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Apple iPhone AT&T Wireless monogamy should end


It is a complex lens with 5 dimensions that determines the true value of the doomed-from-the-start monogamous union of Apple’s iPhone with AT&T Wireless. There’s just too much energy in these 2 dynamos for this celebrity marriage to last, and significantly more money in the split than Madonna and Guy Ritchie’s, and a ripple effect for businesses and consumers that measures in billions, not paltry millions.

First Dimension: AT&T Wireless. It was and is a brilliant deal that AT&T Wireless arranged in gaining exclusive rights to the iPhone. At the time they were the #1 wireless provider (undoubtedly the key component to their marketing strategy) and losing precious momentum to Verizon Wireless. They needed something stronger than the caffeine or cocaine of branding to fight their rival who was winning the street fights of true performance (completed calls and data up/downloads) and supportive branding messages. The iPhone brought phenomenally successful saving grace with all the glitz and sex appeal that must have exceeded ridiculously high bureaucratic expectations. Probably not a good time to mention the hiccups in some service areas, notably New York, due to overtaxed cell towers.


Second Dimension: Apple has benefited too from the marriage. Hard to speculate where they’ve gained and where it’s a wash. Certainly they’ve sold less iPhones by the arrangement, but profit margin is wisely primary, and is causing envy among rivals. To that end, they’ve only needed to support AT&T’s technology and go-to-market strategies in the US, leaving much room for lessons learned prior to rolling out in other markets like China. That’s just the controls and lessons learned on the hardware side. On the software side there’s the App Store. Friend, this is the bounty where they get 30% of all apps sold. Over a billion served in the US, and, sure some are free or only a buck, but many are $5, $10, and one is $1000 that serves a very useful purpose. Estimates are over $1B, and consider that even piracy is estimated at $450M.


Third Dimension: Users. For users the tide has turned and surf’s up, baby! Dan Wooley of Compassion International, in Haiti was caught in the earthquake with his friend, and he sustained head and other injuries, which he used his iPhone to gain information enabling him to diagnose and render first aid while he waited 11 days for rescue, saving his life. This extreme event, noteworthy and dramatic in its life-saving success story, only underscores the life changing differences the iPhone has made on individuals and culture. Since the iPhone has launched it is only a coincidence that wireless minutes surpassed wireline in minutes of use (MOU’s). But look at the battle of the plans including introduction, finally, among the major carriers for all-you-can-eat nationwide voice and data plans and prompt price wars for those.  Even the wireline carriers have woken up, but not enough to lower prices.


Fourth Dimension: Developers. Psssst Hey Buddy…wanna be an instant millionaire? Here’s your shot. Learn how to write code yourself with free lessons on the web (the nuances can cause laborious rewrites even for pros) or hire it out. Take your can’t miss idea and call around and get development estimates and roll the dice. Seems everybody knows somebody who knows somebody who’s making $1000 a day with their app. The reality is that it’s a growth industry in a down economy. So the odds are more like Blackjack where you can apply some skills than just dumb Roulette luck. Finally, Business apps (biz efficiency) are beginning to outpace Consumer apps (entertainment and personal efficiency), as experts originally believed would occur.

The Fifth dimension. The iPhone renders itself THE phone to beat and the challenge is being accepted by RIM, Palm, Motorola, Nokia and all the legacy makers of phones and Watch It! Google!! Bring it! Bring your phones, your app stores, your genius. The competition was beautifully inevitable, even slow by technology standards. Hats off to Apple for its leadership! The Droid is showing significant strength among smart phone developers, so go Google!


This success must be commended but not sustained. Its success has matured, having had a relatively long run in its course of exclusivity but if sustained will drag down both Apple and AT&T Wireless because the competition has had a chance to catch up, or if you think it hasn’t, the iPhone has peaked and another multi-year contractual obligation will be compared to NBC’s mistake in their timing of contracts with Jay Leno and Conan O’Brien written in 2004 for 2010. Even enforcing the restricted iPhone has been problematic for AT&T Wireless with high estimates of imported and unlocked SIM cards enabling use on another carrier. The downside list gets long quick.


Unfortunately this could be very bad news for AT&T Wireless, as its image is hurt by performance failures, and it needs another exclusive, “gotcha” iPhone-like boost or a merger to gain and retain customers. Good luck with that.


And the future should reside on VoIP using a data plan on your cell phone.  You know its good when the carriers begin lobbying to prevent it.


www.att.com

www.verizon.com

www.apple.com

www.npr.com (Dan Wooley story)

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