Apple may soon be free from AT&T
Don Reisinger thinks Apple may try to get out of the exclusivity agreement with AT&T. But will AT&T let that happen?
While everyone else was calling the iPhonethe greatest device of all time and putting Steve Jobs on that pedestal he enjoys so much yesterday, AT&T quietly told its investors that the revenue sharing deal it had with Apple for the past year has ended.
At first glance, that development may not matter to most. After all, that agreement really only affected Apple and AT&T and consumers were still forced to pay the same price regardless of the revenue sharing.
But if you take another look, you might find that there may be more to this story than meets the eye.
Now that Apple and AT&T have squeaked out of the deal, what's holding the two companies together? Certainly some would say that it's that oft-mentioned exclusivity agreement the companies signed, but I don't know of one person who actually read the thing and no one really knows if Apple can get out or not.
But if I had to take a guess, step one in getting out of its contract with AT&T revolved around the revenue sharing deal. And before you know it, Steve Jobs' latest blockbuster may be on other carriers.
It may be hard to believe right now, but rest assured that the chances of AT&T and Apple no longer working with each other are greater than you might think.
Now that AT&T isn't sharing revenue with Apple, the agreement between the companies is all too similar to that between any other device manufacturer and a carrier. In essence, the carrier subsidizes the price of the phone and the device manufacturer offers the phone to the carrier. Nothing more, nothing less.
But in that same agreement, most of those device manufacturers sell the phones to other carriers too. And why not? In a market where competition is everywhere and the chances of rising to the top are so low, why wouldn't the manufacturer sell the phone to as many carriers as possible to (hopefully) profit off their investment?
Of course, Apple won't have too much trouble profiting off its investment, but why wouldn't the company explore other opportunities and try to offer the iPhone to as many customers as possible?
Last year, Apple's deal with AT&T made some sense after we heard about the revenue sharing deal. But now, I just don't see why the company would even consider maintaining its exclusivity deal.
When the revenue sharing was in place, Apple stood to make much more on an iPhone that was on AT&T's service than an unlocked device. But now, the tables have turned. Instead of caring which carrier the iPhone is on, Apple couldn't care less. As far as Steve Jobs is concerned, an iPhone sale means a one-time profit regardless of the service its connected to.
Hard as I might try, I just can't see why AT&T would want out of the revenue sharing deal unless it has some sort of bricking plan up its sleeve. Think about it: the company has said that it will subsidize the cost of the 3G iPhone to encourage more customers to its side, but what if that customer buys the iPhone, unlocks it and puts it on T-Mobile's service? AT&T not only loses the monthly revenue, but its subsidy, as well. All the while, Apple walks away with a solid profit and a smile.
So if AT&T really didn't want out of the revenue sharing deal (and the more I consider it, the more I don't think it did), but it happened anyway, what does that say about Apple? Doesn't it hint that the revenue sharing deal was the only thing holding the company back from going to other carriers? Doesn't it tell us that its plan is not to be in bed with one company, but to offer its device to any and all customers? Doesn't it tell us that it's sick and tired of a limited customer base?
AT&T is trying to put its own spin on the demise of the revenue sharing deal, but it knows all too well that it was the only thing keeping Apple on its side. Now that it's gone and Apple will enjoy the same benefit from selling the iPhone regardless of the service its connected to, the companies' tie is as flimsy as it has ever been.
And it's for that reason that Apple, smelling greener pastures and more customers, will find a way to sneak its way out of the exclusivity agreement and bring the iPhone to every major US carrier.
When? I don't know. But rest assured that it could happen sooner than you think.
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