Apple class action - ridiculous but could be costly

Ok had some long posts so time for a short one.

I think the class action against Apple and AT&T is ridiculous but could be costly
As far as I'm aware the case is on the basis that customers who bought the iPhone were not told by Apple and AT&T that even after their contract expired their iPhone was locked to AT&T, even if they paid the termination payment for AT&T. Their argument is that this enabled them to charge monopolistic pricing and prevented competitive pricing.

First point - I'm very glad I live in London and from October 2009 O2 began unlocking the iPhone. You can now buy the iPhone 4 unlocked and sim free and there are at least 6 different providers you can use (O2, Vodaphone, Orange, Tesco (based on O2), T-Mobile, 3).

But even in the US (which I agree is getting a raw deal), there is no basis for a class action. I mean:
  • The mobile market is highly highly competitive, there is no monopoly in phone providers or Telecom companies
  • If you choose to buy an iPhone (when there are plenty of other good alternatives, with your choice of provider) then as far as I'm concerned you buy into the Apple commercial model and everything that goes with it including who they partner with to provide comms. If you bought a Ford car and they said you can only use Shell fuel in the car (yes you should have read the contract that had this info, or consulted the web) as far as I'm concerned that's their right - your right then is not to buy a Ford car
  • No one held a gun to these peoples heads and forced them to pay what they did for the iPhone on AT&T
I seriously hope that a sensible (too much too hope for?) judge throws this case out where it deserves to be.

Ok lets do the numbers (worst case):
  • Say the price per month was 10% higher than under a "competitive market"
  • Average US monthly bill on iPhone £100 (to keep it easy)
  • iPhone has been out for 36 months, 
  • 20 million iPhones sold in the US. Apple and AT&T 
  • Estimated damages: $7.2 Billion, appealed down by 20% = $2.8B each
  • Apple Q1 2010 profit $3.3Billion, annualized $13.5Billion, damages = 21% of profit
  • AT&T Q1 2010 profit $2.5Billion, annualized $10Billion, damages = 28% profit
  • Based on current EPS share price should be 30% lower for Apple if they get fined today - no wonder Apple shares down 3% against a rising market today!!
I really want to write on how you can securely use the iPhone and Android securely and cost effectively in the corporate world but I really have to get this spec for my new business idea finished and I get distracted by things like this post...

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