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AT&T paying Apple $325 per iPhone 3G?

New subsidies could be as high as $325 per iPhone, somewhat higher than carriers pay for other smartphones, according to one analyst.

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
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Tom Krazit
2 min read

According to one financial analyst, AT&T is paying Apple $325 in subsidies on each iPhone 3G.

AT&T will reportedly pay Apple $325 in subsidies on every iPhone 3G. Apple

Barron's Tech Trader Daily spotted a report from Oppenheimer's Yair Reiner that claims Apple will wind up getting just as much revenue from the subsidies as it did from therevenue-sharing agreement between Apple and AT&T that was in place before the introduction of the iPhone 3G last week. Reiner notes that this figure is far more than the typical $200 subsidy most carriers pay to reduce the price of other smartphones, and it's supplemented by a $100-per-new-subscriber bounty paid to Apple for each new AT&T customer that signs up in an Apple store.

Apple and AT&T unveiled a new pricing scheme for the iPhone 3G after the device itself was given the standard Apple keynote treatment during the first day of Apple's Worldwide Developers Conference. The 8GB iPhone 3Gwill cost $199, and the 16GB version will cost $299: $200 cheaper than the original version after AT&T agreed to subsidize the price.

The actual price of the iPhone doesn't matter to most people, but certain AT&T customers who might not be eligible for the upgrade price of $199 or $299 will likely have to pay the unsubsidized price--or something close to it-- for the iPhone 3G. Current iPhone owners are eligible for the $199 price, as are new AT&T customers, but some AT&T customers who use another smartphone and have been with the carrier for a short time might have to pay the higher price.

And it matters to AT&T, obviously. The company raised the price of its iPhone data plans by $10 a month to offset the subsidies it's paying to Apple. AT&T is throwing an awful lot of cash at Apple from the start, rather than on an ongoing basis as was the case with the revenue-sharing agreement. Still, the heavy subsidies will be worth it if iPhone 3Gs start flying off the shelves on July 11.