Ok. Then who will be the loser?
In one of posts, last month, we wrote that if Apple breaks AT&T deal, nobody can say whether opening up with another cellular network would be a benefit for Apple or not. Even, it is too early to tot up who would be the ultimate loser.
Meanwhile, we can see how much profit did AT&T and Apple’s iPhone drive in the last quarter? It looks like Apple’s iPhone is selling like hotcakes while AT&T is reaping the profits in the U.S. AT&T’s profits rose by 26% in the last quarter to $4.01 billion with 1.6 million new wireless subscribers. So which phone got such a huge number of new customers?
With the end of AT&T – iPhone exclusive deal, should we expect any material negative impact? AT&T has commented that it would keep iPhone Customers. But according to their statement to SEC, as the exclusivity arrangements is about to stop, they expect to continue to offer such handsets (based on historical industry practice), and they believe that the service plan offerings will help their subscribers retain by having incentives not to move to a new carrier.
Let’s come to Apple iPhone’s corner. More than 80 percent of AT&T postpaid subscribers are using Family Talk Plans and business plans that would involve moving the whole group to a new carrier once the deal with iPhone will end. Moreover, the vast majority of AT&T postpaid subscribers are accumulating unused minutes (known as ‘rollover minutes’). It is a plan that is currently not offered by other major post-paid carriers in the United States. And users would lose these minutes if they switched carriers.
Users would not be able to bring AT&T iPhone to Verizon. For that you would have to buy a new device compatible with its CDMA network as AT&T’s phones operate on a GSM 3G network. So switching to other cellular network would be costly for them who have Family Plan with AT&T; because the prospect of buying an entirely new iPhone is unappealing, even if they sell off the old phone.
We may see that the prospective carrier of iPhone would come up with smart marketing strategy, incentives to switch and more reliable 3G network to attract customers once their AT&T contracts expire. But analysts say, loss of current customers may not be immediate, but AT&T would lose them, slowly, but surely.
It is true that AT&T scored some credits for the massive amount of mobile data growth since the launch of the iPhone. But all of its efforts to upgrade its network won’t be enough when other networks would come to play.
Some other opinion regarding this deal say, if AT&T stays as the exclusive carrier of the iPhone for a few more years, you can bet that millions of Verizon, T-Mobile and Sprint customers would eventually cave and switch to the iPhone. If, on the other hand, it ends by the end of 2010, the incentive to switch to AT&T would go up in a puff of smoke.