09 January 2011

Finally, AT&T gets screwed

Rico says that, what with several of them in the 'family', it'll be nice to see some competition among iPhone carriers; maybe the cost will drop now. Shayndi Raice and Yukari Kane have the story in The Wall Street Journal:
Apple Inc.'s iPhone will make its way to Verizon Wireless stores around the end of the month, a person familiar with the matter said. The largest U.S. wireless carrier, based on the number of subscribers, will make the long-awaited announcement to carry the iPhone at an event in New York City, people familiar with the matter have said.
Apple has a track record of releasing phones between two and four weeks after it announces a new device. For example, the iPhone 4 was announced on 7 June this year and available in stores by 24 June. The earlier versions of the phone, like the 3GS and the 3G, followed a similar pattern. Analysts expect the phone to draw heavy interest, putting more competitive pressure on other U.S. carriers and rival handset makers.
The move will, for the first time, let U.S. consumers choose the network that carries their iPhone, and perhaps give them additional pricing options that could affect their monthly bills.
It will also upend the balance of power in the industry, ending Verizon rival AT&T Inc.'s exclusive hold on the device, and leaving smaller players like Sprint Nextel Corp. and T-Mobile USA facing two well-capitalized competitors offering the world's most popular smartphone.
The Verizon phone will be similar to the iPhone 4 but run on the carrier's CDMA technology, people familiar with the matter have said.
Verizon Wireless is set to release four other phones by the middle of 2011, including devices from Samsung Electronics Co., Motorola Mobility Holdings Inc., and HTC Corp. It will also release two tablets, the Motorola Xoom and the Samsung Galaxy Tab.
Verizon Wireless is a joint venture between Verizon Communications Inc. and Vodafone Group Plc.
Apple is moving to expand its carrier base in the U.S. at a time when it is facing increasing pressure from phones powered by rival Google Inc.'s operating system, called Android.
Google gives its software away, hoping to stake out space on mobile phones where it can sell ads and other services.
Android-based phones passed the iPhone in sales in the second quarter, according to research firm Gartner. The surge appeared to get to Apple Chief Executive Steve Jobs, who made a rare appearance on a conference call with analysts in October and criticized Android as fragmented, referring to the myriad ways the software appears on the many different phones that use it.
AT&T has had the iconic device to itself since its introduction in June 2007. Since then, the iPhone has fueled much of the carrier's subscriber growth and has given it a solid lead in smartphone customers. The arrangement between Apple and AT&T was groundbreaking at a time when carriers tightly controlled the appearance and function of their phones, and put Silicon Valley companies like Apple and Google in the wireless industry's driver's seat.
Apple feels it has had tremendous success through its exclusive relationship with AT&T, but it recognized that it needs to partner with Verizon to grow sales faster in the U.S., a person familiar with the matter said.
"It's a big boost for Apple," said Tim Ghriskey, chief investment officer of New York-based Solaris Asset Managmenet which counts Apple in its portfolio worth $2 billion. "It opens up a huge uninstalled base for them in this country."
Verizon Wireless fought its way back into the smartphone race last year by heavily promoting Google-powered phones made by companies like Motorola Mobility Holdings Inc. and HTC Corp.
Top Verizon executives have continued to meet regularly with their counterparts at Apple, however, and have long expressed interest in carrying the iPhone, which could help add to the carrier's base of 93 million subscribers. Toni Sacconaghi, an analyst at Sanford Bernstein, has estimated that Verizon could add more than 10 million U.S. iPhone customers.
"It's great news," said Michael Benkoski, 55 years old, who works at a technology leasing company in Chicago. "I've been waiting for it for two years."
iPhone users have long complained about dropped calls and poor service on AT&T's network, even as the carrier boosted spending to improve coverage. A Consumer Reports survey last month ranked Verizon's network as most reliable among the major carriers, and AT&T's as the worst. Analysts fear AT&T could see one to three million fewer new subscribers because of the Verizon iPhone. AT&T has been preparing for a loss of exclusivity, however. This summer, it made it easier for customers to upgrade to the new iPhone 4, in the process locking them into new two-year service contracts. The carrier says many are also on family or business plans, making it tricky to switch.
Colby Synesael, an analyst with investment bank Cowen and Co., said that "the loss of the iPhone is more of a headline risk than a financial impact." Smaller carriers like Sprint and T-Mobile could be harder hit, however. "This is the worst case scenario for the other carriers," said Roger Entner of Recon Analytics. "When Verizon comes out with the iPhone, there's only one carrier in the U.S. that will gain customers, and that's Verizon."
While Verizon's network is popularly perceived to be better than AT&T's, it has yet to be tested by the heavy volume of data use that accompanies the iPhone. The carrier has been strengthening and testing its network for months to avoid the public relations nightmare AT&T has suffered from, one person familiar has said. Verizon executives also point to their success handling laptop traffic and the data demands of a growing base of Android phones.
Analysts will be eager to know when other U.S. carriers might also get to carry the iPhone. They aree also waiting to see whether Apple will offer the CDMA iPhone to other CDMA operators around the world in countries such as in India and China.

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