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Specifically, Sprint has been pushing its music service, which allows songs to be downloaded over the air for 99 cents each. And it has recently announced several new phones specifically designed for music, including the Samsung UpStage, LG's Fusic and the new LG Muziq. These phones all sell for less than $100. By contrast, the iPhone costs $500 for a 4GB version and $600 for an 8GB version. Of course, the iPhone is more than a music phone. It's a full smart phone with e-mail and mobile Web browsing functionality. To compete here, Sprint offers the HTC Mogul, a Windows Mobile device.
"We really feel like a rising tide will lift all boats," said Aaron Radelet, a spokesman for Sprint. "When customers are able to compare services and phones side by side and they look at pricing, we are confident they will see the value in Sprint."
But some of Sprint's customers say that even at $500 and $600, the iPhone simply offers them more for the money. San Diego resident Omar Bazigran is a Sprint customer who let his contract run out in anticipation of switching to AT&T for the new iPhone. Even though Sprint offered him a new updated handset and a 10 percent reduction on his phone bill, he still says he will likely buy the iPhone because he thinks it is a better value.
"I figure an 8GB iPod Nano would cost me $250," he said. "Then, a smart phone would be a couple few hundred dollars, and then an extra $50 to $100 to have the two products fused into one isn't such a bad deal for the person who was thinking of buying those two things separately anyway."
And AT&T's newly announced pricing for the iPhone data plan makes it seem even more attractive. For $60 a month, users get 450 minutes of talk time. For $80 a month, they get 900 minutes of talk time. And for $100 a month, they can talk for 1,350 minutes. All plans include unlimited e-mail and mobile Web surfing and 200 text messages a month.
Verizon Wireless has taken a similar philosophy that iPhone could actually help it sell its data services. Like Sprint, Verizon offers an over-the-air music download service. And executives at the company believe customers will see the value of its services as a differentiating factor.
"The iPhone will add excitement and stimulation to the market," Verizon CEO Ivan Seidenberg said at a conference last week. "If we have done our job, then we will be a beneficiary. I hope it does reasonably well."
But analysts say that Verizon is already in a much better position than Sprint. The company has consistently added more subscribers than its competitors every quarter and it also tends to lose fewer customers than any of its competitors with a churn rate that hovers around 1.1 percent.
"It would take a lot to damage Verizon Wireless," said Patrick Comack, an equities analyst with Zachary Investment Research. "But Sprint is already struggling. Taking away any subscribers from them now is like kicking them in the ribs when they're already down on the ground."
Need for speedThe one thing that both Sprint and Verizon have going for them is their 3G networks. The initial iPhone will work only on AT&T's 2.5G network. This means that while 3G phones from Verizon and Sprint will be able to download files and surf the mobile Internet at speeds between 400 and 700 kilobits per second, the iPhone will surf at speeds more like 200kbps.
The lack of 3G is one reason that at least one Sprint user said he will wait for a new version of the iPhone before he makes the switch to AT&T. Paul Tunison, of Modesto, Calif., said he is a faithful Apple customer, but he isn't sure he could stomach the slower speeds.
"If the iPhone was 3G capable today, it would be a nonissue for me," he said. "I'd likely go ahead and buy one, but I just don't see the value if it doesn't have 3G."
Comack of Zachary Research said he thinks some Verizon and Sprint customers are going to be annoyed when they realize see how slow AT&T's EDGE network is compared with the 3G networks.
"The difference between EDGE and 3G is night and day," he said. "Customers are going to assume that they can get the same speeds they get on Verizon and Sprint and they can't. And if they roll out a 3G version of the phone in six months, I think they're going to have a lot of pissed off customers."
While it's clear that the iPhone has been hyped, some analysts wonder if people will actually follow through on the excitement and take the plunge.
"Most people subscribe to a cell phone service because of the network coverage or the price of the service," said Iain Gillott, founder of iGillottResearch. "So will the iPhone be different enough and cool enough to get people to switch service just for the phone? It will be interesting to see what happens."
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during the next two years? Or has it left itself a bit of wiggle room
to introduce products with other carriers?
themselves that the iPhone phenomenon is merely the result of
style or Apple fans. Style is nice, and some people will buy
whatever Apple sells, but most people are interested in the
iPhone because it delivers where all of its competition fails:
usability.
Anyone that wants to compete with the iPhone had better be
focusing on quality software, starting with the user interface.
Unfortunately, none of the iPhone's competitors have any
experience building a quality user experience.
little machine. EVDO, WiFi, BlueTooth, flip out keyboard,
speakerphone, SD card expansion, etc. It works great with
Exchange, and it's easy to add software. The big problem is
that the UI is atrocious. I've owned over a dozen Macs and two
Newtons. The Newton MessagePad in 1992 had a better
interface than this thing. The best software for it is open source
stuff (like gsplayer, though it has UI issues). And Sprint loaded it
with crapware (but Google for how to eliminate this stuff).
