Has the last whistle sounded from AT&T's iPhone gravy train?
Source: Flickr user Burnt Pixel
Apple’s iPhone once again carried AT&T to a successful quarter, accounting for a record 3.2 million new activations and driving a 33.6 percent increase in mobile-data revenues year-over-year, to $3.6 billion. But I think AT&T’s ride on Apple’s gravy train is headed for a serious slowdown in the months ahead.
The iPhone launched more than two years ago to rave reviews and crowded lines at the retail counter, and Apple has effectively built on its momentum by continuing to offer new, higher-powered versions as it lowers price points on older phones. And, like a champion cyclist, AT&T has wisely drafted behind Apple, allowing the Cupertino gang to do the heavy lifting with big-budget ad campaigns that helped create the iPhone’s gotta-have status.
But while the iPhone remains more popular than ever, I think there are storm clouds on AT&T’s horizon. While recent upgrades seem to have appeased some users, AT&T’s network continues to draw derision from the iPhone crowd, some of whom — like Om – have stopped using the device entirely. And with the tw0-year anniversary of the iPhone’s launch in the rear-view, plenty of iPhone users are at the end or nearing the end of their contracts, freeing them to switch carriers. And there isn’t a lot of hope for more aggressive upgrades anytime soon: As DailyFinance.com noted, AT&T’s unwillingness to ramp up investment in its network seems to be keeping investors happy.
One recent study found that while iPhone users despised AT&T’s network, they were unwilling to give up their handsets to move to another carrier. But for a long time, the iPhone was the only game in town for customers looking for a user-friendly superphone, and that’s no longer the case.
Palm’s Pre — which has received positive reviews — is available on Sprint’s network and is soon to appear on Verizon Wireless. The nation’s largest carrier is also in the midst of a major marketing push behind the Droid, a Motorola phone set to hit the shelves in time for the holidays, and it could get a major boost with the upcoming launch of the BlackBerry Storm 2. T-Mobile, meanwhile, is pushing the Android-running myTouch with TV commercials that feature a slew of celebrities. (OK, they’re B-list celebrities, but they’re famous.) Lastly, AT&T’s exclusive grip on the iPhone will have to come loose at some point —potentially soon — and there will be no shortage of operators looking to offer the phone.
I think the iPhone will only increase momentum worldwide as the phone hits the Chinese market. But in the U.S., at least, the game is changing quickly in the era of the superphone, and there are several attractive alternatives to the iPhone on the market. Network operators who market those gadgets aggressively — and can deliver data and voice effectively — have a chance to pick up more than a few disgruntled iPhone users from AT&T.