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Analyst sees Apple iPhone on additional U.S. carriers within a year; iTunes TV show subscriptions

Monday, August 31, 2009 · 10:30 am · 23 Comments

“In his latest note to investors, Gene Munster, senior research analyst with Piper Jaffray, takes on 14 ‘unanswered questions’ that surround Apple,” Neil Hughes reports for AppleInsider. “They address the company’s financial guidance, the iPhone, iTunes, iPods and Apple retail stores. One prediction suggests Apple would add new iPhone carriers in the U.S. with the debut of a new product in the summer of 2010.”

Hughes reports, “‘For various reasons the company moved from an exclusive relationship with French wireless carrier Orange to a multi-carrier model,’ Munster said. ‘In France, the company now enjoys dramatically higher market share (in the 40 percent range vs. about 15 percent in ROW) than in countries with exclusive carrier agreements (such as AT&T in the U.S. where the iPhone has market share in the mid-teens). We believe Apple is seeing the increased unit sell-through more than offset the slightly (~10 percent) deteriorated economics per unit involved in non-exclusive agreements.’”

In addition, “Munster believes that Apple will eventually offer a monthly subscription offer for TV shows on iTunes. At a cost of $30 to $40 a month, he said the company could offer unlimited access to content from network and cable providers. If the Cupertino, Calif., company were to offer a subscription model, he believes it would replace a consumer’s cable bill,” Hughes reports.

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Comment Feed

23 Comments

DogGone

Monday, August 31, 2009 - 10:42 am · Reply

$30 a month subscription would not be competitive with Netflix. You can get something similar for $9 a month with the caveat that the latest and greatest won’t be available straightaway.

I’ve spent most of the last month of my evenings watching the first 4 seasons of Lost in HD on Netflix. Very good quality and few issues with connectivity.
Joe

Monday, August 31, 2009 - 10:42 am · Reply

Yeah, hell would really have to freeze over for the iphone to be on verizon or any other carrier that apple approached before the deal with AT&T;. They all had their chance to make a deal, and they all thought it was better to piss into the wind and to bet against Apple and Steve. Well, look where they are now, lost and confused. I’d say, Apple will renew with AT&T;and say to hell with these other carriers.
DogGone

Monday, August 31, 2009 - 10:50 am · Reply

@Joe
I don’t think Apple care about prior history. They want to increase the install base of the iPhone as much as possible. The iPhone has proved itself to be an attractive product and any carrier would be willing to go along with Apple’s rules.

If they double their sales by adding more carriers then that is a good thing.

If Apple have a goal it is to break the hold the carriers have on phone makers. They have done that with ATT now it’s time for the others to submit.
General Passerby

Monday, August 31, 2009 - 10:52 am · Reply

The issue that I see with the subscription model for videos, is that the cable companies would flip out over it. They’ve already said they want to cap Internet usage, this would be the straw that broke the camels back to them, especially if they lost cable subscribers in any kind of volume. I’m pretty sure that’s why Apple hasn’t done it yet. Either they need to work with the cable companies to keep the internet open or they need to provide their own pipeline for people to subscribe to.
Joe

Monday, August 31, 2009 - 10:58 am · Reply

DogGone,
I think it is obvious with the number of attempts at cloning the iphone, that the carriers have no intention at bending over backward to accommodate the control that apple wants over the process. I am also pretty sure that Steve is still pissed at these carriers for not showing the respect to him and Apple that they both deserved. I really do predict that Steve is going to do to these other carriers with the iphone, what they do to dell and the pc industry with OSX. A nice big FU, which I completely and understandably agree with. AT&T;may be behind, but the money rolling in is going to gradually make AT&T;number one in carriers. It is an investment in time and patience. I just don’t see Steve allowing the phone on any other carrier than AT&T;. We will see soon enough when Apple agrees to another 5 year exclusivity agreement. Then we will continue to hear the whiners complain about how they have to switch carriers or how much they still hate AT&T;. Eventually, they will switch anyway, if they want the phone bad enough, which apple will continue to innovate and use to entice people to do. Eventually, the iphone will have features so enticing, people will make the switch, and as AT&T;’s market share continues to grow, and the iphone’s features continue to grow, it will really begin to look like a one sided fight. I simply don’t see Apple going to any other carrier. I also don’t see them caring about having the phone on every carrier, that simply doesn’t seem like the goal. It seems more likely that they will buy a carrier and offer the services themselves.
Predrag

Monday, August 31, 2009 - 11:26 am · Reply

I have a lot of respect for Gene Munster, as he has been consistently one of the most reasonable analysts out there. However, for the foreseeable future, Apple has no reason to go outside of AT&T. They are still selling them faster than they can make them. The price they have with AT&T will be impossible to reach elsewhere (and difficult to keep at AT&T, should the exclusivity go. Add to that the length of a grudge that Steve Jobs can hold, and it’s clear to me that the situation will remain the same for some time.

