No one can deny the business sense that AT&T used when it locked up the iPhone from Apple as an exclusive back in 2007 when the phone first debuted. The iPhone has helped AT&T grow significantly since it debuted.
According to AT&T CEO Randall Stephenson, the partnership with Apple will inevitably end and ultimately the only differentiator between the wireless providers in America will be network quality. The exclusive agreement between Apple and AT&T is believed to end next year.
In Europe, O2 is facing the same problem as AT&T with its exclusive period ending. Apple is allowing O2 to keep the exclusive on the iPhone 3GS in the UK while opening the iPhone 3G up to other carriers. Reuters reports that AT&T added 1.4 million new subscribers in the second quarter and had more than 2.4 million iPhone activation during the quarter.
The prospect of losing the exclusive on the iPhone has to raise eyebrows at AT&T and with Wall Street. Research firm Pali Research issued a sell advisement on AT&T stock in June because it was believed to be losing its iPhone exclusive. At the same time, the research firm issued a buy order on Verizon, believed to be picking the iPhone up on its network.
Pali Research wrote in a report, "Our buy rating on Verizon is based on our view that its market share gains will lead to profit growth that tops other telecom companies and Wall Street consensus estimates. Our sell rating on AT&T is based primarily on our belief that its wireless business will enter a prolonged period of erosion after being propped up by the iPhone for the past two years."
AT&T has long been buoyed by the iPhone, but at the same time, many iPhone users are very critical of AT&T's 3G network. Stephenson admits that there are issues with AT&T's 3G network, but points out that most of the issues are centers on high call volumes and areas where the iPhone is most concentrated.
Apple continues to do fantastically well in the smartphone market with the iPhone and owns a full 91% of the over $1,000 PC market.
quote: Reuters reports that AT&T added 1.4 million new subscribers in the second quarter and out of those subscribers about had more than 2.4 million iPhone activation during the quarter.