While I can understand how easy it is to draw this conclusion, upon deeper analysis I think this view is flawed.
Sure, on its surface, AT&T's "new" iPhone customers represent a small share of its almost 80 million subscribers, and a dramatic increase in costly service and support supply activity. But peel the onion on this exclusive arrangement and it becomes clear why the iPhone is so valuable:
- New iPhone customers might have accounted for 25% of AT&T's "Gross" new subscribers in the first quarter of 2009. Success at gaining new subscribers is an important metric that gets lost in the fuzzy math of looking at iPhone's share of "total subscribers" who tend to stay with their carriers.
- New iPhone customers bolster the significantly more lucrative business of "contracted" customers versus ones that buy minutes at a retail store on a month to month basis.
- AT&T's overall "subscriber churn" (subscribers leaving AT&T) seems to be dropping over the iPhone's life at the carrier. While wireless carriers tend to have low churn anway (usually around 1.5% of subscribers), they do try to lower it. The iPhone helps.
- While AT&T's network is experiencing a dramatic increase in performance problems and overall usage load, that trend is happening at all carriers. The iPhone may be spurring AT&T to act faster than its rivals on this future strategic crisis - a not insignificant benefit for slow-moving lumbering carriers that come out of a culture that is still clinging to their landline businesses!
So when you dig a little deeper, it's safe to say that an exclusive deal on the iPhone has Branded Manufacturersbeen a Home Run for AT&T.