If AT&T loses iPhone exclusivity, Apple will gain
Is AT&T holding back the iPhone's sales potential? That's the conclusion of analysts at Piper Jaffray. In a report issued today, the firm says Apple is likely to go with multiple carriers, as the company is already doing in other world markets like France and the U.K.To make the point, the report cites iPhone sales in France, where Apple's share of the smartphone market zoomed to 40% from 15% since Orange lost the exclusive there.
What does that mean for AT&T? If Apple finds additional partners, AT&T could lose a hefty chunk of customers who haven't been too thrilled with the way the communications giant has performed with the iPhone. There is still no tethering, MMS took a long time to roll out, and there is a continuing complaint of dropped calls from every corner of the country.
One wonders what is going on inside Verizon. The best-regarded US cell carrier for coverage & network quality is the subject of many rumors about the iPhone being offered, and others rumors of the mythical Apple tablet coming to Verizon. It's all especially interesting as Verizon has been bashing the iPhone in a series of TV ads hyping the upcoming Droid from Motorola and Google. Doesn't seem like Verizon is warming up the relationship.
It will be an interesting next few months as competition increases; partners may or may nor change, and Apple will be looking to increase market share for one of the hottest phones on the market.
[via Business Week]
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Reader Comments (Page 1 of 3)
Fubar said 4:12PM on 10-19-2009
I bought, and still own and use, a first generation iPod Touch. I refused back when the iphone/ipod touch came out to have anything to do with AT&T and I hold that position. While I love some of the features and capabilities of the iPhone and apps combination I will wait until AT&T is no longer the only choice of service provider. I realize I could jailbreak and use any carrier I will not take the chance that AT&T will catch on and I will owe them money. I will NEVER pay another bill that will fill AT&T's coffers.
While I'm sure there probably aren't a lot of people out there that feel as strongly as I do, I also know there are a lot of people that are waiting to buy an iPhone once AT&T is out of the way.
I agree that Apple will benefit greatly as soon as they drop the exclusivity deal they have with AT&T.
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Fernando said 4:21PM on 10-19-2009
The thing is though they are all the same. Just bad in other ways. At&t has great phones but crappy service and ok prices. T-Mobile has crappy phones and crappy service but great prices. Verizon has crappy phones, great service but crappy prices, Sprint finally has a great phone but still crap prices and crap service. So the best thing would be an AT&T phone with t-mobile plans on Verizon's network, welcome to cell phone euphoria and dream land. And they all have crappy customer service.
jack sutton said 4:10PM on 10-19-2009
Can't wait for that day to come. I will be first in line!
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Jordan said 4:13PM on 10-19-2009
They would have to improve their phone first. As much as I believe AT&T is to blame for some of the iphones shortcomings, I believe Apple is just as much at fault.
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Brian said 4:13PM on 10-19-2009
I wonder if Verizon are throwing a curve ball to put people of the scent then suddenly they are rolling out a 4G iPhone.
Who knows.
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Brian said 6:16AM on 10-20-2009
Not likely. Steve Jobs is like Happy Fun Ball; you do not taunt him. And he has a notoriously long memory.
Curly Eric said 4:14PM on 10-19-2009
I have to ask, but who else in the US? T-mobile uses different GSM bands so it's not like you can just bring your phone to them ( well the phone would work, but you would be restricted to EDGE speeds for data ).
Who else is there?
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dagamer43 said 4:31PM on 10-19-2009
Sprint has the same problem as Verizon in that it uses CDMA. To be honest, the iPhone is going to be on AT&T for a while until other carriers switch to LTE. And because of the demand from having the iPhone on a new network, I don't see it being a "launch device" for an LTE network. Testing out a new device with millions of new customers is a nice way to have a failed launch. Instead, we'll probably see Verizon flip on the switch for LTE in 2010 and have the network run for a year to knock out the kinks, and then probably make an agreement with Apple to have the iPhone.
I think the most important thing is that Verizon is NOT going to bend over backwards to the iPhone. Since T-Mobile's network is nowhere near ready to handle the iPhone and Sprint will be using WiMax instead of LTE, they are the only alternative. And since Verizon is doing just fine without the iPhone, it is in their advantage to wait until Apple needs them for better sales.
What will really hurt Apple is when Verizon has an LTE network running in 2010 and AT&T claims it'll have theirs up in the 2011/2012 time frame. It'll be even harder to say that the iPhone is on the "best network in the US" if competitors have a network that is 3x as fast with far better coverage (and my guess is it may even be cheaper after all the investments are done to push around more data).
punkassjim said 5:03PM on 10-19-2009
@dagamer43: You make some very good points. I hadn't even thought of the fact that Verizon would/could say "yeah no thanks, we're doing okay over here." Usually greed wins out. But that might just be the smartest thing they could do. If Sprint does the same, then it quickly becomes apparent that Apple made a pretty big mistake by tying themselves to GSM. I don't see how they could have done it differently, but it does sort of paint them into a corner. Given the things you've mentioned, I don't see how _any_ of Apple's potential next steps (carrier-wise) could be a sure-fire win.
