Sunday, March 30, 2008

Flat Rate Commoditization in the US Wireless Market

The current price war, offering flat rate unlimited calling and texting within the US, among the major US wireless has created a commoditized marketplace with virtually no differentiation from carrier-to-carrier.

AT&T the Only Exception: It's Not the Network, It's the iPhone Silly

The one exception in the mix is AT&T, not because of their network as their engineers would like to think, but because of their exclusive arrangement with Apple and their iPhone product.

Did you know that AT&T has a 5 year exclusive arrangement with Apple for the iPhone? Brilliant move!

It is like when Nike and AMEX signed Tiger Woods to massive multi year contracts before he had even proven himself on the PGA tour.

My Wireless Agreement

My wireless contract is scheduled to expire in August 2008 and I am seriously considering changing my service from Verizon to AT&T. The only reason that I won't change to AT&T in August is because I want to wait for the 3G iPhone and barring an new iPhone I have no compelling reason to go through the hassle of changing carriers.

Interesting fact about iPhone's market penetration:

Canalys estimates that Apple took 28% share of the fast growing US converged device market in Q4 2007, behind RIM’s 41%, but a long way ahead of third placed Palm on 9%. This was also enough to put Apple ahead of all Windows Mobile device vendors combined, whose share was 21% in the quarter according to Canalys figures.

Suggested AT&T Customer Acquisition Strategy

What do you think would happen if AT&T offered to rebate the early termination fee to users of alternative carriers who moved to their network with a two contract year and bought an iPhone? I think AT&T's market share would go through the moon.

I think the users would even be willing to stomach a higher termination fee and longer contract period.

The cash flow and market share implications of this strategy are staggering

I hope someone is listening at AT&T.

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