On Feb 14, 9:05 am, The Bob <nos...@bob.com> wrote:
> SMS <scharf.ste...@geemail.com> amazed us all with the following innews:47b46fb3$0$36326$742ec2ed@news.sonic.net:
>
> > The Bob wrote:
>
> >> I don't expect you to get it, John. We're dealing with a market
> >> sector that you don't have any experience in, and factors of
> >> corporate economics that you've never had to consider before. A
> >> revenue leak of this size, while seemingly small in the big picture,
> >> can have devastating effects on the overall performance of a company
> >> the size of Apple, not to mention the negative light it casts them in
> >> with investors.
>
> > If Apple expected that revenue on every iPhone they manufactured, then
> > indeed the investors would be upset. But they knew in advance that not
> > every iPhone sold would be activated on a network from which they
> > would get additional revenue.
>
> But they never expected a 40% rate of defection. Their numbers were less
> than 5%. It is basic Business 101- you manufacture and sell a product
> expecting a certain level of revenue to be generated by each unit, minus an
> acceptable level of shrinkage.

I think you flunked the course.

They may not have expected the large number of unlocked phones, but
they didn't lose revenue that they otherwise would have had. The
shortfall in sales and revenue is not due to the large number of
unlocked iPhones.

They're essentially selling into two totally different channels. One
is through the carriers with which they have a revenue sharing
agreement, and the other is to the sophisticated users that want to
use the product in a different way than they intended.

Some companies spend a lot of money separating their channels, through
different product names, different types of retailers, and different
pricing schemes (rebates, coupons, subsidies, etc.). Apple had none of
those hassles, and did not have to have confusing pricing schemes to
differentiate the channels. They may have even expected this to have
occurred.