AT&T and the Verizon iPhone

This article is a quick teaser for our upcoming in-depth analysis of the effect of losing the iPhone exclusivity on AT&T.

Looking back, it is clear that AT&T Mobility had won a major victory in betting on Apple’s iPhone. Apple’s earlier attempt to enter the cell phone market through alliance with Motorola had failed miserably (see the Motorola ROKR,) so the risk to AT&T was high, but it paid off. Their alliance with Apple has proven to be a splendid success and a boon for both companies. Apple blew wide open the doors of the smartphone market and became one of the major players in the mobile handset business. At the same time, not only has AT&T been increasing its subscriber base at a clip of about 10% a year in a saturated mobile telecom market, it significantly increased its revenue per customer through the sale of the expensive data plans that accompany the iPhone. But now, with the pending Verizon iPhone, AT&T’s party seems to be coming to an end.

AT&T’s iPhone exclusivity provided it with a great differentiator against its competition. For more than a year, AT&T played in the field alone. And even after Android devices were introduced, the iPhone remained a formidable differentiator.

The questions here is, as that differentiator goes away, can AT&T still maintain an edge in the market? The answer here is a simple no. The company cannot differentiate itself on the reliability of its service: the coverage is well behind that of Verizon and they’re still in the early stages of implementation of the 4G technology, well behind Verizon, T-Mobile and Sprint. There is no competing on price either: AT&T’s limited data plan is more expensive than everyone else’s. Finally, customer satisfaction ratings bring the grim news that competing on service is not an option: the company’s ratings are at the bottom of the pack.

While an exodus of iPhone customers is unlikely thanks to contractual obligations, AT&T will find itself in the precarious situation of slowly bleeding customers and revenue. The worse parts is there’s probably no much they can do about it.

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One Response to AT&T and the Verizon iPhone

  1. Thanks I finally came to a website where the webmaster knows what they’re talking about. Do you know how many results are in Google when I search.. too many! It’s so irritating having to go through page after page after page, wasting my day away with thousands of owners just copying eachother’s articles… bah. Anyway, thanks for the information anyway, much obliged.

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