It's really a good thing for the mobile ecosystem that Apple's
getting in the business. It's going to force a lot of change,
either through imitation, innovation or Chapter 11 (or whatever
Korean or Chinese tax code calls it).
Charles
Perhaps you may want to wait until the product is actually out before making claims you can't back up.
It will really help with your credibility which is in serious question with comments like these.
ago (ok a different ATT than today, but they chose the name, so
they get the rep) tried to screw me over for $3/mo. because I
never made long distance calls (mobile is free). So, I dropped
them as my land line LD carrier. That was fine, except they KEPT
ADDING THEMSELVES BACK. This took way too much of my time
to correct, and ultimately I got a bill about a year later for $40+
for all these $3 charges I never needed. I wrote them a letter
telling them they would never get a penny from me. So, I guess
no iPhone for me, until they're on Sprint (whose customer
service has been impeccable - really eerily surprising) or Verizon
(great coverage in this town).
The one big issue: my Windows Mobile 5 phone is also teh suck!
hassling ATT to upgrade their network.
But if you are in a wifi area. You have another option. Also, I
wonder how long it will be before skype gets on to the iPhone?
I think it absurd that there is a perception that Americans have that much disposable income, that the ~million inquiries spoken of in the article will morph into one for one purchases. Those calling are most likely not committed Apple fan(atic)s who are already committed. When the reality of a ~$700 migration cost sets in... $500 up front and anywhere from $150 to $250 to break contract... The reality will be far removed from AT&T?s dreams and aspirations.
Monitor the after sale returns. AT&T is such a horribly unreliable network that the real impact of success or failure may come when within the first 14 days, when those who find themselves unhappy with the quality and reliability of the network, seek to recover their losses, and return to what they know to be a dependable carrier.
Lastly, but possibly most importantly is the culture of sales representatives in AT&T stores that I have frequented. I feel, based on personal experience and the way I was treated by AT&T in multiple regions in multiple stores (and never will again)... that this one element, may be a turning point for some users who have become comfortable with being treated like a person instead of like a credit card.
And you know, just like anyone/everyone else, I could be way off base. It all remains to be seen and just as always, AT&T may continue to succeed (with the iPhone product) in spite of themselves.
Sue! They have no choice as they are sworn to profits by the charter of a corporation. That would be a bold platform for an Independent party to run and encourage co-ops, to play the role of curbing corporate rape and pillage. The government cannot control the volition of greed in the corporation. It is part of the animal by nature. Co-ops could regulate the corporate animal to play fair to catch it's prey. I have a Treo 650 which is a year old. It has been like pulling teeth for me to get a company that rhymes with horizon to upgrade me when I've been a customer for 12 years. I waste so much time with them fighting for equipment that is dated. I want the iPhone now. I'm not going to sign a (2) year agreement with antique equipment. Bring back customer owned companies!
locked into another carrier?
thing analysts have not considered is how spending millions of
dollars to promote the iPhone will alter AT&T's relationships with
other vendors (and even altering their voice mail API system
wide but only telling Apple how to use the new API). If I were an
executive at RIM or Motorola, I would be much more demanding
of sales and technical support from AT&T than I have been in the
past. If that support does not come, I would be prone to ship my
best products to Verizon first. This could leave AT&T with a
shortage of the devices business users demand which could
result in a loss of business customers to other carriers. There
are always unintended consequences.
Now I love music as much as the next guy, maybe more. While
the iPhone may be a great iPod, the iPod is a true audiophile's
nightmare of bad compression and cheap d/a converters, really
a good dolby C cassette sounds better and when I see people
hook their iPods up to $2000 stereo systems I just have to
laugh, so I am not about to drop everything great about my
phone to get an iPod (like my phone takes great pictures of
moving children, if I don't want to type on my little keyboard I
can make a video message and mail it off on a high speed
network, google maps knows where I am, a home button that
always takes me to the homepage, and I have a second battery
that I can pop in if my extended battery dies-- never happened
yet). I would have to give up a lot to get a pretty lousy audio
experience and a bad case of shutter lag-- and that is no way to
listen to Keith Jarrett at the Blue Note or the last recording John
Hicks made before he died or to take pictures of your toddler's
first time on the big kid's swing.
- by zer0punkd March 9, 2009 3:35 PM PDT
- I would never go to ATT so i guess i will just have to settle for my Ipod touch Apple really should have thought about what they were doing before they only had one carrier.
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