In Fantasyland, The iPhone Slices, Dices and Comes With Free Service
from the take-your-booyah-somewhere-else dept
The launch of the iPhone did little to dispel the speculation surrounding the device, as Steve Jobs left enough unanswered questions to keep rumors swirling for a while. Most of them have been fairly harmless, but a recent one stands out, as "celebrity" stock-picker Jim Cramer says Cingular/AT&T will give iPhone buyers 18 months of free service in order to win subscribers over from Verizon Wireless. As Barron's Eric Savitz points out, it's a ridiculous claim, not to mention one AT&T apparently never made. Cramer's claim simply makes no sense whatsoever: Cingular is paying Apple, in some form, for the right to have an exclusive deal on the iPhone, in the hopes that it will recover the subsidy by selling service to iPhone users. So why would Cingular subsidize the iPhone itself, then lock customers into a two-year contract, only to provide them with free service for 18 months? That dramatically increases the subsidy cost, and gives them only 6 months to recover it and turn a profit. Even if Cingular were selling the iPhone at a profit (which it certainly isn't), there's no way that profit would justify 18 months of free phone service. Fanboys letting their imaginations run wild is one thing, but talking heads basing investment "advice" on unfounded speculation is a bit out of order.