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With Loss of Future Revenue, Will Apple Change the iPhone Activation Process?

Posted January 29, 2008 6:00 AM by Gregory Ng
Categories: News Opinions 

According to an article on CNN Money, analysts predict that over 1 million iPhones sold worldwide have been unlocked.

The questions stem from the companies’ earnings reports last week. Apple claimed it had sold 3.7 million by the end of 2007, while AT&T said it had signed up nearly 2 million iPhone subscribers by year-end. Those numbers leave approximately 1.7 million devices missing in action. Some of these were sold in Europe, though analysts believe that number falls somewhere between 300,000 and 400,000. And some of the devices may have been sold but not yet activated for telecommunications.

What does this mean to Apple? According to the article, “For every 1 million iPhone units unlocked, Apple forgoes $300 million to $400 million in future revenue and profit”. This number is sure to make anyone at Apple or any of their investors a tad concerned.

Regardless of the reasons why someone wants to unlock the iPhone for a different network, it is the “innovative” setup process via iTunes that has opened the door. Typically when you purchase a phone from a different provider, you must set up your account during the checkout process. But with Apple’s process for setting up your iPhone, you do that in the comfort of your own home. This has no doubt allowed Apple to control the setup process, eliminate the need for additional training in the Apple Store, and minimized the lines during the launch in June. But it also gave people the opportunity to purchase the phone and never make it to the AT&T computers.

Do you think Apple will change the way iPhones are purchased? Do you think Apple will ever make the move to installing AT&T techs into Apple Stores and forcing iPhone purchasers into activating their iPhones on the premises?

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Comments

  1. Every iPhone sold is $$$ in Apple’s pockets. It has been determined that the iPhone carries 40% profit margins. It is also a conduit to the Mobile iTunes Store, by the way Apple owns.

    I suppose the loss of revenue is due to the profit sharing between Apple and their mobile partners. Dudes, this profit sharing is just the cherry on top of the sundae. This type of profit sharing is unheard of in the mobile industry. One in which Nokia and Motorola would love to mimic. Good luck.

    No story - move on.

    Posted by JPO on January 29, 2008 10:09 AM

  2. Apple will just make it harder to unlock the iPhone.

    Also, Apple will come out with frequent new updates to the iPhone software which will be very tempting - which also happens to lock up the phone again.

    Apple can also require - by updating iTunes - that the user have a .Mac ID and a valid credit card to activate an iPhone.  This would make it easy then to track the iPhones which are sold.

    Apple can also encrypt the software on the iPhone - requiring activation by contacting Apple through iTunes and the internet.  This way, Apple can also track each iPhone by DRM’ing the software. After all, each user may own the hardware, but each user only licenses the software.  And Apple can change the software as it sees fit.  The user does not own the software.  If the user doesn’t like it, then the user can install their own OS - e.g. Linux - in the hardware.

    Apple can give each iPhone a unique hardware iD.  This would make it trackable.

    The current iPhone with firmware 1.1.3 has not yet been unlocked.  Apple can make it further more difficult to unlock with new generations.

    Apple can also charge for new generations of the iPhone software.  Just as Apple charges for Mac OS X 10.5 and other 10.x generations of the software, Apple can charge for the 1.x generations of the operating system.  After all, the iPhone is a palm-sized Mac OS.  Why not charge?

    Apple can also create serial numbers and an activation process similar to Microsoft’s methods or even better.

    Thus going forward, Apple has a lot of options to track and prevent unlocking of iPhones which are not meant to be unlocked.  It will be cat and mouse with the hackers - but Apple can stay ahead - just as it has stayed ahead on its Fairplay DRM.

    So far, there is NO news on any unlock of Firmware 1.1.3 We shall see.  Apple is a wily moving target.

    Posted by James Katt on January 29, 2008 10:34 PM

  3. A lot of the not registered iphones are being used overseas or in the US with different operators. This should tell Apple that there is a big market of potential buyers that they are not reaching!

    I hope that Apple will come to their senses and will allow other operators to carrry the iphone just as long as they are prepared to pay Apple!

    Posted by peter van weissenbruch on January 30, 2008 4:41 PM

  4. Good news

    Thank you for the informations....!!!!!

    kraloyun
    kral oyun
    oyun
    minikperi
    kraloyun
    kral oyun

    Posted by kraloyun on May 24, 2008 11:04 AM

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