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Why AT&T Wants To Keep the iPhone Away From Verizon
Hugh Pickens writes "Saul Hansell of the NY Times has an interesting post analyzing AT&T's earnings report and highlighting the enormous stakes involved in the renewal of its exclusive contract to distribute Apple's iPhone in the United States. Hansell does some rough calculations: 'If the average iPhone customer brings in $90 a month, or $1,080 a year in revenue, and the operating profit margin stays constant at 26 percent, that means an iPhone customer represents at least $561 in operating profit over a two-year contract,' says Hansell. 'Put another way, if the company gets 2.5 million new customers a year because of its iPhone exclusivity, the deal represents at least $700 million a year in operating profits — profits that it could lose if Verizon sold the iPhone, too.' With those sort of numbers, AT&T has every reason to make Apple an offer it can't refuse to keep its exclusive deal for another few years. Of course, the incentives for Verizon are presumably the mirror image, so expect Verizon to come to Cupertino, checkbook in hand, to see what sort of deal they can make. 'The benefit of somewhat more iPhone sales from wide distribution is likely to be swamped by a huge bid from AT&T to keep exclusivity, and an equally high bid from Verizon to win some (or maybe even all) of the business for itself.'"
What this means is that after the bidding war that will ensue when Apple's contract with AT&T runs out, Apple will end up getting the bulk of the profits.
The cake is a pie
They might actually have to deliver that iPhone you see in the commercials. I'd love to trade with THAT iPhone but if they used mine in the commercials the commercial would have to end before it brought Slashdot up on the edge network...
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
You have some breathing room. It will take Verizon at least a year to figure out how to disable all of the iPhone's features so their customers have to buy them back one at a time.
I thought Verizon couldn't use the iPhone because it's GSM and Verizon uses CDMA. There isn't a CDMA version marketed anywhere in the world, they're all GSM. The only options in the US are AT&T and T-Mobile, any bid from any of the other companies would pretty much require them to front the cost of making a CDMA version of the phone since it'd only sell in the US.
I would personally like to see the iPhone available on other carriers, but at least for now this doesn't look likely as Tim Cook has stated that he is happy staying with AT&T and GSM technology: http://www.appleinsider.com/articles/09/04/22/apple_happy_with_att_indicates_no_plans_for_cdma_iphone.html
Verizon rejected the iPhone in the beginning, and they will do it again for the same reason: they want control over their network. They don't want to become just a dumb pipe, because then they are a commodity. Apple having complete control over the iPhone sets a dangerous precedent, it was the first time a phone maker had so much control.
From my perspective the commoditization of the networks can't happen soon enough. The network maintainers SHOULD be separated from the service providers, and the service providers should lease the network from the maintainers, like Virgin Mobile does now. This will increase competition, and be the best for the customer. The same thing should happen with internet service.
Qxe4
Sounds a lot like....
Brett
just like with computers, apple wants to make only minor variations of a model. for the iphone it's how much storage you want. with their computers it's only a few minor variations as well.
more choices means more expensive to produce, more testing, etc. Less profits due to higher costs.
and with CDMA, why make a phone for a dying technology?
A Verizon iPhone would be in the best interest of Apple, even if they had to give up some profits. Why?
1) AT&T's network Sucks. I have heard many complaints that the iPhone is wonderful -- at everything but being a plain cellphone.
2) AT&T's customer service sucks. DNA from a big telco. Monopoly mindset. Nuff said!
3) Mindshare is king. If there were a Verizon iPhone, there would be more Apple iPhone mindshare. I hated to leave Verizon's better network and service for AT&T's suckyness, but I did it anyways. Lower that barrier, and many more people like me would have an iPhone. In the long run mindshare = more profits!
that has been manipulating the market and the public for years. Sadly, many consumers have bought into an elitist, exclusionary scheme to milk the world, all so a few people can live like kings.
Personally, I believe Apple never would have been successfully in a free and open market. We citizens tragically have let the greedy overrun the ethics and principles that America was built upon and should stand for. Sadly, we've become tools of the overly-affluent and power-mad.
2) AT&T's customer service sucks. DNA from a big telco. Monopoly mindset. Nuff said!
Because Verizon (nee Bell Atlantic) is so much less of a big telco then the current AT&T (nee Southwest Bell)? Both are spinoffs of Ma Bell who gobbled up as many of their smaller siblings as the could.
That said, competition is a Good Thing.
A Verizon iPhone would be in the best interest of Apple, even if they had to give up some profits. Why?
1) AT&T's network Sucks. I have heard many complaints that the iPhone is wonderful -- at everything but being a plain cellphone.
2) AT&T's customer service sucks. DNA from a big telco. Monopoly mindset. Nuff said!
3) Mindshare is king. If there were a Verizon iPhone, there would be more Apple iPhone mindshare. I hated to leave Verizon's better network and service for AT&T's suckyness, but I did it anyways. Lower that barrier, and many more people like me would have an iPhone. In the long run mindshare = more profits!
Experiences with cell phone companies are so varied, it's impossible to draw any conclusions approaching 1) or 2)... if anything, all you can come up with is "All cell phone companies suck."
For every "AT&T's network sucks" you'll have a "Verizon's network sucks", and the same for customer service.
As an example, my wife and I both defected from Verizon. I've been with AT&T for 6-7 years, and her since the iPhone 3G launched. She left Verizon because of several experiences with rude customer service, and spotty coverage.
This comment is rated Funny. I've reread this twice, but I still don't understand the joke. Can someone explain it to me please?
Switching from a GSM phone to a CDMA phone is simple, ... on the hardware side it's a matter of swapping out the modem.
Ring Ring!
It's for you!
It's analog radio engineers, everywhere, saying they want you to come over for a... a party. Yes, a party. To celebrate the ease of switching out radios.
I think I hear the FCC in the background gathering pitchforks too. Not quite sure what the intent is there.
"There is more worth loving than we have strength to love." - Brian Jay Stanley