However, if foreign numbers are any indication, giving up `0% of your profit margins on a device in order to sell noticeably more devices will eventually be a consideration for Apple. If “competition” (other smartphones, if they could be called that in the first place) continues to attract significant numbers (especially on other carriers), it would be bad business not to do it.

For now, though, it’s working fine, so no change.
future former AT&T;subscriber

Monday, August 31, 2009 - 11:27 am · Reply

I for one cannot wait to see the iPhone on another carrier. AT&T;is dead to me.
Big Als MBP

Monday, August 31, 2009 - 11:42 am · Reply

All cell phone carriers are the scum of the earth.

ATandT makes Rogers in Canada look like the devil’s spawn.

If the carriers can come to an agreement with Apple that Apple can live with, then Apple will deal with the devil.

Remember, G4 is universal and every carrier will be an option for Apple in 2010 as long as they upgrade to a G4 signal.
Currentinterest

Monday, August 31, 2009 - 12:06 pm · Reply

AT&T;has been absolutely great for me. Outstanding customer service and very good coverage that gets better all the time. I switched and found the company far better than my old one. I will likely stay even if there is a nonexclusive deal.
MacMan

Monday, August 31, 2009 - 12:08 pm · Reply

Interestingly, Apple currently sells iPhones with multiple carriers in at least 2 countries (France and Australia) and a third (Israel) is coming in October.

While subsidies may be less, I’m sure they more than make it up in units sold, so it’s probably a safe bet that other countries will eventually have multiple carriers selling the iPhone. However, it’s not so clear if that will happen in the U.S. for the reasons stated above (i.e., Steve’s long memory and A.T.&T;. not wanting to share the goose who lays the golden eggs).
Predrag

Monday, August 31, 2009 - 12:09 pm · Reply

I thought G4 was discontinued six years ago (Tiger was the last OS that was officially supported on G4 processors).

As for mobile telephony, we still have very patchy 3G coverage. While they may have already begun upgrading the network(s) to 4G, it will take at least 3-4 years before they can actually offer meaningful nation-wide coverage. And what will be the fall-back? 3G or EDGE, or CDMA? Because, if it’s 3G (or EDGE), then the former CDMA carriers won’t be able to provide a compatible fall-back from the (universal) 4G, and the accessibility would be severely limited.

If you really want an iPhone, waiting for a non-AT&T carrier will be pointless; you’ll be waiting a lot more than just one year.
Ralph M

Monday, August 31, 2009 - 12:13 pm · Reply

I think it is interesting that nobody has so far noted the obvious: Verizon is a CDMA network and the iPhone is GSM. For a zillion reasons, Apple is unlikely to create a CDMA version of the iPhone (only two real markets: Verizon and Japan).
Anonymous©

Monday, August 31, 2009 - 12:16 pm · Reply

The iPhone has 40% of the French smartphone market!!! Wow, that’s amazing.
Jeff

Monday, August 31, 2009 - 12:24 pm · Reply

As for the iTunes TV prediction, WTF, the Apple TV or iTunes Computer would have to have TBs of storage, cause if I’m buy my TV Shows I’m keeping them, if I’m renting them I’m getting them a lot cheeper than that. So far the only show I have purchased is House MD, and I found the price on that way to High but some time you have to pay for your addictions. The other thing I have notice with Apple TV is when I download content directly, then delete it I don’t seem to recover the HD space, I have had to recover to Factory 3 time due to this issue.
bobsyeruncle

