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Apple Makes $831 On Each AT&T iPhone

kdawson posted more than 6 years ago | from the minting-it dept.

The Almighty Buck 547

Ponca City, We Love You writes "The NYTimes reports that Gene Munster, an analyst at Piper Jaffray, has studied Apple's financial statements and come to the conclusion that AT&T is paying Apple $18 a month, on average, for each iPhone sold by Apple and activated on AT&T's network — up to $432 over a two-year contract. This shows how much incentive Apple has to maintain its exclusive deal with AT&T rather than to sell unlocked phones or cut deals with multiple carriers. Last week Apple disclosed that 250,000 iPhones had been purchased but not registered with ATT that Apple thinks are being unlocked so Apple has now taken action to curb unauthorized resellers by limiting sales of the iPhone to two per customer and requiring that purchases must now be made with a credit or debit card — cash will not be accepted." The latter article links to a US Treasury page explaining the incorrectness of the widely-held belief that cash cannot be refused for any transaction.

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Well.. (0)

portentum (1121677) | more than 6 years ago | (#21150185)

I'm failing to see where the number 831 comes from.

Re:Well.. (1, Redundant)

portentum (1121677) | more than 6 years ago | (#21150209)

Because I need to learn to RTFA. ;(

Math. (5, Informative)

attemptedgoalie (634133) | more than 6 years ago | (#21150213)

$399 phone
$432 from 24 months @ $18/month
----
$831

that math is wrong (5, Insightful)

G Fab (1142219) | more than 6 years ago | (#21150249)

as correct as that explanation is for the 831 number, the math is wrong.

apple doesn't get iphones from fairies. They pay money to build them.

Re:that math is wrong (5, Funny)

attemptedgoalie (634133) | more than 6 years ago | (#21150287)

iPhones are magic, and you know it. :-)

Ok, you're right. That is, unless Apple is using Oompa Loompas to make them. Then, they might be free. The materials are all derived from recycling old Newtons and glued together with the tears of Apple fanatics upset about the $200 price drop.

Re:that math is wrong (4, Insightful)

mr_matticus (928346) | more than 6 years ago | (#21150417)

The math is not wrong. Apple gets $831 from each iPhone. That doesn't mean it profits $831. It has a number of costs, from raw materials to labor to prorated warranty costs, all the way to packaging, shipping, inventory management, advertising, and ongoing software development; there's always then burden-shifting among products--some products may subsidize others and therefore have an apparently increased profit margin to cover the lower margins on a different product. Deducting all of these would be impossible for an analyst to do without intimate knowledge of Apple's overall operation.

It's better to report the total without them taking wild-ass blind guesses as to how much of that is profit (like iSuppli's crazily inadequate "what it costs" figures). Even if those numbers are right (and sometimes they just pull costs out of their ass because it's "close enough" to something they've seen before), that still only gets you to gross profit. And at the end of the day, gross profit is nowhere even close to the much smaller net profit.

Re:that math is wrong (1)

Jeff DeMaagd (2015) | more than 6 years ago | (#21150453)

iSupply's numbers are supposed to represent gross margin. The problem is that the denizens of the intarweb incorrectly deduce that it's the net profit when it's not. The numbers they give out are reasonable, the problem is that it's woefully taken out of context. And the fact that they put down four significant figures, that's obviously silly, two is sufficient.

Re:that math is wrong (4, Insightful)

mr_matticus (928346) | more than 6 years ago | (#21150557)

They're not reasonable figures, though, is the entire problem.

When they don't have data on a particular component, they use something they deem to be relatively similar. They extrapolate an approximate price based on what they feel is an appropriate price at a given (assumed) volume level. They never seem to account for time or place of purchase, either, which can be significant factors in volatile markets. For example, they used a run of the mill touchscreen price for the iPhone, without multitouch and without the daylight-readable backlighting.

Each step of the game is an approximation adding further error to the calculation, and by the end, they almost invariably end up at a "cost" figure that is below reality, sometimes significantly. I have some experience in various litigation involving some of the products they've assessed, and based on what we get in discovery, iSuppli's numbers are, in comparison, highly conservative and geared toward getting the highest possible gross profit rather than providing the most accurate figure. They generate the biggest stir when people think that actual manufacture costs peanuts, so it makes sense from their perspective, but it does a disservice to everyone.

Re:that math is wrong (1)

mgblst (80109) | more than 6 years ago | (#21150735)

Seems very reasonable to me. Of course they are going to be errors, we all accept that. But unless someone drops us an Apple spreadsheet, this is the best its gonna get.

Re:that math is wrong (4, Insightful)

mr_matticus (928346) | more than 6 years ago | (#21150813)

What is the value in utterly unreliable numbers? It provides absolutely no insight--products cost substantially less for the pieces than the finished good and retail price. Shocking!

Without being able to get within 20% in some cases of the actual materials cost, it doesn't inform any conclusion about the product. The general gross margin range they report is 25-50%--practically that entire variation is within their margin of error in reporting the figures in the first place. Thus, the assessments, apart from being nerd porn, are perfectly vacuous.

I think most people can figure out that almost nothing is sold without a gross margin of at least 20%, and that 50% isn't terribly uncommon either. Unless iSuppli shows up with a 75% margin one day, there's nothing useful about it.

Nonsense, fuzzy math (0, Troll)

unassimilatible (225662) | more than 6 years ago | (#21150771)

Sale price minus cost to build DOES NOT EQUAL profit. There is R&D, marketing, infrastructure costs (Infinite Loop & retail stores rental space, electricity, etc), associated shipping and packaging costs and oh yeah, Apple has this thing called EMPLOYEES that it must pay for.

