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    Home Apple
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    A Shift to Multiple Carriers Looks Like Apple’s Smartest Next Move

    By
    Don Reisinger
    -
    August 31, 2009
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      In a released recently report, Piper Jaffray analyst Gene Munster wrote that Apple’s multicarrier model in France is working so well that it makes perfect sense for the company to follow a similar strategy elsewhere in the world, including the United States.

      Munster said that the iPhone’s market share in France-40 percent-is the highest of any country in the world. And there’s no reason to suggest that Apple couldn’t have similar success if it brought its phones to multiple carriers in the other countries it offers its iPhone.
      It makes sense. Apple’s iPhone is undoubtedly the most attractive smartphone on the market. As nice as the BlackBerry Storm, Palm Pre and MyTouch 3G might be, they pale in comparison-at least in the end user’s eyes-to the iPhone. They can’t match Apple’s more than 65,000 available applications.

      Those phones software doesn’t appeal to consumers as much as the iPhone’s does. They don’t have the marketing power Apple enjoys. They’re not viewed as equals to Apple in any way. Like the iPod, the iPhone has revolutionized its market, and all the other companies in the space are trying desperately to find a way to catch up.
      Arguably, Research In Motion is closest to achieving that goal. Unlike Apple, RIM’s smartphones can be found on any carrier. It’s the single feature that distinguishes the Canadian firm. It’s also the main way RIM can attract both consumers and enterprise users who don’t want to be caught in AT&T’s grips. So far, it has proved to be RIM’s Trojan horse. The company might not command the kind of mindshare Apple does in the space, but one thing is certain: Offering a BlackBerry on Sprint, AT&T, Verizon Wireless and T-Mobile is helping the company. It gives end users options-options that, so far, Apple lovers don’t have.
      The Beginning
      When Apple first announced the iPhone and made it available in 2007, it made sense for the company to offer it solely on AT&T. The carrier gave it a sweetheart deal, complete with revenue-sharing that made Apple look like the genius in the marketplace.

      But that first iPhone lacked several features users wanted, including copy and paste, tethering, Exchange support, video recording and native applications. They were glaring omissions that allowed some critics to find fault with Apple’s smartphone.

      Breaking Down the Final iPhone Resistance

      But over the past two years, Apple’s iPhone has transitioned from a neat concept with a great name into a full-featured smartphone that appeals to both businesses and consumers. It now has copy and paste. Users will be able to tether. Exchange support is a reality. Best of all, users can record videos and interact with thousands of native applications they downloaded from the company’s App Store. It’s an extremely compelling phone that attracts just about anyone.
      AT&T’s Grip
      But the iPhone is still tied down to AT&T. That leaves the majority of the market without the ability or willingness to switch to the iPhone, even though they might want to. Companies that have entered into long-term contracts with Verizon Wireless can’t just break the contract and go to the iPhone. It’s financially unfeasible. Consumers who have had nightmarish experiences with AT&T or those who are simply happy with their current carrier don’t want to switch. Everyone in the market has their reasons for why they would like to, but simply can’t, switch to the iPhone. It’s Apple’s biggest issue.
      By transitioning from an exclusivity agreement with AT&T to an agnostic relationship with multiple carriers, that single issue that’s holding millions of people around the United States back from buying an iPhone will be eliminated.

      Sure, there will still be those who opt for a BlackBerry because they don’t see a reason to switch to an iPhone, but there will undoubtedly be far more folks who do switch to the iPhone. They will line up at carrier stores. They will order iPhones from their carrier online. Companies looking to break out from under the BlackBerry’s sphere of control will call their carrier’s reps and order iPhones. It could significantly change the market. And it could give RIM, Apple’s strongest smartphone competitor, a real problem.
      RIM’s Reaction
      If Apple follows its strategy in France, its smartphone will be made available on all the carriers that will take it. And it’s doubtful that the major carriers won’t want a piece of the iPhone action. Immediately, those BlackBerry devices sitting on store shelves will look obsolete next to the iPhone.

      When users go to their carrier’s store looking to pick up a smartphone, they’ll need to choose between the iPhone and a BlackBerry with a mechanical keyboard, a poor browsing experience and, save for Verizon Wireless customers, no touch-screen. The iPhone makes the new BlackBerry Tour look old. What will consumers think when they compare the iPhone to the Curve at T-Mobile? It could be a nightmare for RIM.
      So as we look ahead at what might happen in the smartphone market, it might be time for RIM to accept the fact that Apple’s next step is carrier agnosticism. If (or, perhaps, when) that happens, its smartphones will look old and obsolete. Those who have stuck to the BlackBerry because they can’t get an iPhone will reconsider their options. And it will be Apple, a company that has addressed all the other issues with its iPhone, that will address its final problem: carrier availability.

      RIM would then have to decide quickly how to respond. Since it would lose its grip on ubiquity, the company would need to update its current models. RIM would need to improve its software, build more touch-screens into its products, and work with its newly acquired Torch Mobile team to build a browser that could compete on the same level with the iPhone’s.

      At the same time, RIM would need to focus its efforts on bringing more apps to its App World marketplace. Without those improvements, the company could be in serious trouble in the face of Apple’s onslaught. But with those improvements, it might put itself in a position to more adequately compete with Apple’s smartphone. Assuming Apple does make its iPhone available to multiple carriers, RIM’s strategy seems clear.

      Don Reisinger
      Don Reisinger is a longtime freelance contributor to several technology and business publications. Over his career, Don has written about everything from geek-friendly gadgetry to issues of privacy and data security. He became an eWEEK contributor in 2009 producing slide shows focusing on the top news stories of the day. When he's not writing, Don is typically found fixing computers or playing an old-school video game.
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