Hey, AT&T's enough

TechNewsWorld.com has an article by Chris Maxcer about the continuing Apple deal with AT&T:

There are lot of big numbers floating around the Apple-focused blogosphere this week, and some of them have to do with Apple's stellar financial performance for the last quarter. Other big numbers mark a milestone: Apple's 1 billionth iPhone and iPod touch app download. Oh, and one more thing: Apple appears to be quite happy with AT&T.
Of course, Apple dominated not only the tech news world this week, but the business and financial worlds as well. The company in Cupertino posted excellent numbers: revenue of US$8.16 billion, a net quarterly profit of $1.21 billion, as compared to $7.51 billion and $1.05 billion, respectively, in the year-ago quarter.
Recession? What Recession?
"We are extremely pleased to report the best non-holiday quarter revenue and earnings in our history, noted Apple CFO Peter Oppenheimer. "Apple's financial condition remains very robust, with almost $29 billion in cash and marketable securities on our balance sheet. Looking ahead to the third fiscal quarter of 2009, we expect revenue in the range of about $7.7 billion to $7.9 billion and we expect diluted earnings per share in the range of about $0.95 to $1.00," he added.
In addition, Apple sold 2.2 million Macs for the quarter and is seeing strong demand for the iPod touch, with iPod market share still hovering over 70 percent in the U.S. The iPhone? It's in 81 countries.
Apple lovers, of course, were pleased with the results. "GO APPLE!" cheered Maclver on the MacRumors.com post on the subject. "Another blow out quarter. Seems the economy isn't affecting Apple much although Mac sales were down over 2Q 2008," added rdowns. Mac unit sales dipped 3 percent for the quarter.
As for the economy affecting sales, BRLawyer added, "Of course not, we are talking about the best-managed, strongest, and most resilient IT company in the world, even in a virtually bankrupt country going through its worst financial crisis ever." Then BRLawyer's exuberance really shone through: "As I said on many occasions, Apple is poised to become the most powerful corporation in the sector, and will soon overcome MS's market cap as it already did for puny PC makers such as Dell. MS IS DEAD. GO APPLE!"
In fact, the overall surprise at Apple's resilience is itself surprising, according to Frank Cioffi, editor and publisher of Apple Investor News. "What I found surprising was the constant sense of disbelief that Apple could do this again," he told MacNewsWorld. "A lot of analyst and media observers... I wouldn't say they were negative, but there was a sense that this would be the quarter that Apple would stumble— that the recession or depression we are in would catch up with Apple. For me, I think, in retrospect, we're going to look back at this quarter as the most important for Apple in the last ten years. Can you think of any company that has so successfully bucked the recessionary headwinds?" he asked. "Gross margins topped 36 percent when most analysts on the Street were thinking 30 to 32; the fact that Apple maintained the margin is significant," said Cioffi. "For all of Steve Ballmer's ranting about the 'Apple Tax,' people are willing to pay it. Why is that? If they are willing to pay that premium in the worst economic downturn since the depression ... wow," he added.
A Billion Apps ... and Just One Prize?
Okay, pretty much nobody seems to be surprised that Apple has served up one billion iPhone and iPod touch applications via its App Store. Apple hit five billion iTunes songs last summer, so what's a billion here or there? Of course, these are apps, and they're fairly new, and the billion file download milestone has come up fast. Naturally, there must be a contest, so what kind of prizes are we talking about?
"Download an app and you'll automatically get the chance to win a $10,000 iTunes Gift Card, an iPod touch, a Time Capsule, and a MacBook Pro," notes Apple's Web site. "Just go to the iTunes Store, browse the App Store, and download your best app yet."
Sounds cool, right? Well, don't count on being one of many winners, especially if your "entry"— in other words, the app you buy — is downloaded before or after the 1 billion mark.
"Well, according to the rules, only the billionth entry will win," wrote lotusfan, commenting on the Ars Technica post on the subject. Language lotusfan drew from the fine print on the page: "The prize will be awarded for the entry... sent immediately following the download of the 999,999,999th app."
"With the rules as stated, I don't even see the point of the standalone entries," added Catatonic.
So what gives? It seems Apple is only giving away a single prize to a single winner, but the language seems to imply that entering any time before there's close to one billion downloads actually constitutes an entry. Technically, it does. In reality, not so much. Sure, apps hold intrinsic value (which varies greatly depending on the app, of course)... but why just one winner? Didn't Apple just post record quarterly profit and boast that it had $29 billion in the bank?
