I call it bull – AT&T is NOT subsidizing the iPhone

I keep reading reports that state AT&T is subsidizing the iPhone. As far as I have been able to uncover, there is no official word from either Apple nor AT&T to corroborate that. This rumor has spread far and wide, and the only corroborating evidence of it all comes from one single source: Oppenheimer analyst Yair Reiner.

So where is the proof? Where is Apple and AT&T on this? Why is every Mac, Cell Phone, and Rumor site in the world reporting this as fact, when there is one source only for this information. Where is the purported reporting or investigating? Hell, for that matter, where is the “This is bullshit” articles? (Hello, John Gruber!)

If Apple is getting subsidizing payments from AT&T ($325 is what Reiner has told his clients) then why is the iPhone the same price (generally speaking) worldwide? Is every wireless company that supports the iPhone also subsidizing the iPhone at the same rate? Or is it more realistic that Apple has set the price of the iPhone at $199 and $299 (8GB and 16GB) worldwide so that they can, in effect, take over the high-end smartphone market by not only having the best technology, but one of the lowest prices as well?

Could it be that Apple, Inc., has realized that they will make, over the long haul, substantially more money selling music via iTunes and software via the App Store than they will on just hardware sales? That by offering a true end to end solution, they stand to make more money as a platform than just a hardware maker?

Apple could sell 10 million iPhones by the end of this year at the higher price point ($399). How many more iPhones could (will) they sell at $199? Factor in the iPhone 2.0 software with the ability to buy applications for the phone, with Apple making a cool 30% on each sale (less after bandwidth and processing fees) and you start to see just how much money is not in the “printer” itself, but in the “ink”.

So I am going to go our on a limb here and call this bull. AT&T is not subsidizing the iPhone.

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