Time for AT&T to buy Foursquare

AT&T is about to lose its iPhone exclusivity and should take a look at Foursquare as way to make subscribers more profitable through software services.

AT&T has a problem. The wireless carrier's subscriber growth is significantly slowing and its exclusive hold on the iPhone in the U.S. may come to an end in 2010.

Sure, AT&T can go back to the iPhone trough, hoping that the forthcoming iPhone 4G will prop up its sales. But that's not going to help the company as it struggles with the blessing and curse of heavy data usage the iPhone has imposed on its network.

What AT&T really needs is a software story, and Foursquare may be a good place to start.

Rumors have been swirling around Foursquare, with suggestions that it was going to be acquired by Microsoft, Facebook, Yahoo, or others. Only the Yahoo rumor (at a price of $100 million) appears to be credible, but in my view Yahoo isn't the best home for Foursquare.

At least, not based on value to the acquiring company.

Think about it. AT&T desperately needs to improve the profitability of its network, which will be complicated by the relentless treadmill of network upgrades to catch up with iPhone demand. Foursquare, 1 million users strong and growing fast, is now branching out into commercial services. This could add a significant revenue stream to AT&T's top line, and AT&T's salesforce could accelerate the adoption of such services.

Yes, it's a market that AT&T may not understand well, but the company already sells telecom services to businesses, so it has a ready-made list of leads to pursue.

Foursquare, of course, operates just fine across wireless networks, so AT&T wouldn't have a lock on users, nor would it need it. Instead, Foursquare offers AT&T a good start into selling commrcial access to a diverse consumer base. It could also turn into more consumer accounts as AT&T builds out additional features that work across networks but perhaps are optimized within the AT&T network.

Regardless, AT&T needs to think beyond its traditional business, with software services offering a great path forward. It may not be Foursquare (Yelp and other such mobile-friendly services come to mind), but AT&T needs to be thinking beyond hardware infrastructure to software services if it hopes to ever be more than a peddler of bandwidth.

Correction: This post initially overstated the potential for AT&T's iPhone exclusivity in the U.S. to end in 2010. AT&T's exclusivity contract with Apple expires in 2010, but could be renewed. Also, the post mistakenly listed Foursquare as potential buyer of Foursquare. That was meant to be Facebook.

About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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