Go to Germany and bring $1,500 with you (well, more if the dollar keeps slipping and you don't go soon).   T-Mobile will be selling an unlocked, contract-less iPhone as a result of a German court ruling.

T-Mobile said Wednesday that it will sell the iPhone in Germany without a contract, complying with a court injunction against it. In addition, it will unlock any phone bought since November 19 -- the date of the ruling -- at no charge, so that the device can be used with other carriers. However, the company has asked the courts to clarify the injunction so it may change its offer to consumers based upon that.

Consumers will gain the option to purchase the device without the two year contract for €999, or about $1,478 USD. In all cases, contract or not, T-Mobile will unlock any iPhone purchased after the ruling. The process is apparently different in Germany than it is here in the US. American consumers may purchase the iPhone sans contract for a flat price of $399, whereas in Germany, consumers are apparently forced to purchase the contract first and the phone second.

Even with a 2 year contract, the phone is still more expensive than in the U.S. at €399 (or about $590). Does Apple have revenue-sharing deals with the European exclusive carriers as well? It's still shocking to me that Apple wants to tie to a singular carrier in each market, but I guess if you look at the price with and without carrier, maybe we can see why: that contract is really valuable, and we now have concrete figures.

That said, something doesn't sit right for me here. The 8GB iPod Touch retails for $399.00 with no contract and still WiFi, touch screen and so on. I'm assuming that the only thing it doesn't have from a hardware perspective is the GSM radio, and I can't imagine that that isn't being addressed by the $100 premium. You also expect that they're still getting decent margins on the iPod Touch, so clearly the iPhone hardware itself is still making Apple money.

Now, if the contract is so valuable, why bother selling the iPod Touch? If you think people wouldn't bother activating the phone capabilities, well, those people are probably now buying an iPod Touch. I know a number of people - myself included - who would consider buying the iPod Touch but are holding off in case they want to get an iPhone later (i.e., due to existing contracts or whatever). If Apple is really getting such a great margin for the contracts, why preclude those people who buy an iPod Touch from ever activating the device?

I wonder if a better strategy would be to eliminate the iPod Touch entirely and integrate that into the iPhone line. Offer two models (8GB and 16GB) each with the phone hardware in there. If you activate, you get phone capabilities, if you don't you get the base functionality in the iPod Touch today.

I think this is especially necessary in the gift scenario. iPods are traditionally big gifts in the holiday times, but they are stand-alone products. By tying the use of the iPod to the phone contract, there's a barrier to giving the iPhone as a gift.

Thoughts?


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