No Apple Superbowl ad after all

Many Apple rumor sites, including AppleInsider, were reporting that Apple would air a superbowl commercial for a possible Beatles announcement. CNN had actually refuted this reported, but the rumor sites didn't have anything further to say. Since Macworld, Apple's only real (not fake) announcement was that they were offering iPod Shuffle 2G's in multiple colors. The rumor mill expects the iPhone to possible arrive sooner than the June deadline. This would seem to be in both companies interests to capitalize on the large press and buzz generated from Macworld. Apple might use this to their advantage to try to extract any other points from Cingular/AT&T in the mean time. From Verizon's last press release Apple wanted a cut of the monthly subscriber revenue. Cingular/AT&T responded and essentially admitted that Apple was getting a cut of the monthly subscriber revenue. They tried to hide this by saying they weren't sharing any revenue from iTunes sales, but the Verizon announcement was actually talking sharing revenue from the monthly subcription revenue from subscribers for cellular service.

Report states the Verizon passed on iPhone

USAToday is reporting some more details about Apple and the iPhone. They mention some interesting terms and conditions that most likely Cingular/AT&T agreed to at least in part if not completely. While previously Cingular/AT&T stated that they didn't bend, but that they made Apple bend, this report would seem to indicate otherwise.

Verizon states that Apple was looking for control of distribution and service/repair of the iPhone. This makes sense since they made and designed the phone so they want to sell and support the phone. This isn't how the cell phone business generally works, much to the annoyance of cell phone makers such as Nokia and Motorola. In general the carrier dictates full control over the phone that is made by the manufacturer. As such Verizon is righteously angered at Apple's request stating, "They would have been stepping in between us and our customers to the point where we would have almost had to take a back seat … on hardware and service support." I guess old habits die hard.

Whats most interesting is what is mentioned least in the article. Apple wanted a cut of the monthly cell phone bill from Verizon. This would be a good incentive for Cingular/AT&T to give Apple. Given that Apple won't be letting people install VOIP, IM, iTunes as ringtones on the iPhone it sounds like they probably have received this offer (or that they are using this leaked press release to try to get it).

The final thing that is interesting in this article, is that if Apple was talking to Verizon that means that a CDMA version of the iPhone could exist. Because of the deal with Cingular (until 2009 by other reports) we probably won't see a CDMA version in the US until after that time. That is of course assuming that any clauses that allow Apple out of their Cingular/AT&T contract aren't broken.

Wow someone finds out that AT&T won't be giving free service with the iPhone

Now here is a real shocker. I never saw this one coming. AT&T has confirmed that they will NOT be giving away free service with the iPhone. So apparently I was wrong about the blogosphere bringing up this rumor for the next week, AT&T decided to quash it. The guys over at Gizmodo got confirmation from AT&T that they will not be providing free/discounted cellular service with the iPhone.

"The report is nonsense. We've always said the only way you can get the iPhone is with a Cingular rate plan."

Technically he didn't say the price of the plan, but hopefully people aren't going to assume that $0 is a price and let this rumor die.

Digg.com again with the free iPhone service rumors!

Its really amazing, within a day another Digg.com article has been posting talking about the same Cramer and TheStreet.com comments. This time Gizmodo linked to the rumors, I guess the blogosphere loves spreading rumors more than quashing them. As before, Cramer is making a speculative guess based on nothing more than AT&T's enthusiasm. The actual conference call with AT&T only mentioned the iPhone once, they were concerned about margin expansion (i.e. making more money) not cutting prices.

Hopefully this rumor will be put to death, but it will probably be resurrected many times in the next week.

AT&T will NOT be giving away service with the iPhone!

What was a small comment, has on the blogosphere turned into a bad game of tele-iPhone. Cramer on TheStreet.com had suggested that AT&T give away discounted service with the iPhone. TheStreet.com staff posted another article quoting Cramer and then quoting the conference call from AT&T stating that it was clear AT&T would give away 18 months of service. The transcript of the call itself only mentions the iPhone once, there is lots of talk of margin expansion in wireless (which would be contradictory to giving away 18 months of service), but none that I could find of Cingular giving away service.

Cingular might offer discounted monthly plans

Cramer over at TheStreet.com said that Cingular/AT&T was absolutely giddy when talking about the iPhone. Using this he translates AT&T's desire to gain marketshare as really an all out war against Verizon. While likely to be pure speculation, he says that AT&T might actually discount monthly plan prices in order to gain marketshare. Considering that AT&T's data packages are among the priciest in the business, its quite possible they will lower their prices to something more reasonable.

It does make sense that instead of subsidizing the iPhone price $200, it could be applied as a $15 monthly discount (or a special iPhone plan) over 2 years. From a financial point of view they would actually make more money considering the time value of money. If they offer a $200 discount now, that costs them more than offering the same discount over two years. Considering that Apple's iPhone sales rely on reasonable monthly pricing for the iPhone, hopefully Apple will convince Cingular to offer reasonable monthly plan prices. If not Apple could always threaten to be very liberal in handing out unlock codes, i.e. to anyone who wants one. Effectively allowing someone to buy an iPhone, cancel Cingular service within 30 days, get the unlock code from Apple and go to Tmobile.

Apple iPhone price without contract

Over in Germany, iPhone prices have been listed and they are steep. So even though Cingular is saying Apple will not allow them to discount the price of the iPhone, $499 is the discounted price. In Europe the unlocked (as most phones there are sold) iPhone will sell for $899 EUR and $999 EUR. While the prices in US$ work out to ~$1200 and ~$1300, I think its probably more appropriate to say that the unlocked price, if Apple does sell it unlocked, will be cheaper. I would guess $699 and $799.

Apple doesn't want Cingular to discount iPhone

In the same manner that Apple sells iPods across the board at the same price without discounts, sales etc. Apple is preventing Cingular from doing the same. This would imply that AT&T/Cingular will have to sell the phone for the price stated by Steve Jobs with a 2yr contract. Its quite possible that Cingular will try to sell the phone for more without a contract, but that would still imply that they were giving a discount to match Steve Jobs price. It will be interesting to see as more news comes out about how Cingular will handle people who purchase the phone without entering into a new contract.

Apple iPhone exclusive only for 6 months?!

ThinkSecret has some contradictory information. They state that:

• the Apple iPhone and other Apple phones will be Cingular/AT&T exclusives for the duration of their lifespan
• Apple is not restricted from coming out with other products with other carriers
• Apple iPhones will only be exclusive to Cingular/AT&T for 6 months.

Given that Steve Jobs wants to sell 10 million iPhones by the end of 2008, I would not expect him to restrict himself to only Cingular/AT&T which only has about 60 million customers. He will want to sell as many Apple iPhones as possible, and I would expect CDMA versions of the iPhone by the end of the year.