As an AAPL stockholder, let me point out to you on Slashdot who actually owns corporations. It isn't rich, white fat cats twirling their mustaches. Two thirds of all publicly-traded stocks in the USA are owned by the small investor, either directly or through some sort of investment fund. And this is good, since I'd rather have Americans looking out for themselves than on the public dole, which pays less and is bankrupting America (and most of Western Europe) due to changing demographics.

My father, on disability for the last 15 years, has taken a $50,000 investment in Apple in the early 90's and, thanks to Steve Jobs, turned it into over $1,000,000. And the last thing he or any other AAPL stockholder needs is someone on Slashdot whining about how much Apple "makes" with your fuzzy math and socialist sympathies.

If you don't like Apple's products or business model, DON'T BUY ITS PRODUCTS. DO NOT PRESUME TO TELL A COMPANY THAT HAS PERFORMED WONDERFULLY FOR ITS STOCKHOLDERS (GOD BLESS STEVE JOBS) HOW TO DO ITS BUSINESS. THAT IS CALLED ARROGANCE.

Re:Well.. (0)

Anonymous Coward | more than 6 years ago | (#21150223)

I'm guessing it is as simplistic as $399 (retail) + $432. This is the amount apple _takes_ on an iPhone, if the revenue share numbers are correct. However, it is not what they 'make' in the sense of profit.

Re:Well.. (0)

Anonymous Coward | more than 6 years ago | (#21150237)

oi douchebucket

add price of phone minus cost of production plus att profit

it's not fucking quantum algerba

Re:Well.. (0)

Anonymous Coward | more than 6 years ago | (#21150243)

If it's derived the way these analysts usually get their numbers, the analyst got it from his roommate in the nut hatch who kept muttering "831... 831... 831..." over and over for no obvious reason.

In other words, I wouldn't bet the farm on a reverse-engineered AAPL balance sheet.

Re:Well.. (1)

flyingfsck (986395) | more than 6 years ago | (#21150477)

I guess 831 is two blocks over on the opposite side of the road from the beast at 666. That is the only way it would make sense to me...

Exactly! also this exaplins a lot. (3, Insightful)

goombah99 (560566) | more than 6 years ago | (#21150575)

I'm failing to see where the number 831 comes from.
Exactly, the headline is rubbish. Apple does not make 831 per Iphone. They collect 400+431 over the 2 year contract. They "make" considerably less.

Now another way of saying this is I am paying 431 dollars less than the true sales price of the iphone. Or another way of saying it is, AT&T is giving me an $18 a month discount for using an Iphone on their network. All upside to me. Of course that mean I should be upset about the unlockers who are preventing them from giving me an even larger discount.

This seems to fit some other piece of the puzzle. For example, Why to UK iphones cost so much more? Presumably because of a lower subsidy. And why is apple booking the iphone revenue as deferred subscription income? Because they are probably not making any money on the sales, but on the 18$ per month.

Finally, this also helps axplain the anomolous $200 price drop. My original guess, which this reinforces, was that apple took a huge gamble on the technology. Craploads could have gone wrong. The screens might have scratched to easily, the batteries might have died prematurely, the OS might have blue screened. . So many untested things you can't really adequately Q/A before the roll out. Plus it might not have been popular. There were a few look-alikes in the pipeline, what if one had rolled out earlier?

So they had a huge risk margin built into the price. Once the risk dissipated they could remove that. But at the time this hypothesis seemed a little off. Sure a risk margin is there in any product but how could they overestimate by 50% of the propert phone price? that seems way too high. But now realize the true sales price of the phone was 1031$ and they lowered it by 20% to 831. Now it does not seem quite so absurd.

Re:Exactly! also this exaplins a lot. (1)

foobsr (693224) | more than 6 years ago | (#21150685)

My original guess, which this reinforces, was that apple took a huge gamble on the technology. Craploads could have gone wrong. The screens might have scratched to easily, the batteries might have died prematurely, the OS might have blue screened. . So many untested things you can't really adequately Q/A before the roll out.

So, after all, it looks like NASA gambles quite well.

CC.

tiny little dot (0)

Anonymous Coward | more than 6 years ago | (#21150203)

Last week Apple disclosed that 250,000 iPhones had been purchased but not registered with ATT that Apple thinks are being unlocked so Apple has now taken action to curb unauthorized resellers by limiting sales of the iPhone to two per customer and requiring that purchases must now be made with a credit or debit card -- cash will not be accepted

See the key with a tiny little dot on it?

Re:tiny little dot (0)

Anonymous Coward | more than 6 years ago | (#21150221)

wait, what?

Re:tiny little dot (1)

celardore (844933) | more than 6 years ago | (#21150695)

I believe it has something to do with a 'dot' over the letter I being missing in US passports or drivers licenses. I forget which one.

Re:tiny little dot (0, Offtopic)

david_thornley (598059) | more than 6 years ago | (#21150799)

Technically, there is no such thing as a US driver's license. There's about fifty different ones, since they're issued by states. The central government is trying to introduce central standards (the RealID program), but is meeting fierce resistance from some states. I wouldn't expect typographical oddities to be the same on Minnesota, Maine, Montana, and Mississippi licenses.

The central government does issue passports. If there's anything odd in design about one of them, it's odd about all of them.

