Apple and AT&T: Who’s Exploiting Whom?

Jim from Cincinatti - Thanks for your statistically relevant comment. I am sure you represent the greater cell phone market.

I think everyones forgetting that AT&T has less than 2 years on their contract with Apple. After that, i fully expect the iPhone to be offered with other carriers.
Now how many customers will start switching to Verizon when/if they offer the iPhone? How many are willing not to switch to AT&T now and wait for the iPhone to improve and be offered with other carriers in the future?

The iPhone will bring in millions of new AT&T customers and millions of new Mac Users.

Both AT&T and Apple are laughing all the way to the bank. The relationship is profitable for them both.

Apple’s customers are generally fanatically love their Apple products. Because of this, they naturally sell Apple’s products in conversation with others. This brings in more customers to Apple.

The iPhone attracts users who are fed up with other cell phones, just as Steve Jobs predicted.

Now with the new SDK in January, the iPhone will soon take over from Blackberry and Palm and Windows Mobile smartphones.

Methinks thou art too melodramatic.

Since when has Apple warranted the nefarious undertones ascribed to it in your writing?

Apple, believe it or not, is one of the least exploitive companies on the planet. Shrewd, yes, exploitive no. Evil iBricking notwithstanding.

Just an observation: it’s become trendy lately to malign the company as, for example, ‘the new Microsoft’, etc. It’s just plain wrong.

I realize it may lead you to believe that the article is more compelling if you cast the Apple/ATT relationship as exploitive, but it’s gratuitous at best to do so.

I think a lot of people are wrong in regard to early termination of a contract. If you want an iPhone now, why wouldn’t you pay 150 dollars to terminate your contract with your current provider. Many people that use services such as text messaging, internet, picture messaging and so on would rather get the iphone now and it will cost them extra 150 bucks, its not even days work. You don’t go out to dinner twice and there you go. Besides time is money, so why waste your time to get what you really want. Especially since the product you acquire will make you more productive and efficient. You will probably get your money back in few months if not sooner.

By the way, I’m still on T-mobile with my crappy RAZR 2. Just waiting for it to expire. Often been tempted to just go ahead and terminate, especially whenever I travel (and I do a lot).

Marc Zeedar at macopinion.com has an interesting series (yes, just an anecdote) of being on the road with just iPhone and no laptop.

I dunno that switching in the middle of a two year contract with T-Mobile was a dumb idea. My family and I found it easy to dump our T-Mobile products (an MDA, Blackberry, and three Sidekicks) in favor of Apple’s iPhone.

Yes, having to pay $1000 to terminate our contracts was a downside; paying it, however, was easy to swallow considering the ease of use we’re experiencing with our iPhones.

Earlier this year we dumped our windows boxes in favor of an iMac, three MacBooks, and a MacBook Pro. Even though the Macs were more expensive than some of the windows boxes we looked at it was a no-brainer making the switch.

We dumped T-Mobile because they did a very poor job of integrating their products with our Macs. Now that we have our iPhones everything just works.

I’m wondering if other new Mac users will be sharing our experience over the next few months. What happens when they discover that their T-Mobile, Verizon, and other phones are causing too much friction in their digital lives?

I do want to point out that the Jan 2007 ChangeWave survey occurred after iPhone was introduced. So Oct’s 23% is still 9% above what is was before iPhone was introduced. And Verizon’s 28% before has only rebounded to 21%.

So I think Todd is wrong. The 28% and 30% were from a backlog of all the people with contracts expiring in the first 6 months of 2007, and just waiting for iPhone to come.

When PED states things correctly, there’s no reason to correct him.

I can think of several things to criticize/bash Apple for, but PED hasn’t written about any of them. If he did and used factual evidence to do so, I’d support him.

ex ped: Several things? You’ve got my e-mail address, Mark. Feel free to drop me a line. –Philip Elmer-DeWitt

The article suggests that anybody that was going to switch to the iPhone gas done it already. How many people are locked into another wireless carrier and are just waiting for their contract to run out so they can switch.

There has been so much talk about the dreaded two year contract with AT&T. I had no idea that AT&T was the only wireless carrier on the planet that makes you sign a a two year contract with them when you sign up. Just kidding, pretty much all of them except maybe one company makes you sign up for two years.

Anybody that was going to buy an iPhone has done so already?
It really doesn’t matter what the “experts” think because nobody knows what is going through the minds of millions of cell phone users but themselves.

If iPhone sales go flat over the next quarter then we will know that the “experts” were right. Since the “experts” are wrong 99% of the time, my money us on Applesince they keep proving the “experts” wrong quarter after quarter.

1. iPhone users bring non-iPhone users to AT&T in family plans.

2. Nobody would be dumb enough to switch in the middle of a two-year contract (with TMobile, Verizon etc). Thus, we should continue to see switches for the next 6 to 7 quarters, especially when Apple regularly update the iPhone.

