John Paczkowski

Recent Posts by John Paczkowski

Apple to End AT&T iPhone Exclusivity Within a Year?

att_iphoneAnother point worth pulling out from Piper Jaffray analyst Gene Munster’s recent research note about Apple, this one regarding AT&T’s iPhone-exclusivity deal: Munster doesn’t see it lasting much beyond this year. Apple (AAPL) is slowly transitioning the countries in which it sells the iPhone to a multicarrier model and the United States is at the top of its list.

“We expect Apple to add new iPhone carriers in the U.S. within the next year (likely with a new product launch next summer), Munster writes. “By way of example, for various reasons the company moved from an exclusive relationship with French wireless carrier Orange to a multi-carrier model. In France, the company now enjoys dramatically higher market share (in the 40% range vs. about 15% in ROW) than in countries with exclusive carrier agreements (such as AT&T in the U.S. where the iPhone has market share in the mid-teens). We believe Apple is seeing the increased unit sell-through more than offset the slightly (~10%) deteriorated economics per unit involved in non-exclusive agreements.”

If Munster’s prediction proves true, it will undoubtedly be welcomed by iPhone owners–nearly a third of whom listed AT&T as the feature they dislike most in the iPhone in a recent ChangeWave survey. But it will be ugly news for AT&T (T), which could suffer some serious subscriber defections if the company loses its iPhone-exclusivity deal–particularly if Apple signs on Verizon (VZ) as a second carrier. As Pali Research recently noted:

“As the iPhone exclusivity period rolls off between AT&T Wireless and Apple, a material number of AT&T customers will flock to Verizon’s superior network. We estimate that nearly a third of AT&T’s post-paid customers are being retained by AT&T primarily because of the iPhone exclusivity.”


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik