AfterDawn: News

Apple should drop AT&T exclusivity, say analysts

A number of prominent analysts have recently noted that Apple should drop their AT&T iPhone exclusivity pact, and likely double their market share in the process.

Today, Morgan Stanley analyst Kathryn Huberty noted the same thing, and specifically cited the iPhone's dramatic market share growth in France (136 percent) after it became available non-exclusively.

"We expect Apple to broaden iPhone carrier distribution over the next two years and believe this opportunity is under-appreciated by the investment community," said her research note, via the AP.



Hunerty notes that Apple currently has 4 percent market share in the markets that make up 70 percent of all iPhone sales, its exclusive markets. If those pacts were to be dropped, Huberty expects market share to fly to 10 percent within two years.

In the US specifically, if the iPhone was to begin selling as a CDMA phone for Verizon, market share would jump to 12.2 percent from the current 5.

Written by: Andre Yoskowitz @ 5 Oct 2009 14:28

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• 8 comments

• handsom

  I'm a little unclear as to how the jump from 5% to 12.2% is being theoretically calculated, but I don't necessarily feel it's innacurate.
  
  Honestly, they've got a highly coveted product. It's been very exclusive for a few years now; they've probably about tapped out major sales from AT&T(Especially now that the pix messaging thing has been resolved), so their only way to jump a sales increase would be to add carriers.
  
  As a CDMA subscriber, I'd personally love to see a CDMA version come out, but I don't think it's coming any time soon. They'd have to re-design much of the internal tech of the phone, and that in turn means much of the OS as well. I'd be shocked to see a CDMA re-work of the iPhone any time in the near future. (Outside of the rumored 'nano' model)
  
  I hate to say it, but they might be better suited to work with other GSM carriers, they wouldn't have to recreate the phone, just work with carriers to use the existing hardware. They'd get some more customers with minimum investment.
  
  CDMA is unlikely, as architecture and design is moving towards change for 4g networks, which supposedly might be more compatible. We may be more likely to see a 4g version of the iPhone once Verizon gets things all set and ready.
  
  The article posts some interesting market perspective, but I don't believe those making the statements have considered the internal costs that a move to CDMA carriers would cost Apple. So, market perspective without technical understanding.

  5.10.2009 16:04 #1

• CG81

  Handsom,
  I used to agree with you about the CDMA, in fact I argued your point at one time a few months ago, but if you look at what is happening world wide, Apple has struck a deal with the second largest carrier in China who also uses CDMA (potentially 100m customers). That combined with the fact that they will be using a tri-band (GSM, CDMA, LTE) chip in these phones makes it far more likely that they will keep running the line and ship some our way for Verizon. Verizon is THE largest carrier so it would be dumb not to. Beyond that everyone complains about AT&T service where Verizon's is great (by the way, I hate the company, but not many will argue that they have bad service), so if they move the iPhone to Verizon people are happy, their stock goes through the roof and sales soar. Lastly, Verizon has stated that they are going to start rolling out 4G in Jan, far ahead of schedule, which is also when the contract with AT&T ends. As a business decision it just makes sense when you look at all of the details. Ok, and one more thing, they also have the FCC investigating them for the exclusive contract with AT&T, so this would get them off their back too. Just my two cents.

  5.10.2009 21:22 #2

• handsom

  Interesting, I'd heard that they were signing with a few different companies in different regions, but I had not read the CDMA bit specifically in china. This is particularly interesting, because someone could theoretically make a simple flash for that to adjust the language, if there isn't already a setting to do so.
  
  And hey, I'm not saying that Verizon doesn't have a fair number of interested users; but I am saying this:
  
  If a company can choose between getting 70 customers for no investment(Just supplying another GSM carrier with the phones), or getting 100 customers with a hefty investment (Because making a CDMA model IS a heavy investment), they're typically going to go the safe route and get the 70 first. They might go for the larger group later, after they've gotten the small group, but that's not usually an immediate thing. Companies make the easy buck first, and typically roll out more after they've made all they can with ease.
  
