I was reading my usual morning Wall Street Journal articles and came accross this article, “New iPhone Could End AT&T’s U.S. Monopoly.” For some time I have been closely following the iPhone and the almost unreal deal with AT&T. This deal has in many ways made it possible for AT&T to maintain consistent growth in market share, and not only in cellular technology. I believe investors, consistently collecting on a 6.4% dividend, could not be happier with the deal that was struck.
The numbers do not lie, for example, “For AT&T, the Apple relationship has been crucial, helping to make the carrier the U.S. leader in lucrative smart-phone market share. According to comScore Inc., AT&T has over 43% of all U.S. smart-phone customers, compared with 23% for Verizon.”
In fact, “For several quarters, AT&T’s growth has come almost single-handedly from the iPhone. In the fourth quarter of 2009, the carrier said it activated 3.1 million new iPhones. In comparison, it counted only a net total of 2.7 million new subscribers as some customers moved from other phones to iPhones.”
I personally use Verizon and enjoy the CDMA (Qualcomm) technology. However, I can’t stand the RIMM Blackberry Storm which I am still under contract with. In addition, and I could be wrong, but my information looks to place RIMM’s stock as overpriced and in many ways due for a slight correction. Add to that my personal experience that the Storm was rushed, meaning it just cannot take advantage of the awesome data network because the software and hardware is terrible. At one point I was very impressed with this phone, but not since the iPhone second generation came into the marketplace.
If the iPhone, as the articles illustrates, moves into the marketplace for a full on Christmas 2010 special (launched in Sept), we will see movement through large increases in sign-ups for both Sprint and Verizon. I know I will switch phones and think many others would rather have the superior CDMA coverage over AT&T’s network. So, if you are currently with AT&T, after your plan is up, would you make a switch? I would gamble that if the price is right, you would. After all, for years you have heard that the network for AT&T is not as good, right? Maybe, lets say, you think your network is great. All I ask is that you drive 15 miles outside of town and see how good your 3G coverage is then. It ultimately will depend on price for the data and talking plans. In any case, this is great for us consumers because it creates a price war given that now three (or more?) networks will compete for iPhone users.
I think RIMM will be hit hardest, and I would expect Google’s Android to also take a hit. Kiss Palm goodbye even considering the bright minds working there. They will jump ship, eventually. I hope you found the article interesting. I will try to keep up to date and see what eventually happens.