Apple, AT&T Try to Plug iPhone Revenue Gap

Updated from 3:18 p.m. EDT

SAN FRANCISCO -- Unlocked iPhones may soon become a thing of the past.

That's because Apple(AAPL Quote) and service provider AT&T(T Quote) have made new 3G iPhone customers pay a premium to opt out of a two-year contract with the carrier's network.

Coupled with the increased availability of the 3G iPhones worldwide and an impending deal with one of China's mobile service providers, the demand for unlocked iPhones could shrink, analysts say.

"All this will significantly reduce the unlocked iPhone market, says Ezra Gottheil, an analyst with Technology Business Research, "though it may not entirely disappear."

When Apple first launched the iPhone about a year ago, the company inked an agreement with AT&T that allowed the carrier to be the exclusive service provider for the iPhone. Instead of following the industry standard of taking a carrier subsidy on the sale of each iPhone, Apple struck a deal for a slice of the subscription fee for every new AT&T subscriber.

As it has turned out, both AT&T and Apple apparently underestimated the extent of subscribers and fees they lost from unlocked phones.

At its Worldwide Developer Conference last month, Apple said it has sold about 6 million iPhones. In May, AT&T revealed it had about 2.5 million iPhone subscribers.

Including subscribers in countries outside the U.S., the percentage of unlocked iPhones could range from 30% to 40% of all iPhones sold, analysts estimate.

< Previous

1 2 3 4

Next >