3. In addition to getting switches from other phone providers, iPhone also prevented some switches from AT&T to other companies.
4. That survey was pretty much pointless, since it is not a random sample survey, and the membership (Changewave Alliance) is limited to techies.

That’s why the NET gain is 2M, while there were only 1.1M iPhone activations.

We will continue to see this until at least 2009.

That sample group is of early adopters by definition - if they are planning to move to att it maybe because they got the iPhone already, but that is not necessarily predictive of a larger audience. I think the market for iPhone is much larger than the smart phone market, its any consumer really.

AT&T wireless doesn’t have subscribers, only “victims”. Why anyone would stay with them any longer than they had to, I can’t imagine.

Andy (recent ex long-term AT&T wireless customer, who was asked to restart a whole new 2 year contract when AT&T made a forced network change )

1.2 million postpaid + 200K prepaid + 600K wholesale (i.e. Tracfone) = 2 million net adds.

Not that impressive for AT&T Wireless.

And to think…Apple’s board fired this guy once before!

only 1.2 mill were post pay, 800,000 were pre pay subscribers

Lol, but then you must also consider Verizon’s new phones.

The phones they are rolling out in November are pretty nice, and they’re on 3G.

e.g. Take a look at the LG Voyager, it’ a touch screen phone like the iPhone with a slide out keypad for those people who don’t have needle tip fingers when trying to type a email.

So, all you people who only take into account how wonderful the iPhone is and how much customers it will bring to AT&T are not considering the fact that Verion is responding to the situation.

Mr. DeWitt your reporting includes two opposites. In one sentence you quote Jaffray as saying that they believe that the number of subscribers peaked in July. In another statement you suggest a 1.8M per quarter rate of subscriptions. I hardly believe that that number is sustainable. Especially as the number of people continue to unlock their phones. I wouldn’t be surprised if the next quarterly numbers for these companies show a even bigger divergence between sold units and new subscribers. And Apple is hedging its bets by allowing 3rd party software on the iPhone that may soon include calls via internet. Where would that leave AT&T when people opt out of their contract prematurely?

ex ped: The two statements do seem to pull in different directions, but they could also both be correct. For the record, that poll (it’s from ChangeWave, by the way, not Piper Jaffray) showed what seemed to be a peak in the number of people who said they were planning to switch to AT&T. A lot of things could change those plans: another price cut, a new model, a 3G iPhone… The 1.8 million figure take the current rate of iPhone sales and assumes they continue unchanged. Again, a lot of things could affect that figure. A new model or a price cut could boost sales. Competition or market saturation could slow them. –Philip Elmer-DeWitt

“iPhone was clearly a factor in the phone company’s net gain of 2 million wireless subscribers”

Listen up to all wireless carriers around the world!

Apple iPhones will boost your bottom line. So, jump on board!!!

More negotiating power for Steve Jobs and Co.

Based on anecdotal evidence, it appears there is a huge overhang of people waiting for the 3G iPhones to come out, at which time they will switch to AT&T. I’ve been with Verizon for many years. As soon as the new iPhones are out, I’m buying three and my family is going to AT&T (I expect my brother’s and sister’s families will follow - another 10 people). I can’t wait to tell Verizon to kiss my — with its ridiculously rigid, consumer unfriendly system. I seriously question the chart and believe that the real boom in iPhone sales will come and continue after the new iPhones are out. Increased Mac sales will follow.

It takes more that a group of parts to create an iPhone, iPod, or Mac. It also takes software, which must be maintained.

The iPhone’s software costs the company money to create and maintain. The initial release even cost the Mac OS X team a rather large delay as people were moved from one project to the other.

It’s nice to put a number to the phone, but it must include the cost of research and development.

It appears that Mr.Steve Jobs was listening to Dr. Eric Schmidt, CEO of Google in the Board Room. ” A hit on every click”

Now where are all the posters who like to rant that P.E.D. is just an Apple basher? I guess they can’t find anything negative in this story, so they stay away.
Anyway, seems like Jobs & Co. can come up with endless ways to make money. High hardware margins and give the services away (+/-), or lower hardware margins and make the big profits on the backside. Not many companies can work multiple angles the way Apple can. Makes you wonder what they will do for an encore?

How many people did Alliance poll? That chart is pointless if it’s less then 50,000 people.

It’s kinda of like when someone polled 10 people and said Zomg iTunes store lost 70% sales. Only to have iTunes report 1 billion songs sold a week later.

—

ex ped: That chart comes out of a ChangeWave poll of its 11,000 so-called “strategically positioned experts.” The size of the subset that responded to this particular query is not indicated, but it’s probably more than 10. Here’s the link to the original report:

http://www.changewave.com/freecontent/2007/10/alliance-102207-AppleDoesntDisappoint.html

– Philip Elmer-DeWitt

We swithched five lines to AT&T but only two of them are iPhones. We would not have switched if not for the iPhones. Suggest you reconsider your math since iPhone users are bringing along non-iPhone users.