incompetent. Read: San Francisco and New York City, among other places. You know, small towns that no one lives in.
GigaOm’s Kevin Fitchard:
After blasting the Federal Communication Commission for “picking winners and losers” in the wireless industry by scrutinizing every deal, Stephenson claimed AT&T is now in a mobile capacity-constrained environment which has forced it to raise prices and manage connection speeds (aka throttle) for its highest volume subscribers.
As I wrote back in December:
I suspect their next move will be a lot of complaining that the government is now the reason why they’re so inept…