During its quarterly reports, AT&T stated that it felt losing iPhone exclusivity wouldn’t have a negative impact on the company and its earnings. If I was a betting man, I would say that executives at AT&T have some sort of group delusion going on.
While the theory is pretty outrageous at first glance, it makes more sense when you realize they are talking about only at the immediate time of the end of exclusivity. Lets break down some of the reason listed in the company’s 10-Q quarterly report:
[…] more than 80 percent of our postpaid subscribers are on Family Talk Plans and business plans that would involve moving the whole group to a new carrier. Moreover, the vast majority of our postpaid subscribers (including Family Talk Plan users) are allowed to accumulate unused minutes (known as rollover minutes), a feature that is currently not offered by other major post-paid carriers in the United States, and users would lose these minutes if they switched carriers.
This is a somewhat valid reason as the idea of moving a whole group to another carrier can be a hassle. Saying they would lose their unused rollover minutes is nice and all, but I doubt any customer would be swayed to stay just because of that. We will give them a point on the group plans, however.
As is common in the industry, most of our phones are designed to work only with our wireless technology, requiring customers who desire to move to a new carrier with a different technology to purchase a new device. In addition, many of our handsets would not work or would lose some functionality if they were used on another carrier’s network (even a carrier using GSM technology), requiring the customer to acquire another handset. Although exclusivity arrangements are important to us, such arrangements may not provide a competitive advantage over time, as the industry continues to introduce new devices and services. Also, while the expiration of any of our current exclusivity arrangements could increase churn and reduce postpaid customer additions, we do not expect any such terminations to have a material negative impact on our Wireless segment income, consolidated operating margin or our cash from operations.
This is where the arguments fall apart. Yes, lets say someone just bought an iPhone 4 on a two year contract, and Apple surprisingly announces tomorrow you can finally get the iPhone on Verizon. It is doubtful many people would jump ship immediately because of termination fees and the idea of buying another iPhone so quickly. However, flash forward to the release of the iPhone 6 when those two year contracts are up. Carriers usually give incentives to gain new customers, so you don’t think Verizon won’t be throwing everything but the kitchen sink to lure them over?
While some have said Apple will never leave this pact with AT&T, growth of sales dictate that it must. In the last quarter, 3.2 million iPhones were activated with AT&T, but nearly three-quarters of those were upgrades from previous models; this surely indicates that growth is slowing. If Apple has any hopes of capturing new customers, it will have to increase the number of carriers because pretty much everyone that is willing to go with AT&T already has. Do you really think Apple CEO Steve Jobs will be content to just keep upgrading phones and not adding new users? Highly doubtful.
AT&T is right, it won’t lose everyone, but I would be willing to say it will lose a healthy chunk.
What say you? Is AT&T doomed if Apple adds more carriers?
Add magic to your living space with these string lights
String lights add personality and soft light to your living space. Here are some of the best.
Disguise your little one with the help of a themed costume
From avocado halves to hoppy bunnies, costumes speak to every child's unique spirit. And we've collected our favorite options.
The Galaxy S20 Ultra's Space Zoom camera is amazing and a bit creepy
The Galaxy S20 Ultra supports up to 100X zoom, which Samsung calls Space Zoom, but is it any good? Can a phone really product usable photos at 100x zoom? We've got our Galaxy S20 Ultra already so join us to find out!
Find the right wall charger for your new iPhone 12
The new iPhone will not come with a wall charger in the box. If you are looking to buy the phone you will need to buy a charger as well. We've got you covered.