Simple but flawed (-1, Redundant)

Anonymous Coward | more than 6 years ago | (#21150235)

They added $432 and $399. Still doesn't mean they MADE $831, it means they TOOK IN $831

They make money. So what. (3, Interesting)

rolfwind (528248) | more than 6 years ago | (#21150247)

They make money, good for them. As long as they give what the customer wants, they'll get sales (I don't have one. At most, I'll get an iPod Touch one day. Mostly because of the limitations of AT&T service rather than the cost).

I just find it amusing that some people get upset that a hardware manufacturer makes money or a lot of it. Maybe they are so accustomed to the subsidized Xbox model where MS supposedly loses money on each sale only to try to salvage it later (MS couldn't afford it if Xbox was their business like Windows/Office is anyway). It is no way to say that Apple has to be doing things that way and there is a lot of competition out there for these devices if you don't like their way of business.

I still think Apple is being rather silly about the cash issue. Many people I know don't have credit cards because that's how they control their spending. This isn't to say that they don't have money though.... their probably more affluent than average and can afford these gadgets.

Re:They make money. So what. (-1, Flamebait)

ShieldW0lf (601553) | more than 6 years ago | (#21150273)

Don't use your iPhone where I can see you. I will knock you to the ground, take it from you and smash it to bits. Better yet, don't buy one.

Re:They make money. So what. (1)

omeomi (675045) | more than 6 years ago | (#21150303)

Don't use your iPhone where I can see you. I will knock you to the ground, take it from you and smash it to bits. Better yet, don't buy one.

The lawsuits must be getting expensive...

Re:They make money. So what. (1)

commodoresloat (172735) | more than 6 years ago | (#21150841)

The lawsuits must be getting expensive...
Seriously. Think of all the iPhones he could have bought with that money!

Re:They make money. So what. (1)

radish (98371) | more than 6 years ago | (#21150367)

Get help. Seriously. It's a fricking phone.

Re:They make money. So what. (1)

jcr (53032) | more than 6 years ago | (#21150445)

I will knock you to the ground, take it from you and smash it to bits.

You can try...

-jcr

Re:They make money. So what. (0)

Anonymous Coward | more than 6 years ago | (#21150687)

I've seen you, and you're about as intimidating as Steve Urkel. I haven't seen the OP, so for all I know he's a pixie. Pixie vs. Urkel. Only on pay per view.

Re:They make money. So what. (1)

empaler (130732) | more than 6 years ago | (#21150635)

If I ever meet you I will kick your ass!

Re:They make money. So what. (1)

tm2b (42473) | more than 6 years ago | (#21150655)

I'd love to see you try this in a shall-issue state, monkey boy.

Re:They make money. So what. (1)

D'Sphitz (699604) | more than 6 years ago | (#21150275)

As long as they give what the customer wants

Customers want to be locked in to a specific carrier? That's news to me.

Re:They make money. So what. (4, Interesting)

SamP2 (1097897) | more than 6 years ago | (#21150381)

A business doesn't have to cater to what's BEST for the customer. A business needs, and ONLY needs, to provide the following two points:

- A better product value (this includes technical specs, service quality, license agreement, and of course price) than any other competitor can offer;
- A NET gain for the customer for purchasing the product (in other words, no matter how objectively "crappy" the product is, the customer will be more satisfied buying the product than not buying it.

Out of the whole range of options which satisfies the above two points, a business will always choose one that is best for the BUSINESS, not the customer.

E.g. If more people cared about carrier lock-in and less about the flashy buttonless display, then they wouldn't buy iPhone in particular, would they? Can't say I'm terribly thrilled by Apple's tactics, but I find it perfectly fair that in a free market society where competition to Apple DOES exist, Apple has the full right to say "either take our products how they are and with all strings attached, or take a hike".

If you don't like this business model, then you do not support free market in principle (not preaching whether that is good or bad, just stating the fact).

Re:They make money. So what. (3, Insightful)

DavidShor (928926) | more than 6 years ago | (#21150739)

"A business doesn't have to cater to what's BEST for the customer."

Your right, I don't expect a business to act in any way that does not maximize their own profit. Nevertheless, we need to pass laws and regulations to ensure that the actions of profit maximizing corporations do not interfere with the collective well-being of society.

Property laws, Anti-trust legislation, and contract enforcement are all examples of such laws. Without such measures, free markets would barely function, let alone be optimal.

Certain types of actions, such as carrier lock-in, creating Monopoly power, and exclusivity contracts, are very often the most profitable courses of action for a company (An extreme example would be forced enslavement and wide scale theft). However, these actions leave society poorer than it would have been had these actions been illegal.

The Free Market is a mathematical ideal, described precisely in the first Welfare theorem. It is a great ideal, and one that we should strive for as an utmost priority. However, the model assumes that these kinds of transactions do not exist.

So to support a business model based on depriving consumer choice is not free-market, it's Plutocratic.

Re:They make money. So what. (2, Insightful)

heinousjay (683506) | more than 6 years ago | (#21150465)

You know, given that it's well understood before the purchase the AT&T is the exclusive carrier, I really don't see why this could be something you could complain about. Unless you feel entitled to the iPhone, in which case, bully for you, but you're wrong.

It's the network. NOT. (1)

tepples (727027) | more than 6 years ago | (#21150597)

You know, given that it's well understood before the purchase the AT&T is the exclusive carrier, I really don't see why this could be something you could complain about.
AT&T's coverage map [att.com] has a lot of gaps, especially west of the Mississippi River and from Virginia to Maine. Zoom in, and a lot of the areas show up as "partner" (that is, roaming), and if you live in a "partner" area, AT&T won't let you buy a phone [boston.com] . Even if you do live in an area where AT&T maintains a network, roaming during travel can get ridiculously expensive [iht.com] . Furthermore, the coverage map's disclaimer states flat-out that "AT&T does not guarantee coverage."