  Also, I'm curious about your source for the China CDMA bit, I'm going to be honest, I just ran a google search, and all that comes up on this is a lot of very loose rumor. This seems to branch out of an article originally posted by USA Today... An article which saw serious correction rather swiftly (corrected 04/28/09). It appears that a lot of folks have taken the original article as source and run with it, but it was corrected to state that a CDMA version is NOT in the works. Unfortunately, a lot of other tech and news websites(like this one) picked up the story within hours of original post, and many of them never picked up the correction, which makes a big difference. If you can post a news article on it that isn't derived in one way or another from the USAToday article, I'd be genuinely intrigued(Remember, I'm stuck with this %$&* CDMA limitation, too!)
  
  From a business perspective, CDMA is on it's way out. Verizon is moving towards the new LTE standard, which is the same thing that AT&T is moving towards. It seems somewhat likely that iPhone may appear in LTE form on Verizon first, since they'll beat AT&T by a year from the look of things. But Apple would be foolish to re-develop a phone designed for the 'high tech' crowd on a format that will be 'dated' in under a year. It doesn't make business sense.
  
  *IF* the china CDMA thing were true, I would agree with you much more, but checking the web, and the original source of this information, it's very clearly not.
  

  
  
  "Its not stupid, its advanced!" - The Almighty Tallest, Invader Zim

  5.10.2009 22:19 #3

• handsom

  Oh, one other addition, if you do a web search, you're going to have difficulty finding anything recent on the FCC investigating Apple and AT&T for anything other than rejecting Google Voice... Yeah, there was some talk about the legality of the contract in the first year on that phone, but high powered attorneys put that one to bed pretty quickly, and it hasn't been brought up in some time.
  
  I know I'm playing the devil's advocate hear, because I want you to be right; but a bit of research really leans very strongly the other way.
  

  
  
  "Its not stupid, its advanced!" - The Almighty Tallest, Invader Zim

  5.10.2009 22:31 #4

• DVDBack23

  Handsom, CG81 is correct. China Unicom is to begin selling the iPhone and they use WCDMA.
  
  Please check here:
  http://www.reuters.com/article/technolog...=technologyNews

  6.10.2009 00:57 #5

• handsom

  WCDMA is not the same as (not is it intercompatible with) CDMA.
  
  "In WCDMA systems the CDMA air interface is combined with GSM based networks." - http://www.tech-faq.com/wcdma.shtml
  
  It's not a true CDMA phone, WCDMA utilizes some ofthe same 3G technologies that CDMA does to get higher speeds of data transfer for things like media, web, etc; but WCDMA phones are not compatible with networks like verizon, due to their reliance on GSM.
  
  They are two entirely different technologies, for more info on WCDMA, and the differences between the two, I found this article to be very informative:
  
  http://en.wikipedia.org/wiki/WCDMA

  6.10.2009 02:08 #6

• DVDBack23

  Ahh very well, just read as well that Unicom sold their CDMA business to CT last year. Thanks Handsom, good read.

  6.10.2009 10:54 #7

• chrissd

  The problem that most have with the AT&T exclusivity, is that it doesn't look to be going away anytime soon. Heard a heap of rumors, some by well respected sites, that AT&T and Apple were/are in talks to continue their contract. When Verizon rolls out their 4G network, it'd make a lot of sense to drop the exclusivity. Network performance seems to be really dodgy from overload, putting the iPhone on another network would get a lot more users. The market share they calculate would be pretty close.
  
  And no, it wouldn't take very much to make the iPhone CDMA compatible. This is Apple we're talking about. =P Cost wouldn't be an issue. But it's Apple. No way it's going to happen. They build something and it's like that, stays like that, will be like that for the future. All according to their perfect design specs. =P

  12.10.2009 01:14 #8