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Jan 06
0

AT&T Preps for Heightened Verizon iPhone Competition

By | ATT, iPhone, news, Verizon | No Comments

By SHARA TIBKEN

NEW YORK—AT&T Inc. cut its price for Apple Inc.’s iPhone 3GS to $49 from $99 as the carrier prepares for heightened competition from a Verizon Wireless iPhone launch expected early this year.

AT&T, which currently is the exclusive network operator for the iPhone in the U.S., said the iPhone 3GS will be available at the lower price starting Friday. The iPhone 4, released in June, sells for $299.

The move comes as AT&T faces increasing pressure from customers and critics alike, who have complained about the reliability of the company’s wireless data and voice network. Additional competitive pressure is expected from new smartphones showcased at the Consumer Electronics Show in Las Vegas this week, and from Verizon Wireless once it starts selling the iPhone, potentially as early as the first quarter.

AT&T added a record number of iPhone subscribers in the third quarter but paid a heavy price to do so. While the activations require AT&T to pay Apple high subsidies that cut into its near-term profit, they also lock in new and existing customers to a two-year contract. AT&T is banking on those contracts to blunt any potential defections if the carrier loses its iPhone exclusivity.

The latest offer from AT&T is available to both new and certain existing customers and requires a two-year wireless-service contract of at least $39.99 a month, plus $15 data plan.

AT&T isn’t the first company to discount the iPhone, with retailers such as Wal-Mart Stores Inc. and Radio Shack Corp. offering promotions.

—Tess Stynes contributed to this article.

Dec 07
0

Early Mistakes Hurt iPhone’s Potential

By | ATT, Droid, iPhone, Verizon | No Comments

AT&T deal may have capped initial interest

Apple has committed two “meaningful errors” since launching the iPhone in 2007, argues Piper Jaffray analyst Gene Munster. He notes that at first, Apple did not get subsidies for the iPhone, keeping the cost as high as $599 for an 8GB model. That price soon dropped to $399 however, and an 8GB iPhone 3GS can now be bought for $99. The most expensive current model, a 32GB version of the iPhone 4, is still only $299. Initial prices likely hurt the iPhone’s appeal, Munster suggests.

The other major mistake is said to have been signing an exclusive agreement with AT&T. Although the deal is on the verge of ending, the choice of carrier is said to have hampered demand. “We expect Apple to correct this issue by the end of [the first half of 2011] and add Verizon to the list of carriers that sell the iPhone in the US,” says Munster.

Exclusivity is the only reason Android phones are outselling the iPhone in the US, the analyst claims. “As an example, in countries where the iPhone is available on multiple carriers and competes with Android, we see the iPhone outselling Android,” he says. “The greatest factor in the success of Android has been Verizon. Customers are loyal to their carrier, and once Verizon gets the iPhone, we believe Android’s success in the US will be tested.”