Analyst: AT&T to aggressively woo new subscribers with Apple iPhone service fee discounts

“Apple’s iPhone is slated for shipment in June, but the device raises several important questions because it represents a new market segment for the Cupertino-based company. Research firm Piper Jaffray’s senior analyst Gene Munster mulls over these questions which range from the economics of the Cingular/Apple partnership to the addressable market of the iPhone, addressing each while examining the Apple/iPhone story,” MacNN reports.

MacNN reports, “Each iPhone customer will need to sign a two-year contract with Cingular, regardless of which store they purchase the handset from, and another Piper Jaffray analyst for the Mobile space believes Cingular will not subsidize the iPhone… ‘We believe [that] Cingular will be aggressively attracting new subscribers during the launch of the iPhone by reducing service fees and announcing discounts to iPhone customers,’ Munster said.”

MacNN reports, “Apple and Cingular have signed a multi-year exclusive contract for the iPhone, but Munster says it is still unclear whether the deal applies to all iPhone models released throughout the duration of the contract. Cingular’s president of national distribution Glenn Lurie in mid-January, however, said that Apple’s contract with the cellular carrier covers ‘all models’ of the iPhone including several other devices in the works that could debut in the near future. ‘We believe Apple will release new iPhone models quickly (as the company has with the iPod) and these devices will eventually be open to other wireless carriers, possibly even before the Cingular contract expires.'”

“The analyst estimates that a 3G-based iPhone would cost an additional $100, but that Apple will eventually reap the benefits of economies of scale and favorable component markets, ultimately releasing a 3G model. Despite the current lack of 3G support, Apple’s iPhone offers WiFi support as part of its broad feature set,” MacNN reports.

Much more in the full article here.

Related articles:
AT&T: iPhone will NOT come with 18-months of free service – January 26, 2007
Jim Cramer: AT&T to promote Apple iPhone with 18 months of free service – January 25, 2007

32 Comments

  1. Aggressively woo…? I’ve got some news for Cingular/ATT, just put service in my area – yup, that’s it, and you’ve got me as a customer.

    Several times I’ve been to both ATT and Cing. web sites to try and send an email that we would like to have them as an alternative to Verizon in our rural area, but I can’t even find a place to send an email, or make a phone call.

    A word to ATT, save your big budget ad. dollars and just make sure that EVERYONE who wants the iPhone can get ALL of your cellular services WHERE EVER they are in the US. That’s it, that’s all you need to do. Its not complicated and if any corp. can afford to do it you can. Save us the sexy ads and just put service out there – period. The damn phone will sell itself – period.

  2. Make it 3G already. I have been on 3G with my phone for over a year now in the UK. And i hope they don’t try and get us on a 2 year contract in the UK, it won’t be popular. We are used to 1 year contracts!

  3. I really believe we’ll be looking at Apple’s first flop in a long, long time. Don’t get me wrong, I think the iPhone has a lot of potential. But it has some things working against it.

    1. Cingular. You can substitute Verizon, T-Mobile, Sprint, whomever. It doesn’t matter. None of them care about the customer.

    2. The platform isn’t open. When Steve Jobs announced it ran OS X, there was a loud cheer of approval at the keynote. Why do you think people cheered? Because everyone was thinking about getting their favorite app to run on the iPhone. Then Apple dropped the bombshell that it wouldn’t be open. I can’t believe Apple would be this dumb. I believe Cingular is behind this. Why? Because it would take about 6 hours for someone to port Skype over to this thing and have it use the wi-fi to make phone calls. And that cuts into Cingular’s profits.

    3. Price. $500 is just too expensive to get a phone that is crippled. Like I said, the iPhone has potential. But someone is holding it back. I hope it isn’t Apple.

  4. i don’t really care about surfing the web on this thing… and I’m not even sure I’d even use the iPod part that much, since I have 30Gig iPod already…

    I just want a phone that is EASY TO USE.
    I want a phone, that my parents can buy and not call me 10 times a day to ask questions about how to use it
    I want a phone that keeps phone numbers synced with all my computers..

    Surfing the web? Getting e-mail? Only if it’s cheap.. and I mean REALLY cheap.

    Look at the cost of providing wired phone service now.. anywhere between $15.00 and $50.00 a month… Cell service, regardless of what else it provides, shouldn’t cost much more.

  5. Right, an easy-to-use phone that blows the competition (and I mean all of them) out of the water like a 10-ton torpedo will be Apple’s first flop. Look, I don’t have a cellphone and one of the reasons I don’t is because their ease of use bites big monkey butts. Everyone I know, however, does have a cell phone. Aside from dropped calls and signal quality, what is their next biggest complaint? Ease of use. People who think this is going to fail just have no clue how big cell phone angst really is. Do you live in a cave somewhere, bro? I mean, if I can pick up on this, why can’t you?

  6. Odd post there Jeff, very odd. Are you really sure about what you were saying?

    If Apple can put the power of web, media and communication into the hands of non-geeks with ease, then iPhone is the revolution Jobs described it as.

    From what I have seen that’s exactly what it does…and so does Pogue, Levy, Mossberg and a few other minor commentators…

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