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TheStreet Open House

Apple Deal Bites Into AT&T

The coming release of Apple's (AAPL - Get Report) iPhone will give the tech titan more than a toe in the mobile phone market, according to one observer.

The hotly anticipated iPod-inspired cell phone also will give Apple a nice handle on a partner's pocketbook, a Wall Street analyst said Tuesday.

The iPhone, due out from Apple in June, commands enough potential sales leverage that AT&T (T - Get Report) is willing to share some of the proceeds, says American Technology Research analyst Shaw Wu, in a note Tuesday.

According to the two-pronged revenue sharing arrangement, AT&T will pay Apple a commission for each new customer and a cut of the customer's monthly payment, writes Wu.

Not since Qualcomm (QCOM - Get Report) successfully sued phone makers to honor its patents and enter royalty agreements has a tech equipment shop of Apple's size managed to wring recurring fees out of the ever expanding wireless industry.

Verizon Wireless, a joint venture between Verizon (VZ - Get Report) and Vodafone (VOD), was offered an exclusive deal for the iPhone but said no to Apple's revenue sharing proposal in January.

But AT&T may believe the half-inch thick iPhone -- with its large touch screen, music player, 2-megapixel camera and $500 price tag -- might be the big hit with gadget lovers. And that's a lucrative opportunity, given that Apple says 100 million iPods have been sold.

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