Re:It's the network. NOT. (2, Insightful)

devjj (956776) | more than 6 years ago | (#21150741)

Good points, except they apply to any carrier. All carriers have coverage gaps, and having unlocked iPhones available doesn't exactly mean that problem is solved. In the US, at least, where T-Mobile is pretty much your "other" GSM option, the coverage issue certainly isn't solved.

One thing that strikes me about this product in particular is how people feel entitled to it, as though in a free market you have the "right" to purchase and use an iPhone. Like all products the iPhone has a target market, and apparently Apple has decided that its target market for this device shall be limited to the people with coverage by one of its exclusive carriers. They have the right to make that decision, just as you have the right to determine whether or not it fits your needs.

Bottom line: The iPhone isn't intended for everyone, and if you have to jump through hoops to get it on your terms, it certainly isn't meant for you. Wait a little while so the market can come to terms with how to create appropriate competing products, and buy something that actually fits your needs.

Re:It's the network. NOT. (1)

DavidShor (928926) | more than 6 years ago | (#21150785)

"The iPhone isn't intended for everyone, and if you have to jump through hoops to get it on your terms, it certainly isn't meant for you. Wait a little while so the market can come to terms with how to create appropriate competing products, and buy something that actually fits your needs."

Or, we could ban carrier lock-in. That would be faster and better for our economy.

Re:They make money. So what. (1)

omeomi (675045) | more than 6 years ago | (#21150373)

I still think Apple is being rather silly about the cash issue.

I agree. I wouldn't ever pay cash for something that expensive, but I can see where other people would want to be able to. And I don't really understand how refusing cash makes it easier for Apple to stop people from hacking iPhones. If it's to track sales so you can only buy 2 iPhones per year per credit card or something, just use another credit card...

Re:They make money. So what. (1)

snl2587 (1177409) | more than 6 years ago | (#21150407)

And all that will happen is that instead of people buying a bunch of iPhones, hacking them all and selling them, people would instead provide a send-away service. Or someone will develop an even easier method that the average user or their tech-inclined friend could do. Either way, limiting to 2 phones just forces a different avenue for hackers, not an end to the hacking.

Re:They make money. So what. (1)

falcon5768 (629591) | more than 6 years ago | (#21150441)

the idea is to prevent people from mass-buying the phones, unlocking them, then selling them unlocked.

They are less concerned about the few people doing it, and more about the number of companies who have stated they would do it for a profit on the phone.

Re:They make money. So what. (1)

DavidShor (928926) | more than 6 years ago | (#21150837)

Sounds more likely that they will just drive these already shady companies further underground. Expect Iphones to "fall out of a truck".

Re:They make money. So what. (1)

timeOday (582209) | more than 6 years ago | (#21150421)

They make money, good for them.
Knowledge of Apple's fat profit margin is useful to customers in a few ways. First, if you believe in market economics, it means competitors should be offering similarly useful products for less money soon, so you can probably save a lot of money by waiting a short while. Second, would-be unlockers considering buying an iPhone for use with another carrier can use this information to judge how likely Apple is to look the other way.

Market economics are fundamentally adversarial. The idea that pricing/profit information is a "so what"? issue is just wrong.

Re:They make money. So what. (1)

michaelknauf (830252) | more than 6 years ago | (#21150717)

you're assuming someone else will make "similarly useful products for less money"... I think that's unlikely unless you only campare feature lists of the back of the package. Apple's brilliance is in the feel and function, that's harder to copy than, feature x,y,z. For comparison, look at all the DAP's that compete with the iPod... many have better battery life, extra features (am/fm radio, recorders) for close to the same price without the market responding very well to them (funny that none of the models that compete on features manage to me much cheaper). You can claim the difference is marketing, or fashion but both those things have a cost and skill threshold as well.

Re:They make money. So what. (1)

hedwards (940851) | more than 6 years ago | (#21150559)

I still think Apple is being rather silly about the cash issue. Many people I know don't have credit cards because that's how they control their spending. This isn't to say that they don't have money though.... their probably more affluent than average and can afford these gadgets.
I think that if they don't start behaving they're going to piss off their core market. It amazes me that every time they seem to fix one of my objections to the way they're handling the iPhone, they seem to come up with an even more outrageous way of screwing it up.

I'm beginning to have a hard time remembering why I hate MS and want Apple to do well.

They make envy. So what. (0)

Anonymous Coward | more than 6 years ago | (#21150565)

"I just find it amusing that some people get upset that a hardware manufacturer makes money or a lot of it"

For a fun slashdot discussion, pick a product (service, good, physical, ethereal, doesn't matter) and see if you can get a consensus on what is the "right price". Correlate that with "amount of rage" and let the fun begin.

Re:They make money. So what. (1)

DavidShor (928926) | more than 6 years ago | (#21150577)

"They make money, good for them."

Most of the time, the collective actions of profit maximizing firms lead to rather efficient distributions of resources for the general population. But exclusivity contracts are not an example of this.

Apple and AT&T are better off, but everyone else is worse off. This is not even a case of income redistribution, because the total gain to Apple and AT&T is less than the total loss from everyone else. This is a case of resource destruction, of wide scale theft from society.

At least, that's why I'm pissed.

Cingular/AT&T doesn't get my phone purchase (1)

huckda (398277) | more than 6 years ago | (#21150269)

business...simply because their rebates are in the form of 'pre-charged debit cards' which I still haven't found a method of depositing the value of into my bank account without incurring a fee.