Moving On to AT&T
There have been reports recently that AT&T has been trying to make sure it's iPhone exclusivity remains intact for a longer period of time. Meanwhile, Apple might be considering offering an iPhone to other carriers in the US, namely Sprint, T-Mobile, or Verizon . Clearly there are some potential customers out there who want iPhones but are locked into contracts with other carriers, or are averse to AT&T.
In the conference call presentation of Apple's quarterly financial report, longtime Apple analyst Gene Munster of Piper Jaffray asked why Apple is maintaining an exclusive relationship with AT&T. Tim Cook answered the question, noting that Apple views AT&T as a very good partner: "We believe that they're the best wireless provider in the US, and we are very happy to be doing business with them," he said. "They have done a very good job with iPhone, they've put the full force and weight of their company behind it, it's a major strategic thrust for them, and so we're very happy with the relationship that we have and do not have a plan to change it."
Wouldn't Apple want a piece of Verizon's pie, though? Munster asked about a "structural" reason for Apple to stick with AT&T, and technology, it turns out, gets close to the heart of the matter. "From a technology point of view, as you know, Verizon is on CDMA, and we've shown from the beginning of the iPhone to focus on one phone for the whole of the world. And when you do that, you really go down the GSM route, because CDMA is— doesn't really have a life to it after a point in time," Cook explained.
"I think Apple made a good choice to go with AT&T for the US," commented sflocal on the AppleInsider.com post on the subject. "Biggest GSM carrier in the US, which also allowed Apple to market the same hardware to other countries using GSM. Good move. Sprint/Verizon on the other hand won't be going anywhere outside the US so not much point to make separate hardware to satisfy them."
More specifically, "with CDMA, it is not ending life," Chris Hazelton, research director of mobile and wireless for The 451 Group, told MacNewsWorld. "What's happening is, Verizon, Sprint and AT&T are at 3G , and as they move to 4G (their fourth-generation network infrastructures), AT&T and Verizon are going to move to LTE. The big thing is that there's no surprise that AT&T and T-Mobile would evolve to LTE, it's that Verizon is switching from CDMA to LTE," Hazelton explained.
In addition, he said, Verizon is expected to be the first carrier to have a broadly deployed LTE network. "So, if Apple is wanting to offer an LTE phone, they could go with Verizon. It looks like AT&T is about a year behind; they are still improving and upgrading their 3G networks," he said.
So really, in order to deliver an iPhone on LTE first, which would provide faster data to the iPhone, Apple would have to go with Verizon in the US. However, from a technology standpoint, doing so would only gain Apple six to twelve months over AT&T's own LTE rollout. To complicate matters, the iPhone would still need to be backward-compatible with Verizon's networks.
"If Apple decided to go to Verizon, to be an early provider, that device would also need to be CDMA as well," Hazelton said, noting that it would require several different components. "It's an option open to Apple, but I don't see it happening. With AT&T continuing to invest in its network, expanding the footprint and bandwidth... right now, it's pretty good," he added.
What About T-Mobile?
Of course, some iPhone owners have already unlocked their iPhones to work with T-Mobile services, so chipsets aren't an issue there. "Wanting to be GSM-only only doesn't explain why Apple hasn't made a deal with T-Mobile. In cities like Seattle, service would be better. I know people with jailbroken iPhones who use T-Mobile because even with a data plan it costs them less. And a lot of us aren't on the go enough to justify $70 or more a month for AT&T's pricey package," commented Inkling on AppleInsider.
Good point. The plot is thickening, however. Although Palm will debut its upcoming Pre smartphone with Sprint, AT&T may, at some point, start selling the Pre as well. While the Pre hasn't been made available yet, early demos suggest it could be a decent competitor to the iPhone. If that's the case, will Apple simply shrug and continue doing its thing? Or will it make some business moves on its own?
If the AT&T-selling-Palm-Pre rumors are true, "that could make Apple a bit unnerved," Ken Dulaney, vice president of research at Gartner, told MacNewsWorld.
Somehow, though, coming on the heels of Apple's excellent quarter, it's hard to imagine the Apple heads in Cupertino worrying too much. Still, at least some smidgen of hope for carrier choice remains, if not in the near future, at least in a couple of years.

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