iPhone Users to Escape from AT&T Next Year?

Monday, August 31, 2009

Almost everyone who got an iPhone loves it. But if you ask them what’s wrong with the iPhone, most iPhone users would answer “AT&T.” AT&T’s issues with dropped calls, network coverage, lack of MMS, and other arbitrary policies and limitations make iPhone users mad. That is why many would welcome the prediction made by a Piper Jeffray senior research analyst, Gene Munster, that Apple should offer iPhones on more U.S. carriers by the summer of next year.

Gene Munster said that multi-carrier model in France let to a dramatic increase in market share. iPhones achieved 40 percent market share of smart phones in France after implementation of multi-carrier model. That is a huge gain compared with 15% market share during their exclusive agreement with French wireless carrier Orange. Like France, the iPhone’s total market share in the U.S. for smart phones remains near the teens. But analysts expect that number to explode if another carrier such as Verizon Wireless offers the iPhone. Apple would also make a lot more money despite a lower profit margin for each device due to non-exclusivity.

One issue preventing iPhones to jump ship may be wireless technology, Verizon’s EVDO network is expected to gradually phase out. Even though Verizon is rumored to roll out its new 4G network by early 2010, it may not be ready to take on legends of iPhone users. AT&T, on the other hand, continues to expand network capabilities for the current iPhones. Thus, from a technology point of view, Apple is likely to stick with AT&T.

That’s not to say a Verizon iPhone won’t appear next year. If Apple believes another carrier can increase iPhone’s U.S. market share dramatically, it can make iPhones with CDMA capabilities. After all, isn’t Apple going to make CDMA iPhones for the Chinese market after its announcement to partner with the CDMA-only wireless carrier, China Unicom?

Perhaps the wireless world will be a better place if your iPhone isn’t tied up with one carrier. If iPhone users don’t like the current wireless carrier because of a lack of MMS, then just switch to another carrier that offers it. This would make wireless services competitive. We will no longer have to tolerate incompetent carriers that are slow to satisfy their customers’ wireless needs. And hopefully, the competition will heat up by next summer, just in time for all those iPhone 3G buyers to upgrade their iPhones to a new model.