A major decision Apple made for the U.S. iPhone launch was selecting AT&T as its exclusive carrier. It’s not that exclusive deals are unusual — HTC’s Android G1 is exclusive to T-Mobile, the BlackBerry Storm is offered only on Verizon, and Sprint has dibs on the upcoming Palm Pre — it’s just that most phones weren’t as hyped, or seen as so radically different, as the iPhone. Everything about the iPhone was scrutinized in minute detail, so its availability on a single carrier was more publicized, and even politicized.
At the iPhone’s launch, Apple’s deal with AT&T was rumored to be five years, though later reports have pegged next year as the end of the agreement.
Why would Apple enter into such a deal for three or more years? More specifically, with Verizon running neck and neck with AT&T for U.S. market share, why would Apple deliberately limit the penetration of their product into half the U.S. market? Should this continue, or will Apple be compelled to change in the future? Clearly, AT&T benefits from the exclusivity, and Verizon would like its rival to lose the advantage. The question for Apple is when will its benefits from the AT&T relationship be outweighed by sales gains from adding AT&T’s chief rival?
I am not reluctant to spend cash on internet connected devices, but have been unable to do so with my decade long wireless provider, Verizon. ^^^I don’t want to pay monthly for a data plan on an inferior phone.^^^ Last week I tired of waiting an bought a Verizon MiFi, and I will provide my own devices: iPod Touch, Dell Mini 9 netbook, and more to come.
@texasyellowdog – how do you like your MiFi? I have been wondering how wireless carriers will answer the puzzle of multiple devices/one mobile broadband connection – MiFi seems a decent first step, but its only really a first step.
The MiFi has been perfect so far. I only use about 7mb/day; probably because my ipod touch is my primary device, and the built in apps for the NYT and WSJ along with Google reader have light bandwidth requirements. If I were using a lot of full web pages, it might be a lot more. In a -90dbm EVDO (3 bar) reception area I get 600kb download, but in a -70 (5 bar) area I can get 1.2mb download. Other reports in Dallas claim 2mb download — my towers may be backhaul limited. If you haven’t seen one of these in person, you can not believe how small and lightweight they are. It’s half the weight and volume of the ipod touch. I just leave in in my pocket. There may be a next step, maybe multi carrier, but it would be a lot to ask of your phone to power a wireless router also.
Colin,
I agree the App Store is absolutely critical, and ^^^I wonder if Verizon would be so foolish as to want the iPhone but still want to push BREW apps.^^^ In any case, I’m sure any attempt to change the iPhone would be refused by Apple.
Kevin,
The problem with waiting for LTE is two-fold: 1) Despite talk about it being 12-18 months away, who are we kidding? Look how long EDGE held out against 3G. I think widespread use of LTE is still years off, and am not sure Apple can (or should) wait that long. 2) Even when in “widespread” use, won’t the iPhone have to fallback to the older network when 4G is not available? It may be that CDMA capability will be necessary anyway. Apple will probably introduce a CDMA variant in China, so I believe they’re coming to the realization that it’s time to diversify.
^^^I suspect AT&T moved the timetable up today on their HSPA network upgrade mainly to keep Apple happy^^^ with the “signal” part of the tripod. As you said very well, Apple makes the phone, which are the hardware and software legs. AT&T has to step up the signal part, so they’re spending $18b to do just that. My gut says Apple stays with AT&T in the US until we see LTE deployments.
I think Apple’s App Store may be the crucial — and perhaps insurmountable — hurdle in launching a VZW iPhone. As closed and protected as the carrier continues to be, it’s tough to envision Verizon supporting an app-distribution system that leaves it cut out of download revenues.