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C|Net: Apple Would Maximize Shareholder Value by Unlocking iPhone

Monday, October 15th, 2007 at 4:50 PM - by

Based on calculations from available sources and data, Ron Reisinger at C|Net Blogs believes that it would maximize shareholder value and financially benefit Apple to unlock the iPhone.

"Now, assuming there are iPhone unlocks that are readily available and easy to use, most people say that Apple can expect 2 percent of the population to buy iPhones and immediately unlock them. Assuming that logic and using the 1 million iPhones sold already (although many more probably have been sold), we should assume that 20,000 iPhones will be sold in this quarter with unlocking as the main goal. Multiply that number times the amount of profit Apple expects from each iPhone sale, and the company nets a profit of $3 million," Mr. Reisinger wrote.

"Compare that to the amount of revenue lost from AT&T, and the company still realizes a profit of $2.3 million. Even further, if you assume all of the owners are not AT&T customers, Apple's lost AT&T revenue from the sale of these 20,000 iPhones is only $660,000 for the quarter, which still keeps Apple well into the black.

After additional analysis, the author concluded that Apple stands to profit considerably from an unlocked iPhone. AT&T would resist, but an unlocked iPhone would open many doors for Apple.

"As a public company, it is incumbent upon Apple to maximize profit and shareholder value.... Sorry folks, but regardless of where you stand on this issue, business is business, and Apple should look out for itself -- no one else," the author wrote.

If current lawsuits, like those against T-Mobile and Apple regarding mobile phone locking are successful, that's just what Apple may achieve.

13 comments from the community.

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Terrin said:

member since 29 Jan 2006 with 410 posts, unranked, send him a message or view his profile

Mon Oct 15, 2007 5:18 pm

Hard to see how unlocking the iPhone could maximize shareholder value. Last I checked Apple had a five year contract with AT&T to keep the phone locked. Surely being successfully sued doesn't maximize shareholder value. Moreover, the only other major Network in the US that an iPhone can work on is T-Mobile. Apple is contractually obligated to keep that that way as well.

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A guest said: (hide)

Mon Oct 15, 2007 6:20 pm

Umm yeah, I'm with Terrin on this one. Apple doesn't have a choice here. They have a long term deal with AT&T. I'm not sure it's for a whole five years as Terrin claims, but nevertheless they have an obligation to AT&T. Now third party applications is a different story altogether. If his point was that Apple should allow third party app development to maximize the benefit to users and to shareholders then I would agree 100%. But in terms of unlocking it for use on other carriers, well, that argument doesn't hold any water whatsoever.

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A guest said: (hide)

Mon Oct 15, 2007 7:24 pm

Apple would have had a choice while entering the European market, but they choose to tie themselves up with one, single carrier in each country and the iPhone could have worked with them all. Perhaps there are a few features (or only one, as far as I know - the voice mail) which are dependent on a close co-operation, but consumers should have the choice, anyhow. If I want to buy the phone, regardless of the fact that the voice mail won't work as well as it could, I should be able to stick with the operator I have. And swap between other SIM-cards if I go to stay for a few weeks in another country, too.

But, of course, I have the freedom not to buy the iPhone and I am afraid that is what I am going to choose. And wait until Apple change their stance her or a competitor develops a similar phone with similar software which is free...

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A guest said: (hide)

Mon Oct 15, 2007 8:21 pm

"As a public company, it is incumbent upon Apple to maximize profit and shareholder value.... Sorry folks, but regardless of where you stand on this issue, business is business, and Apple should look out for itself -- no one else," the author wrote.

Well that is about as shortsighted as it comes. Modern companies like Apple are increasingly aware that they should not just look out for their own (or their shareholders) interests but also for those their costumers, partners and suppliers. It's a tricky balancing act—the better you are at it, the better your company will do. Furthermore, sometimes a shortterm gain is a longterm loss. Oh, I am a solid shareholder and last time I checked the Apple has done a great job in increasing my value.

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Tiger said:

member since 17 Jun 2003 with 1010 posts, unranked, send him a message or view his profile

Mon Oct 15, 2007 8:24 pm

"or a competitor develops a similar phone with similar software which is free.."

