14 DAY TRIAL // Apple's deals with carriers for the iPhone are known to be rather radical and demanding so much that some carriers have actually refused to play. It is not normal for a carrier to give a handset maker a cut of the revenue from the monthly subscription, but considering the appeal of the iPhone and the fact that it is not subsidized, both companies stand to make a lot of money over the two year contract period.
The exact details of the agreement are obviously being kept confidential, but analysts such as Gene Munster estimate that Apple gets $3 per month for every iPhone customer that was already an AT&T customer and $11 per month for every new subscriber. These numbers would explain why activation of the device is so important for the iPhone and why it is handled by Apple though iTunes. The Cupertino Company is making a lot of money from the iPhone, not only from the device itself, but also from this shared revenue. But the catch here is that Apple stands to make a lot more money from new customers and that implies carriers that are not currently market leaders.
This makes a lot of sense for Apple. Not only are these carriers more likely to be willing to agree to the changes in their network that Apple requires to make the iPhone magic happen, but they are also less likely to be picky about the terms. After all, the device's ability to make users switch carrier is incredible and that means more money for both companies. Looking only at Apple's estimate of 10 million iPhones sold by the end of 2008, that is a big chunk of change.
Of great interest is how these deals will extend to new iPhone products that will eventually make their appearance further down the road. Downgraded, cheaper iPhone might mean less money made from the device itself, but significantly more made from the shared revenue, as the market segment is huge compared to the current high end one.