Thus..if Apple wants to play some stupid 'credit card only' purchasing game...I'm sure 99% of american's have MORE THAN ONE credit card, and it is quite trivial to order from different locations. Or a single credit card with multiple authorized users Myself/Mywife/etc..

Apple's stock is skyrocketing...but their business tactics are scrapping the bottom of the barrel...I guess investors like that these days.

Re:Cingular/AT&T doesn't get my phone purchase (1)

Frosty Piss (770223) | more than 6 years ago | (#21150413)

I'm sure 99% of american's have MORE THAN ONE credit card...
I don't think that's true anymore. Many people choose to live within their means these days when Credit Card Companies screw everyone but the very wealthy with astronomical percentage rates and draconian fee structures. It doesn't mean people don't have money, it means they don't want to give it to Credit Card Companies.

Now, most people have Debit Cards, which may be acceptable to Apple...

Re:Cingular/AT&T doesn't get my phone purchase (0)

Anonymous Coward | more than 6 years ago | (#21150821)

I certainly don't have or want a credit card. Though I think there are a lot of people with multiple credit cards though, as the national average for credit card debt was rather obscene the last time I looked. Unless there are some with incredibly high limits, I take it as a hint that there probably are a lot of credit junkies floating around the country.

Oh the horror! (1, Insightful)

NaugaHunter (639364) | more than 6 years ago | (#21150271)

A company is making money in a business deal! What is this country coming to when a company can produce a product people want to buy and then actually make money selling it?

Re:Oh the horror! (1)

jo42 (227475) | more than 6 years ago | (#21150323)

Never underestimate the herds of sheep [people] buying the latest over-priced Shiny Thing (tm)...

Getting around the cash thing.... (3, Informative)

registrations_suck (1075251) | more than 6 years ago | (#21150281)

It's worth pointing out that you can still avoid having to use a personal credit card with your name on it by getting one of those re-loadable Visa cards. Yeah, there is a small cost involved, but it can be worth it if you value having the ability to buy without using your own, named card.

Re:Getting around the cash thing.... (0)

mr_matticus (928346) | more than 6 years ago | (#21150447)

Or just use your freaking debit card. Problem solved.

Well that sure explains it (-1, Flamebait)

SmallFurryCreature (593017) | more than 6 years ago | (#21150289)

So, it is a shitload of cash. Guess that shows those people who claimed Steve Jobs was anti-drm because of what he said about music.

DRM is bad, if it is COSTING him money. DRM is GOOD when it MAKES him money. Because that is what this is, DRM, digital rights restrictions. You buy the product, they tell you how to use it.

Oh well, no worry, I am sure some Apple fanboy will explain it all away.

Too bad apples lawyers do not understand Law. (-1, Troll)

Lumpy (12016) | more than 6 years ago | (#21150295)

" limiting sales of the iPhone to two per customer and requiring that purchases must now be made with a credit or debit card -- cash will not be accepted."

in the United state of America it is a felony to not accept United States currency as legal tender.

They can not legally make such a request. The retaillers refusing cash will be getting in a crapload of trouble when people start forcing the issue.

Re:Too bad apples lawyers do not understand Law. (2, Interesting)

MrP- (45616) | more than 6 years ago | (#21150315)

From the ./ summary: "The latter article links to a US Treasury page explaining the incorrectness of the widely-held belief that cash cannot be refused for any transaction."

Re:Too bad apples lawyers do not understand Law. (0)

Anonymous Coward | more than 6 years ago | (#21150427)

He is correct....

American Civil War, the federal government was unable to pay its debts with gold or silver coin, so began to issue paper notes to pay its debts, and when people refused to accept them in payment, Congress adopted the Legal Tender Act of 1862, compelling them to do so. Thus forced to accept federal notes, the recipients wanted to be able to use them to pay their own debts, and this led to litigation. The United States Supreme Court, with the support of judges recently appointed by President Ulysses S Grant, held that paper money can be legal tender, in the Legal Tender Cases, ranging from 1871 to 1884.

Credit cards and debit cards are NOT legal tender. therefore refusing legal tender is in it's self illegal.

If you believe everything you see in a web article you must be quite gullible, that article is incorrect in many ways, one of which Apple even saying that.

    The same law protects people from crap like gas stations not accepting $50.00 and $100.00 bills. It is in fact illegal to refuse legal tender. Actually in most states it even goes as far that refusal of legal tender is proof that a debt is paid and the person being refused can take the item without recourse.

Laws like that which make legal tender legal tender are to protect citizens from stores and retaillers trying to set their own standards. A store can not force you to pay in gold for example.

YOU CAN NOT REFUSE LEGAL TENDER. That is a stone cold law from the 1800's.

Re:Too bad apples lawyers do not understand Law. (3, Insightful)

mfnickster (182520) | more than 6 years ago | (#21150529)

> YOU CAN NOT REFUSE LEGAL TENDER. That is a stone cold law from the 1800's.

Of course you can. "Legal tender" simply means that it is a legally acceptable form of payment, not that you must accept it.

I can demand live chickens and jelly beans as payment if I feel like it, and you waving cash in my face while threatening to call the police can't make any difference.

Re:Too bad apples lawyers do not understand Law. (1)

Planesdragon (210349) | more than 6 years ago | (#21150617)

Of course you can. "Legal tender" simply means that it is a legally acceptable form of payment, not that you must accept it.

