Newswires’ Roger Cheng reports:
While there may be a lot of buzz around the potential end of AT&T (T) and Apple’s (AAPL) iPhone partnership, the two are virtually a lock to keep their marriage going for at least another few years. The truth is there are few options for either side.
AT&T’s wireless image has been synonymous with the iPhone over the past two years, which greatly helped its transition from the older Cingular Wireless name, which many thought was a younger, livelier brand. But it’s come at a price in margins, since AT&T has to pay a significant subsidy to Apple to keep the price as low as $200 for the still coveted smartphone. Still, it’s a sacrifice AT&T is willing to make as the device has drawn high-end subscribers - willing to pay a higher phone bill each month – away from its rivals.
While many would assume Apple has more leverage in the negotiations, it really doesn’t. As Verizon (VZ) Ivan Seidenberg said in a meeting with Wall Street Journal editorial staff, Apple never seriously considered making an iPhone that would run on its network. The technology powering Verizon Wireless isn’t anywhere near as widespread as the standard used by AT&T, limiting the market potential for the device. Seidenberg’s comments likely dashed the hopes of iPhone fans stuck on the wrong carrier.
If Apple drops AT&T, where can it go? The only other compatible carrier is T-Mobile USA, which has been struggling with its own identity, and feeling the competitive squeeze from both low-end pre-paid carriers and the higher end contract players. Plus, T-Mobile has pegged Google’s (GOOG) G1 smartphone as its own halo product, and it’s tough to envision Google and Apple sharing the same spotlight.
Things could change in a few years when Verizon and AT&T deploy next-generation wireless networks that are compatible with each other. Seidenberg suggested the discussions would likely be different in that scenario. While Verizon is pushing ahead with commercial availability of its fourth-generation network next year, it’ll take a while before it is widespread enough overseas that Apple would consider investing in “iPhone 4G.”
