Will AT&T maintain its exclusivity with the Apple iPhone?

Posted Apr 15th 2009 4:40PM by Brian White
Filed under: Deals, Apple Inc (AAPL), AT and T (T)

AT&T Inc.'s (NYSE: T) decision to partner with Apple, Inc.'s (NASDAQ: AAPL) iPhone back in the summer of 2007 was one of the best decisions the company has made in a decade. Not only did that single move bring millions of customers to the wireless carrier in recent years, it has kept them there (for at least two years per the iPhone service contract) and will keep on keeping them there. That is, unless the iPhone comes to another wireless company in the U.S.

The exclusivity agreement between AT&T and Apple expires in 2010, and that leaves Apple open to shop the iPhone around to any carrier. Sure, AT&T is trying to extend the deal until 2011, but if the iPhone were offered by any other carrier as more and more AT&T iPhone customers near the end of their contracts, who knows -- the iPhone phenomenon could shift somewhere else.

I highly doubt most iPhone customers are tied to AT&T -- they are tied to the iPhone (and its AT&T exclusivity). It's what AT&T has probably feared for a while -- its network is a commodity (all cellphone service is in 2009 for the most part). In the IT world, one truism holds here: its the software (iPhone) that makes the customer, not the hardware (AT&T service). If AT&T does lose iPhone exclusivity, look for customers to flock to wherever the iPhone (and its most updated version) is sold -- and that would crimp AT&T's share price severely if it started bleeding even a small amount of customers to the competition.

Tags: AAPL, Apple, ATT, inthenews, iPhone, iPhone exclusivity, IphoneExclusivity

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Reader Comments (Page 1 of 1)

4-15-2009 @ 9:19PM

TxdoHawk said...

Unfortunately for AT&T, Apple is very, very aware of this. It'll be interesting to see what comes out of this...Apple can pretty much set the contract price. If AT&T says no, every other carrier will rush to the company's table looking to make a deal. Even if Apple refuses to let carriers in on much of the App Store proceeds or hardware profits, you're talking a lot of customers coming to your network and paying for expensive smartphone plans. That's big.

4-15-2009 @ 10:55PM

Beltway Greg said...

Beltway Greg says that exit visas are imminent. Makes no sense to stay tethered to one carrier. It made sense early in the game in case the IPhone didn't sell well or perhaps it didn't work as promised then there would've been fewer disgruntled customers and phones to fix. Niche hood has served Apple well. Time to take on the world. And you know me, daddy likes that underlying bid.