Well, that depends. Have you given me a good yet? If so, I'm in debt to you -- and you have to accept cash. Or if you don't, well, I can say "it's this or nothing", give you a letter to that effect, and walk away if you don't pay me.

If you don't want cash, you need to make it a condition of the sale -- like how Apple is doing right now. Or how a gas station does when they say "pay first."

Re:Too bad apples lawyers do not understand Law. (1)

mfnickster (182520) | more than 6 years ago | (#21150701)

Well, that depends. Have you given me a good yet? If so, I'm in debt to you -- and you have to accept cash. Or if you don't, well, I can say "it's this or nothing", give you a letter to that effect, and walk away if you don't pay me.

Debt simply means "money owed." If you agreed to buy the goods, and I delivered the goods already, then a debt exists until you pay me. Until that point, the transaction is not complete and you don't own the goods.

But that still doesn't mean I have to accept cash, that's not what "legal tender" means. Do you owe money on credit cards? That certainly counts as "debt." Try sending the creditor cash and see what they say.

Re:Too bad apples lawyers do not understand Law. (1)

wiredlogic (135348) | more than 6 years ago | (#21150569)

YOU CAN NOT REFUSE LEGAL TENDER. That is a stone cold law from the 1800's.

This may vary by state but usually the convenience stores are allowed to refuse large bills if they have a prominently displayed sign stating as such. You don't tend to see this at electronics retailers.

Re:Too bad apples lawyers do not understand Law. (1)

Fraktyl (673488) | more than 6 years ago | (#21150337)

Did you even read the article? Did you happen to go the Treasury Departments FAQ? Seems you may be the one who does not understand the law.

You have no clue (1)

WebHostingGuy (825421) | more than 6 years ago | (#21150365)

You are so wrong; first, there is no crime saying what you can or can't accept as a business. Second, if you read the article you would have been informed of this. Third, how many people are actually dropping cash in a store nowdays?

Re:Too bad apples lawyers do not understand Law. (2, Informative)

Nixoloco (675549) | more than 6 years ago | (#21150383)

in the United state of America it is a felony to not accept United States currency as legal tender.

It says right in the summary that you are incorrect. You are required to accept cash/legal tender for payment on a "debt" only, not for purchasing a product or service.

Re:Too bad apples lawyers do not understand Law. (1)

Aetuneo (1130295) | more than 6 years ago | (#21150763)

So the way around this issue is to give the seller an IOU, and then when they think you are crazy, pay the IOU with cash?

Re:Too bad apples lawyers do not understand Law. (4, Informative)

Todd Knarr (15451) | more than 6 years ago | (#21150395)

Cash must be accepted as payment for debts. IOW if you owe someone money and offer cash in payment, they can't legally refuse to accept it. If you do not owe them money, though, then no debt exists and that rule doesn't apply. A merchant's entirely free to refuse any method of payment for a transaction where no debt exists yet.

For the iPhone, this means that if you walk up to the counter wanting to buy, they're allowed to refuse to sell for cash. Once you've bought the phone and used the service and now owe them money for that service, however, they're not free to refuse a cash payment.

Re:Too bad apples lawyers do not understand Law. (2, Informative)

religious freak (1005821) | more than 6 years ago | (#21150661)

Once you've bought the phone and used the service and now owe them money for that service, however, they're not free to refuse a cash payment.


If you're referring to the cell phone service provided by AT&T then they are, in fact, able to refuse cash for payment of cell phone service. You have signed a contract and they are providing a service. In many (all?) states, this would not be considered to be a "debt", and as such, can be considered to be a transaction, just like buying an iPhone.

Re:Too bad apples lawyers do not understand Law. (5, Informative)

rueger (210566) | more than 6 years ago | (#21150437)

Sigh... from the US TREASURY PAGE that is LINKED from THE SUMMARY above:

Question: I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?

Answer: The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.
Of course, perhaps you just don't believe what the US Government would write on their own web site. Which raises the question of why you would trust their currency enough to use it.

Re:Too bad apples lawyers do not understand Law. (1)

edwardpickman (965122) | more than 6 years ago | (#21150519)

You need to crawl out of your parents basement and get a little sunshine. A little 411, a lot of companies dont accept cash. I have even dealt with some that didnt accept credit cards they strictly sold by invoice. There is no law that you have to accept cash. Stuff a bunch of money in an envelop for Newegg to get some computer equipment and see the reaction. I know of some stores that dont have a cash register. If you want to stick it to the man and buy a bunch of iPhones get yourself some Visa cash cards and go crazy. Theyre in the business to make money. Deal with it.

Hmmm (0)

Anonymous Coward | more than 6 years ago | (#21150629)

"A little 411"

You realize that no one over the age of 15 uses that phrase, right?

Re:Too bad apples lawyers do not understand Law. (1)

zakezuke (229119) | more than 6 years ago | (#21150593)

They can not legally make such a request. The retaillers refusing cash will be getting in a crapload of trouble when people start forcing the issue.
I would like to agree with you, in fact I thought so my self, but TFA has a link to the Department of the Treasurey stating otherwise. It would seem that while debts public or private cash is legal tender, goods and services on the other hand are another matter. It looks like they don't have to sell you the phone. Whether you can still pay cash for your service before it hits debt status is an interesting question.

I'm not going to agree AT&T and Apple, their actions are borderline classist, but looks like it's legal.