I really think they're gonna have to re-vamp the OS and the AppStore policies in order to maintain that meteoric growth.
MikeWard1701 said 4:23PM on 10-19-2009
It took them this long to figure that out?! I've been saying that network exclusivity is now a hinderance to Apple since June.
Going exclusive with the iPhone was a way for both Apple and the networks to play it safe.
Last time Apple attempted a device of this type (Newton) it didn't do too well, and they may have had similar concerns about the iPhone. Limiting the iPhone to one network per location also kept things simple with regard to technical issues.
Networks no doubt were equally cautious, this was Apples' first venture into the mobile phone market and it could have gone the way of the Newton. Pitching the iPhone to the networks would have been hard, so they'll have wanted something significant in return for the gamble.
The iPhone has been a success though, and networks with it are lapping it up for the most part. They've incurred some collateral damage of sorts (not being prepared for the surge in data usage or user migration) but for the most part they're happy.
Apple though is a different story. Network exclusivity is now a hindrance to their goal of getting the iPhone in as many hands as possible. The problems of the network (coverage, pricing, customer service etc.) are effectively their problems, limiting sales because there are those who, through choice or circumstance, will not purchase an iPhone whilst on the exclusive network.
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sampsonhead said 4:24PM on 10-19-2009
well after a very heated debate with an AT&T customer service manager on the phone Saturday, i demanded a free month of service from AT&T in regards to dropped calls and delayed notification of missed calls, mms and sms messaging, as well as, a complete failure of my visual voicemail.
according to my conversation with the manager, AT&T puts all blame on the iphone device and not their network. AT&T suggest that i reset my network setting every week on my iphone to solve all of the problems i have had to this date from their network.
having received my free month of service i called apple care to clarify their position on the network reset suggestion of AT&T and Apple's responce was "thats insane."
so any change in carrier would be a great step forward.
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Cowicide said 4:32PM on 10-19-2009
sounds like an at&t punter to me; god they suck
Duane said 4:28PM on 10-19-2009
T-Mobile seems like the most likely candidate, unless Apple puts out a CDMA version. As a T-Mobile iPhone user from launch, I sure would appreciate the chance to upgrade.
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dagamer43 said 4:36PM on 10-19-2009
If AT&T's network can't handle the iPhone, I doubt T-Mobile's will be able to (no offense to their network).
The average iPhone user consumes around 40x more bandwidth than the average smartphone user. And when you consider the shear number of people that would switch because they think AT&T stinks, they aren't going to be happy for very long.
If anything, we're going to have to wait for balancing of users between different carriers before the iPhone won't have such a tragic effect on service. At the very least, AT&T just wasn't prepared for the level of service expected from consumers.
Jordan said 4:58PM on 10-19-2009
@dagmar: I love your reasoning that an iPhone user uses 40x more bandwidth than another smartphone user. Where did you get those statistics again?
MikeWard1701 said 5:04PM on 10-19-2009
T-Mobile seems like the logical choice, modifying the GSM bands would be much easier and cheaper than releasing a CDMA version.
If Apple and T-Mobile have been smart, taking note of the failins with AT&T, they'll be well preparred. Apple will have been testing the iPhone on T-Mobile, and T-Mobie will have been upgrading their infrastructure to accomodate the bandwidth and user increases.
Deals of this size usually take months, possibly years to negotiate.
Eric said 8:30AM on 10-20-2009
AT&T claims 13X bandwidth usage over other smart phone users.
http://www.pcworld.com/article/173320/atandt_wireless_ceo_hints_at_managing_iphone_data_usage.html
emil said 4:28PM on 10-19-2009
I'm sorry, I hate AT&T these days just as much as the next guy, but iPhone on Verizon is now officially a pipe dream.
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Cowicide said 4:30PM on 10-19-2009
i have refrained from my iphone purchase until i have a choice of carriers - if that day never comes, i'll go with alternative phones - sorry apple, but locking me into one carrier is not cool
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Microdot said 4:34PM on 10-19-2009
i dont personally care either way. im happy with att... and loathe verizon more than any other company on the planet. the "best network" is a myth that everyone just accepts. i tried them for a year, and just couldnt handle their spotty service and dropped calls (they kept blaming the phone... i went through 4 different phones while there). i moved to att long before the iphone was announced (back when it was cingular), and wont look back. in the 4 years ive been with them... i can count on one hand the number of dropped calls.
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