Monday, August 31, 2009 - 12:24 pm · Reply

@joe

You have a fundamental misunderstanding of what happened between Apple and Verizon. What Apple tried to do was to fundamentally change the relationship between the carrier and the phone maker: instead of subsidizing the price of the phone with an up-front payment, Apple wanted a piece of the ongoing monthly charges for itself. Verizon balked but AT&T;agreed. But once they got what they wanted, Apple saw very quickly that it was a bad business model and that they were better off being in the cell phone hardware business rather than the cell phone carrier business and they went to the same subsidized model that all other hardware makers use with the 3G. So it is Apple who has come around to Verizon’s way of thinking, not the reverse. But the big impediment to a Verizon iPhone is that Apple doesn’t make a CDMA iPhone. CDMA has lots of coverage now (US, Canada, most of the rest of the Americas, Japan, Russia, China, Israel) and they probably could profit from having a CDMA iPhone, but the real category killer, if they were to make it would be a dual-band (actually quad band) phone that worked on both CDMA and GSM networks.
Fat Basterd

Monday, August 31, 2009 - 12:24 pm · Reply

@Predrag

Leopard was fully supported on many G4 systems, requiring an 867MHz+ cpu.
http://www.tuaw.com/2007/10/16/leopard-system-requirements/
JC in Canda

Monday, August 31, 2009 - 12:25 pm · Reply

Ultimately, Steve is accountable to the Board and Apple Shareholders. If he decides to go against their wishes, he must provide the reasoning behind it (remember Cheng from Yahoo?)
That said, rolling out to another carrier only makes sense if the other carrier has a different customer base than AT&T;.
Applefreak80

Monday, August 31, 2009 - 12:26 pm · Reply

Apple has or is making a deal now with China Unicomm with is a GSM/WCDMA network. Apple is broadening its market and AT&T;CEO himself said, “He knows they can’t keep Iphone under its wing and it will go to different carriers in the US” Verizon and Apple are talking and we can only hope it happens in 2010 as I am eagerly waiting this deal to happen. ATT is a horrible carrier and should just go away and let its cell towers become nesting homes for birds.
bobsyeruncle

Monday, August 31, 2009 - 12:34 pm · Reply

@predrag

You miss Munster’s point. There is a definite group of people who, for whatever reason, will NEVER go to AT&T;and thus will never get an iPhone as long as they have it exclusively. Thus Apple will never be able to sell to these people as long as they are AT&T;exclusive. There is another definite group who, out of laziness or whatever, just don’t want to change carriers even to get a phone as cool as the iPhone. Apple will find it increasingly hard to sell to this group as long as it is AT&T;exclusive because the ones who are easiest to pry away from their existing carriers will eventually get converted, leaving the remaining hard to reach holdouts. So at a certain point, if Apple wants to increase its market share, it will have to find a way to sell to this group or write them off. Right now, they probably can afford to write them off, just like they write off the market for sub-$1,000 computers. But they may find that they would like to reach that group, especially as it appears that Apple’s strategy in the phone market is to dominate (unlike PCs where there strategy is simply to own the high end).
Mr. Reeee

Monday, August 31, 2009 - 12:58 pm · Reply

I’ve read that T-Mobile and AT&T;are the only mobile carriers whose networks are compatible with iPhone hardware.

I HOPE T-Mobile gets the iPhone, then I can get an iPhone and not need to switch carriers.
Peter

Monday, August 31, 2009 - 2:13 pm · Reply

Uh, Applefreak, China Unicom is GSM. They sold their CDMA business to China Telecom last year.

That said, one interesting development will be deployment of 4G networks. When that becomes widespread enough that they are “everywhere you want to be,” Apple will drop it’s exclusivity agreements.
DogGone

Monday, August 31, 2009 - 3:54 pm · Reply

I have to disagree that Apple are hell bent on punishing those who don’t co-operate with them. They have grown up and realized that they need to do what is best for business. The Intel deal is a great example and look what it has done for Apple.

Verizon and other carriers are an opportunity to increase their client base. Also remember big and small corporations (mine included) have deals with a single carrier for corporate cell phones and a significant amount of that business would be available if other carriers could sell the iPhone.

Bob got it right that a Quad band phone would work well to cover all important instances.

Add to this the regulatory inquiries that are beginning to look at the mobile business in the US and overall you get the picture that Apple are well positioned to force the market into a more open environment whilst not appearing to be the one’s responsible for forcing the issue. Another good example is the removal of DRM from music.
@Joe

Monday, August 31, 2009 - 4:42 pm · Reply

I will NEVER purchase iPhone if the only carrier is ATT. iPhone sales will increase if other carriers, especially Verizon, offered cellular service.

I don;t were your animosity comes from, but it would be in Apple’s and the consumer’s best interest to have the choice of a cellular service provider other than ATT.