And this of course is the crux of the debate. If somebody was going to come out with something nearly as desirable as the iPhone, don't you think the major carriers/cell companies would have done so already? NO. And what on earth would make you think it could be free? That's ridiculous. Either is locked to a carrier under a guaranteed contract, or it's open and subsidized so heavily JUST to get it out the door. No mention of if it's actually going to work. Apple did what the rest of the cell makers have wanted to do for a long time, but don't have the stones to do. Make a phone, limit what it can do so it can be top-quality, and dictate who and what can carry it. The open to anybody model is the whole reason Windows sucks as a platform. It's only as good as the lowest level of crap that runs on it. And with so much crap, we get stuck in the muck (as I sit here and type this on a Sony Vaio that's borrowed because I don't have a new MacBook yet).

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FakeSteveBallmer said:

member since 11 May 1978 with 43632 posts, Guest, send him a message or view his profile

Mon Oct 15, 2007 8:34 pm

Apple would never do this because they are a bunch of anal control freaks with delusions of grandeur!

http://fakesteveballmer.blogspot.com

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Bosco said:

member since 03 Jun 2002 with 1001 posts, unranked, send him a message or view his profile

Mon Oct 15, 2007 8:54 pm

FakeSteveBallmer... You could benefit from some anal control, freakish or otherwise. We are literally drowning in you diarrhea here.

Signed,

All of us

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Intruder said:

member since 07 Jul 2004 with 3142 posts, TMO Mac Specialist, send him a message or view his profile

Mon Oct 15, 2007 9:02 pm

Fakesteveballmer,

Savannah is in Georgia, not in Redmond, Washington (as is your IP address).

Usually, better humor comes out of Georgia. You basically suck.

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Sir Harry Flashman said:

member since 08 Feb 2007 with 787 posts, unranked, send him a message or view his profile

Mon Oct 15, 2007 9:29 pm

This C/Net story sounds like the old whine "Apple should license their OS to other computer makers."

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burrito said:

member since 07 Aug 2005 with 177 posts, unranked, send him a message or view his profile

Mon Oct 15, 2007 10:31 pm

apple would minimize AT&T taking it up the rump for them by unlocking iphone.

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A guest said: (hide)

Wed Oct 17, 2007 1:44 pm

Guest wrote:
"As a public company, it is incumbent upon Apple to maximize profit and shareholder value.... Sorry folks, but regardless of where you stand on this issue, business is business, and Apple should look out for itself -- no one else," the author wrote.

Well that is about as shortsighted as it comes. Modern companies like Apple are increasingly aware that they should not just look out for their own (or their shareholders) interests but also for those their costumers, partners and suppliers. It's a tricky balancing act—the better you are at it, the better your company will do. Furthermore, sometimes a shortterm gain is a longterm loss. Oh, I am a solid shareholder and last time I checked the Apple has done a great job in increasing my value.

Nope, you're wrong on this one. Public companies have one purpose and that is to grow their value. Most often looking out for their customers and users is one of the many tasks that leads to increased value, but there comes a point where that is not true. When it comes to increasing value instead of increasing customer satisfaction, public companies have a responsibility to look out for the bottom line, for the shareholders and not the customers. After all, once the bottom line goes the company cannot satisfy any of the customer's needs & wants let alone all of them.

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A guest said: (hide)

Wed Oct 17, 2007 1:56 pm

Anyone else read FakeSteveBalmer's blog? I was amazed at how trite was and it really did lack any kind of humor to it. You got one hit out of me, but there's no reason to come back.

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Sir Harry Flashman said:

member since 08 Feb 2007 with 787 posts, unranked, send him a message or view his profile

Wed Oct 17, 2007 4:02 pm

Anonymous wrote:
Anyone else read FakeSteveBalmer's blog? I was amazed at how trite was and it really did lack any kind of humor to it. You got one hit out of me, but there's no reason to come back.

I haven't clicked through yet, I will probably do so at least once. I can understand that he/she (probably a he) wants to get some traffic to his site; we all have need to make money or fill a creative outlet. However, there are only so many hours in a day and the clock upbraids me for time spent here when I should be tending to business. What the hell, keeping up with the Apples is my business.

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