Re:Too bad apples lawyers do not understand Law. (1)

John.P.Jones (601028) | more than 6 years ago | (#21150599)

The law requires them to accept dollars as a form of payment not cash, they can require you to charge $400 on a credit card, they just can't require you to charge 250 Euro, or whatever, to your card.

and more to the point (1)

goldcd (587052) | more than 6 years ago | (#21150333)

if AT&T is having to hand over $18 a month to Apple, they're going to make damn sure they're going to separate every iPhone user of at least $18 a month extra.
Or alternatively keep iphone users attached to their phone for longer than they would for a conventional handset - which I assume means AT&T would not be happy to see an upgraded handset (e.g. a 3G one) launch any time soon as then they'd have to deal with users wanting to upgrade.

Re:and more to the point (1)

frdmfghtr (603968) | more than 6 years ago | (#21150683)

if AT&T is having to hand over $18 a month to Apple, they're going to make damn sure they're going to separate every iPhone user of at least $18 a month extra.
Or alternatively keep iphone users attached to their phone for longer than they would for a conventional handset - which I assume means AT&T would not be happy to see an upgraded handset (e.g. a 3G one) launch any time soon as then they'd have to deal with users wanting to upgrade.
AT&T does charge that additional amount per month, in the form of the $19.99/month unlimited data package that is required with the iPhone.

Think of it this way: Apple has subcontracted AT&T to provide data service to the iPhone, where AT&T is paid a 10% commission ($2 of $20) for each plan. AT&T makes their money on the voice plans, and the iPhone brings new subscribers to those voice plans.

Oversimplified and making some gross assumptions (like the $18/phone number being accurate), but I think I get the basic idea across.

Re:and more to the point (1)

eggnet (75425) | more than 6 years ago | (#21150805)

They already do charge extra with every customer. How do you think they give away phones with subscriptions without increasing the monthlies?

Apple, the corp that would be M$. (1, Interesting)

Anonymous Coward | more than 6 years ago | (#21150347)

Or so they wish.
Maybe Apple should made a sub-company called Apple Telecomm, join with AT&T, drop a 'T' between the two, and be called...

AT&AT.

More forces for the darkside. Rebels beware!

Re:Apple, the corp that would be M$. (1)

rcoxdav (648172) | more than 6 years ago | (#21150607)

No, that is not quite correct.
It should be, AT &AT &C1D2 &ScrewU2

The money's in the services (1)

wickerprints (1094741) | more than 6 years ago | (#21150353)

Everyone already knows that the real money to be made in the mobile telecommunications market is in the service itself, rather than the hardware. It's simple math. ($60/mo) x (24 mo) = $1440. Even the most expensive consumer phones (we're not talking about limited edition, diamond-encrusted atrocities) are at most half the value of the 2-year contract. Is it any wonder that Apple would seek to leverage its design and cachet to grab a slice of the huge pie that is wireless? What's most telling about this is not how much Apple gets from each iPhone sale, but rather, how much other wireless companies make off of everybody. If AT&T is willing to part with $18/mo for the increased market share, then how much profit margin do you think they (along with Verizon, Sprint, T-Mobile, etc.) make off of non-iPhone customers?

Explains why they went berserk on unlocking (1)

webmaster404 (1148909) | more than 6 years ago | (#21150363)

Well this explains why they went haywire on the iPhone unlocking, even though they still made enough money on the hardware that they shouldn't break compatibility with an "update"

Greed (-1, Troll)

rueger (210566) | more than 6 years ago | (#21150369)

Wow, this will have about thirty-five seconds before it's modded "flamebait" by the fanboys, but I'd argue that this surpasses "good business" on the part of Apple and crosses into barefaced greed.

With practices like this why would anyone want to do business with Apple?

Re:Greed (2, Insightful)

Anonymous Coward | more than 6 years ago | (#21150419)

"With practices like this why would anyone want to do business with Apple?"

Because the things they make are pretty.

Re:Greed (1)

Nixoloco (675549) | more than 6 years ago | (#21150487)

With practices like this why would anyone want to do business with Apple?

Well.. I started doing business with Apple (relatively recently) because I like their laptops and have come to love their OS.
My personal view is that many of their products are superior to their competition's products and represent a better value to me.

Re:Greed (1)

fastest fascist (1086001) | more than 6 years ago | (#21150523)

No comment on the why, but seeing as the terms of service were, AFAIK, pretty clear to people before they bought the iPhone, and people HAVE been buying them, clearly people DO want to do business with Apple, even with "practices like this".

Re:Greed (0)

Anonymous Coward | more than 6 years ago | (#21150567)

As a recent "switcher" I have to say, I'd walk over burning coals to buy a Mac Pro from Shai'tan himself if the lesser demon Apple wasn't around. I mean, what choice is there? There's the slavering hound Microsoft, who produces an incompetent OS that falls over at the slightest provocation--just TRY opening a samba share by WINS address when that share is down, watch your entire system screech to a halt. Or maybe the gibbering horde of Linux developers who can't decide on a HIG standard so they've written hundreds, all of which must be installed together? I bought a Dell that took 35 minutes to go from pressing the power button to having a desktop; my MacBook took five minutes, most of which was plugging my wireless router back in so the AirPort had something to talk to.

I'm gonna have to go with the shiny demon who produces a competent and pretty system.

Re:Greed (1)

whogben (919335) | more than 6 years ago | (#21150631)

Well, what practices exactly are you thinking of? They have a deal with a carrier whereby the carrier pays them in exchange for exclusivity - this is completely standard in businesses of all types. They won't accept cash for new iPhones, - you'll have to use your debit or credit card. The same was true the last time I tried to buy a bus ticket out of NYC, they aren't pioneering new ways to abuse the consumer here. I assume most people pay their phone bills with card, rather than cash. Imagine Apple makes printers and AT&T makes the compatible ink - this isn't a new racket, is it just because its shared between two companies rather than one that you feel slighted?

