Yesterday some combination of CnnMoney.com and Fortune Magazine (who can tell with these mashup Websites?) described what it called the "iPhone revenue bomb." The takeaway, basically, is this: When you buy an iPhone from Apple, for $200, Apple doesn't just put that $200 on its balance sheets; rather, it counts that as $8.33 of revenue a month every month for the next 24 months. It does this because, supposedly, the company is not allowed to offer free upgrades unless it treats that purchase price some kind of subscription-type payment. This is why iPod Touch users have to pay nominal fees for the same OS upgrades that iPhone users get.
The article then goes on to describe how this means that either Apple's current or future revenues are much more than you'd think otherwise, and proves it with nifty charts, but reading it, two things that weren't immediately clear to me came to mind:
- Will our free OS upgrades end two years after purchase?
- Is AT&T's subsidy for each phone being paid to Apple in monthly installments?
Anyone know the answers?