Cash isn't king: Apple limits iPhone purchases

by Steven Schwankert

October 29, 2007 —

People looking to walk into an Apple retailer and buy an iPhone with cash will
be out of luck. The company is now accepting only credit or debit card payments
for the devices so they can track who purchases the phone, according to an employee
at the Apple Store in New York's SoHo neighborhood.

The new policy is Apple's attempt to prevent people from purchasing and then
unlocking and reselling iPhones, a situation that has been a problem for the
company. Apple won't let anyone without a credit card or debit card in their
name purchase iPhones, according to an unidentified Apple Store employee in
a phone interview.

"We need to track the purchases of the iPhone [because] we have people
buying the phones, unlocking the phones and selling them," she said.

A report
by the Associated Press last week said Apple was limiting the purchases to two
devices and allowing users to purchase them only with credit or debit cards.
According to store employees, the two-device limit has always been in place,
but the noncash policy is new.

Apple's public relations team did not respond to multiple requests for comment
on the new policy. However, it's no secret the company is trying to stem the
tide of unlocked and resold phones, now totaling about 250,000. Apple Chief
Operating Officer Tim Cook mentioned
that number last week in a quarterly results conference call as the difference
between the number of handsets sold -- approximately 1.4 million -- and those
actually connecting via AT&T Wireless, the iPhone's exclusive U.S. carrier.

If one analyst's estimate
is correct, those unlocked phones are costing Apple millions of dollars. Piper
Jaffrey analyst Gene Munster said that he believes Apple receives US$18 per
iPhone per month from AT&T Wireless, based on iPhone-related revenue Apple
reported in its latest quarterly
earnings, totaling more than $4.5 million in lost revenue.

IDG News Service