Reaction to RIM choice: Why AT&T again?

BlackBerry fans have much to be happy about when it comes to the new BlackBerry Torch, but few applauded Research In Motion for choosing AT&T as the exclusive U.S. carrier for the new phone.

Almost immediately during the live blog of the news on CNET's Web site, readers posting comments at the bottom of the story expressed their disapproval.

"Wonderful," said one commenter. "Another good looking, capable phone available only on AT&T's already over taxed network."

"Yet another hardware vendor goes exclusive with AT&T--what the heck?!?!" said another. "Haven't they learned from the previous disasters?"

It's little surprise that some consumers would express misgivings about the exclusive AT&T deal. AT&T has been struggling since Apple's iPhone launched three years ago to keep up with network demand on its network.

So why did RIM give AT&T, which some critics would say has one of the worst reputations in the wireless industry, exclusive rights to sell the newest and hottest BlackBerry on the market?

A big reason is that AT&T really wanted the hot new BlackBerry. AT&T has racked up millions of new subscribers with its exclusive rights to the iPhone, but the day is fast approaching when AT&T will have to share that right with its rival wireless operators. Rumor has it that Verizon Wireless could get its own version of an Apple iPhone as early as January 2011.

AT&T currently sells more smartphones to subscribers than any other U.S. wireless operator. And in order for the company to keep its position as the No. 1 smartphone carrier, it needs to have a wider and flashier smartphone portfolio than its competitors. This is why AT&T plans to sell the new Microsoft Windows Phone 7 phones. And it will be adding more Google Android phones to its line up as well.

"AT&T is trying to inoculate and wean themselves off the Apple drug that has brought them to such highs," said Roger Entner, head of telecom research at Nielsen. "They are preparing for a day without an exclusivity deal for the iPhone. So they have to lock in other platforms on their network."

AT&T's head of wireless marketing David Christopher said at the press conference Tuesday that AT&T will be aggressively marketing the new BlackBerry Torch on TV, in print, and online starting Thursday. He wouldn't say how much money the company plans to spend on the marketing campaign, but he said it was "big."

Another reason that RIM went with AT&T as the exclusive carrier is that AT&T has a lot of wireless subscribers. In total, AT&T has more than 90 million subscribers. And it sells more smartphones than any other U.S. carrier. For this reason alone, RIM would be happy to let AT&T sell its phone since it has a wide audience.

AT&T is also a GSM carrier. This means that the BlackBerry Torch will not have to be altered much to sell it in other countries. GSM is the most widely deployed network technology in the world. Because the Torch is GSM-based, subscribers can easily take the phone overseas and use it on other GSM networks throughout the world. This is especially appealing to business subscribers who may travel internationally.

No one knows for certain how long the exclusivity deal with AT&T will be, but judging from previous device launches, RIM will likely offer similar functionality in other BlackBerrys within the next few months. And other versions of the Torch, could end up on Verizon Wireless or Sprint Nextel early next year under a different name.

But some analysts say that limiting the Torch to AT&T will likely limit the number of people who will buy the device.

"This device will not attract new customers to AT&T, nor will it likely attract new smartphone users," said Ken Dulaney, an analyst with market research firm Gartner. "The Torch is really a replacement for the BlackBerry Bold."

Dulaney said that the Torch offers BlackBerry Bold customers a better browser and more robust applications, things that were missing in the high-end Bold that may have tempted users to switch to the iPhone or an Android phone.

"I just don't see the BlackBerry Torch as a phone that will compete with the iPhone or any of the touch-screen Android phones," Dulaney added. "Consumers that are looking for a touch-screen phone will still find the Torch lacking. But it offers a physical keyboard and that is something that still appeals to a lot of consumers, especially current BlackBerry users."

Correction, 7:35 p.m. PDT:This story inadvertently misstated that exclusivity for the BlackBerry Bold Sprint Nextel and Verizon Wireless each sell versions of the Bold. The story has been updated to reflect the correct information.