Freeing the Hardware (3, Insightful)

snl2587 (1177409) | more than 6 years ago | (#21150371)

The greatest piece of legislation that could be passed would be one requiring that software and hardware manufacturer's could not impose restrictions on how it is used. Not only would the iPhone situation be a non-issue, but the way would be clear for Linux developers to provide drivers without fear of prosecution by hardware manufacturer's. Of course, given greed, this is nothing more than a pipe dream...

Re:Freeing the Hardware (4, Interesting)

thbb (200684) | more than 6 years ago | (#21150611)

This is the legislation in France, where the iPhone will be sold by Orange before the end of the year.

The legislation says that "linked sale" (vente lie'e) is forbidden: if you offer some good for sale, you are not allowed to force the buyer to buy a service together with this good.

There has been a debate in the press about whether Apple would renounce selling iPhones in France or find a workaround.

The trick Orange will use is to propose the iPhone at a prohibitive price (1000 euros?) and offer a massive discount for any plan purchased with it. But consumer watch organizations are quite powerful here, and they could sue if they show the price is too high and the scheme is actually a disguised "vente lie'e". The consumer watch organization are allowed to use surveys and statistical analyses to show this, so Orange and Apple will have to play tight at this game.

BTW. I'm surprised so many of you in the US have plans around $60/month. I pay 14 euros/month for basic service, but it's plenty enough airtime.

Re:Freeing the Hardware (1)

frdmfghtr (603968) | more than 6 years ago | (#21150757)

BTW. I'm surprised so many of you in the US have plans around $60/month. I pay 14 euros/month for basic service, but it's plenty enough airtime.
For many of us (such as myself), the $60/month (45 Euros by my math) covers both the voice and data plan.

I pay $60 for the unlimited data, 450 anytime minutes, 5000 off-peak (nights and weekends) minutes, and 200 free text messages (I use maybe 5-10 per month). Any peak minutes that don't get used at the end of the month get added to the peak allocation the following month.

With the banking of minutes, I've never paid for extra minutes even though my cell phone is my only phone. Sometimes I may use 200 peak minutes, sometimes I use 600.

Hard to believe. (2, Interesting)

LinuxInDallas (73952) | more than 6 years ago | (#21150403)

It's hard to believe AT&T is handing Apple $18/month for the iPhone when to get an iPhone added to an existing AT&T plan you only haved to spend an extra $20/month.

Re:Hard to believe. (2, Informative)

krakass (935403) | more than 6 years ago | (#21150473)

You have to remember that AT&T is just redirecting the money they would normally pay towards discounting the phone to Apple. And when you consider that they usually don't discount phones by $432 ($18*24 months) they're actually probably making more money from iPhone users.

"cash will not be accepted" (2, Interesting)

Hao Wu (652581) | more than 6 years ago | (#21150433)

Cash will be accepted by the competition. I will not do business with pricks who treat me so suspiciously as not to accept pocket change.

useful information (4, Insightful)

m2943 (1140797) | more than 6 years ago | (#21150463)

People say things like "it's Apple's right" and "good for them". Of course, it's Apple's right to do those deals.

Nevertheless, where do you think this money is coming from? Do you think that AT&T is giving that to Apple because they are such good buddies?

No, you are paying for it one way or another (e.g., by paying a premium for their sluggish EDGE service).

False (1)

goombah99 (560566) | more than 6 years ago | (#21150665)

People say things like "it's Apple's right" and "good for them". Of course, it's Apple's right to do those deals.

Nevertheless, where do you think this money is coming from? Do you think that AT&T is giving that to Apple because they are such good buddies?

No, you are paying for it one way or another (e.g., by paying a premium for their sluggish EDGE service).
But I pay the same price for ATT no matter which phone I use. So tell me again how I am paying more. Seems like I just learned I'm pay $18 per month less that the chumps with non iPhone who get the same service.

High limit (1)

flyingfsck (986395) | more than 6 years ago | (#21150505)

Two? I don't even want one. Not even for free.

Oh well, I guess I am not the average Apple fan...

Cash will not be accepted? (0, Redundant)

Tim Ward (514198) | more than 6 years ago | (#21150609)

Is that legal in the US? - it's unlikely to be in the UK.

Re:Cash will not be accepted? (-1, Flamebait)

Anonymous Coward | more than 6 years ago | (#21150779)

You're a fucking idiot. If you can't be bothered to RTFA, RTF summary. (if you CAN read)

Can iPods be Far Behind (0, Troll)

Nom du Keyboard (633989) | more than 6 years ago | (#21150637)

by limiting sales of the iPhone to two per customer and requiring that purchases must now be made with a credit or debit card -- cash will not be accepted."

Can iPods be far behind? After all, how many iPods are out there that never downloaded a single track from iTMS? WE CAN'T ALLOW THIS!

By not accepting cash, Apple shows that customer's privacy means absolutely nothing to them -- and that they're not the Good Guys they try to make themselves out to be.

Re:Can iPods be Far Behind (1)

Yahweh Doesn't Exist (906833) | more than 6 years ago | (#21150759)

>Apple shows that customer's privacy means absolutely nothing to them

get a grip

not accepting cash?!?! (-1, Redundant)

VolciMaster (821873) | more than 6 years ago | (#21150689)

That's illegal in this country: it'd written write across the front of every denomination of Federal Reserve Note: "Good for all debts, public and private".
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