ATandT Must Act Fast to Offset Losing iPhone Exclusivity: 10 Smart Ideas

By Don Reisinger  |  Posted 2011-01-27

ATandT Must Act Fast to Offset Losing iPhone Exclusivity: 10 Smart Ideas

Feb. 10 will be a landmark day for Verizon as it begins selling the Apple iPhone. AT&T, on the other hand, won't have much to cheer about. Over the past few years since the iPhone's launch in 2007, AT&T's exclusivity deal in the United States has helped the company generate boatloads of cash and see its subscriber base swell to over 95 million people.

But AT&T will have to be on the top of its game to contend with a resurgent Verizon that will have the iPhone and its 94 million subscribers to help put its growth into overdrive. Both companies will be competing on more of an even playing field now. However, Verizon might even have a decisive advantage in this battle since customers have been waiting for years for this carrier to get the iPhone accumulating plenty of pent up demand.

However AT&T still has the ability to overcome the loss of iPhone exclusivity. It just needs to play its cards well and leverage existing relationships.

Here is what AT&T should do to keep the Verizon iPhone from becoming a serious thorn in it side.

1. Double down on Android.

When the iPhone is no longer exclusively available on AT&T's network, the carrier should invest heavily in Google's Android platform. As recent sales figures have shown, Android is growing rapidly and by 2014, according to research firm Gartner, could be within striking distance of supplanting Symbian as the world's top mobile operating system. If AT&T can follow through on bringing more Android devices to its store shelves in the coming months and carve out a significant portion of that market, it should be able to soften the blow brought by the loss of iPhone exclusivity.

2. Roll out the 4G.

One of Verizon's key selling points right now is its 4G connectivity. The company claims that it's available to over 110 million potential customers. As of this writing, AT&T hasn't deployed 4G wireless technology on its network. That's a problem. If AT&T wants to maintain its leadership position in the U.S. mobile market, it must roll out 4G as quickly as possible. The high-speed network is the next frontier in mobility, and AT&T should be prepared to capitalize on it.

3. Invest in better service.

One of the biggest issues with AT&T over the past few years has been its spotty service coverage. Customers around the U.S. have found in many cases that Verizon's network delivers better service. For its part, AT&T has invested billions in improving its service over the past couple of years, but it's still not where it should be. If by investing in better service AT&T can match or best Verizon, it should be able to reduce the number of people who leave for its top competitor's network.

4. Consider an iPhone price reduction.

If Apple allows the company to do it, AT&T should consider reducing the price of the iPhone 4 to new customers. The carrier should drop the price of the devices by $50 each, making it a better value to consumers. Will that be enough to get folks to stick with or switch to AT&T, rather than go to Verizon? It's tough to say. But if AT&T can lead on pricing, it could prove to be helpful. The only issue now is it needs to sell Apple on the idea.

Its Time for ATandT to Diversify Its Smartphone Offerings

5. Warm up to RIM.

Lost amid all the talk of the iPhone and Verizon is Research In Motion. It's important for AT&T to remember that RIM is still the top enterprise choice in the market. If AT&T can continue to get early access to some of RIM's newest BlackBerry devices it will be able to make a strong pitch to business customers. The iPhone is extremely important and the consumer space is a great market to make money in, but the enterprise is just as valuable to AT&T. It shouldn't forget that.

6. Market the iPhone's international support.

One of the key shortcomings in Verizon's iPhone is its inability to work on GSM networks around the world. AT&T's iPhone 4, on the other hand, does have global support. Especially in the case of enterprise customers, AT&T should make that reality well-known. If it does, it might be able to retain some world-traveling customers that would shift to an international wireless carrier. Granted, that's not a big portion of the iPhone market, but in its battle with Verizon, AT&T should be looking for any way to win customers.

7. Capitalize on Verizon's inevitable mistakes.

So far, Verizon has played its iPhone cards quite well. The company has revealed useful information about the phone and wireless plans; it has sought to accommodate the right customers; and it has said all the right things to investors. But in the next few months, Verizon will inevitably commit some missteps that AT&T will capitalize on if it is smart. As AT&T showed with the iPhone 4's botched pre-ordering process, huge iPhone demand alone can cause serious marketing mistakes for the wireless carriers. Under such conditions even mighty Verizon can make mistakes. When it does, AT&T should instantly highlight those problems in its marketing efforts and present itself as a capable alternative. It's the easiest way for the company to look good.

8. Try getting the iPhone 5 first.

So far, Apple has not revealed plans for the iPhone 5. The company also hasn't said how it will handle new-product cycles, now that Verizon is in the mix. Right now, AT&T should be negotiating with Apple to see if it can get a six-month head start with the iPhone 5. Not only would it keep some customers from going to Verizon, but it should also give the company some time to market its advantages over its top competitor. It might be a stretch for AT&T to pull it off, but it's worth a try.

9. Build a better relationship with Motorola.

Motorola currently offers its best smartphones on Verizon's network. The company's Droid X is arguably the best alternative to the iPhone 4. The Motorola Droid Pro is the best enterprise-focused Android smartphone on the market. AT&T should do everything it can to start building a better relationship with Motorola. It's becoming more obvious by the month that Motorola is delivering the best iPhone alternatives. So if AT&T can find a way to get that company's best products on its side, it could limit Verizon's growth.

10. Go after the profits.

At the end of it all, AT&T is a for-profit public company that has a responsibility to shareholders. And those shareholders are looking for profits. So, AT&T should find the areas where it makes the highest margins, and ensure that those aspects of its operation are growing. At the same time, it should seek areas that are likely to be highly profitable in the coming years and focus efforts there. If it can continue to post strong profits, the loss of the iPhone won't be nearly as worrisome as it is right now. 


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