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8/31/2009
02:49 PM
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iPhone Exclusivity May End Next Year

Selling the iPhone on multiple carriers may be the only way for Apple to gain significant market share in the U.S.

Apple could be ending its exclusive iPhone agreement with AT&T within a year, according to Piper Jaffray analyst Gene Munster.

Munster said a non-exclusive deal would be far more lucrative for Apple because it opens up the device to a larger potential audience who will not or cannot switch to AT&T. The analyst said Apple went from an exclusive deal in France to a multi-carrier agreement and it now has a dramatically higher market share there than in markets where it is tied to one mobile operator.

"We expect Apple to add new iPhone carriers in the United States within the next year (likely with a new product launch next summer)," Munster wrote in a research note to clients.

Both Apple and AT&T have maintained their relationship has been mutually beneficial, and AT&T is reportedly working hard to extend the agreement because the iPhone has been a major driver of new subscriber growth. But AT&T has publicly said it knows it won't be the exclusive provider of the iPhone forever, and it is bulking up the rest of its smartphone portfolio with devices like the BlackBerry Bold and the Nokia E71.

Selling devices on multiple carriers may be the only way for Apple to gain significant market share in the U.S. smartphone market. The company's iPhone 3GS recently had a blockbuster introduction, but it was still outsold by the BlackBerry Curve lineup, which is available on AT&T, Sprint Nextel, T-Mobile, and Verizon Wireless.

Providing iPhones on multiple carriers could also help Apple avoid government pressure, as the FCC is reviewing the impact exclusive agreements have on competition in the wireless industry. Verizon has long been rumored to be getting an iPhone, or an iPhone-like tablet with 3G services built in.


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