No one outside a very few at Apple and AT&T know exactly how long iPhone will remain exclusive in the US. While the original deal was for 5 years, deals are subject to all manner of renegotiation, renewal, termination, amendment, and service level agreements. It could run out earlier than expected or it could continue on longer. While we can't see the dark matter that is Apple and AT&T exclusivity, we can see some of the gravitational ripples around it.
Holding out for BlackBerry, Android, and Palm heroes
Since launch in 2007 through 2009, iPhone was AT&T's single hero phone. iPhone 2G, iPhone 3G, iPhone 3GS were not only the biggest they were the one and only flagship release of the year. They were also the only real, full screen, touch-centric devices on AT&T's network. You went to AT&T for iPhone and some even stuck with abysmal AT&T service in their area just to get iPhone.
In 2010 iPhone 4 was still a huge deal. The hugest deal perhaps. But for the first time it wasn't the only deal. AT&T got Palm Pre Plus. They didn't do much with it, of course, nor with the first Android phone they got -- the unfortunate Backflip. In July they added a real Android, the Samsung Galaxy S branded as the Captivate. Both the Palm Pre Plus and the especially the Captivate offer very iPhone-like experiences. They're both real, full screen, touch-centric devices on AT&T.
Then August brought the BlackBerry Torch. Back in May we wondered what this device meant for AT&T and iPhone. While media reception to RIM's first slider has been lukewarm to say the least, the device itself was built specifically for and with AT&T, and was introduced by AT&T head honcho Ralph de la Vega who reportedly ordered millions of them.
Again, real, full-screen, touch-centric device on AT&T's network, and this time with a huge network push behind it.
From zero comparable devices/OS to three in a year? The pace is being picked up.
Look at the locks
In recent SEC filings AT&T has gone further than ever to try and assuage investor fears about what losing iPhone exclusivity would mean to the carrier. Much of this involves new iPhone 4 customers who are just beginning a 2 year contract stint, but also states that 80% of iPhone users are locked into hard-to-transport corporate and family plans. And there's that new ETF.
AT&T also remains the only US carrier fully compatible with current and past GSM/HSPA iPhones. T-Mobile is compatible for EDGE data but their 3G bands are another story and Verizon and Sprint use CDMA/EVDO radios that would require a completely different radio.
That AT&T is taking the time to point all this out, and doing it now, at the same time they're releasing other hero phones in noteworthy. That they're pointing it out to investors -- the people who know just how much of AT&T's profits and ARPU (average revenue per user) have been tied to iPhone over the last few years -- is noteworthy.
Lies, damn lies, and iPhone on Verizon
It used to be that everyone was talking about the next iPhone having a hardware keyboard. No one cares about that anymore. 4 years later and they're still talking about the next iPhone coming to Verizon. That they care about. And the punishment for that caring is year after year, rumor after rumor, that an iPhone on Verizon is just around the corner. Always, just around the corner.
Better service is one of the most closely held hopes. Whether AT&T has a poor network or any single network would suffer under the sheer volume of iPhone usage -- or both -- the reality and perception is that, for many users, Verizon is their network of choice.
We heard back at CES in January, and many other outlets have heard since, that the technology for a Verizon iPhone was in place but Verizon and Apple couldn't come to an agreement. Two such controlling companies, go figure?
Since then it's been revealed that Apple has flirted with Verizon several times over the years but never pulled the trigger.
Follow the money
The bottom line is, there will come a point where everyone who wants to or is willing to use AT&T for an iPhone will have one. Apple will reach saturation on a single network. 4 years in, old contracts are done, new towers are in place, the price is cheap-ish and brand awareness is through the stratosphere. It's becoming an upgrade, not a new user business for both AT&T and Apple in the US.
AT&T obviously knows this, hence the Palm Pre Plus, Android Captivate, and BlackBerry Torch. Users who actually like AT&T but for some reason don't like the iPhone might just come on over for one of those. (And, of course, when iPhone does go non-exclusive, AT&T will have other platform bases established from which they can attempt to build).
For Apple, selling tens of millions of additional iPhones in the US means getting on Verizon. (Or, okay, Sprint and T-Mobile since why leave any money on the table?). Verizon tried and failed to appease would-be iPhone converts with the BlackBerry Storm, and tried and succeeded with the Android Droid line, but while that stemmed the bleeding it didn't suck in the massive iPhone market. An iPhone on Verizon would.
Apple probably won't let Verizon paint a huge logo on iPhone, stick on garbageware, or BOGO it come January, but Verizon has Droid now for all that.
It's just, and all, about the money both will make from the deal at this point -- if they can reach it.
But what about the LTE, man?
While AT&T and Verizon don't have compatible 2G or 3G networks, they're both moving to 4G networks based on LTE (Long Term Evolution). This makes many believe Apple will wait for LTE before releasing a Verizon iPhone.
It has less to do with LTE and more to do with timing. When Apple and Verizon have a deal in place, iPhone will ship on Verizon. If that's after LTE is ubiquitous, it will be an LTE iPhone on Verizon. If not, it will be CDMA. The first AT&T iPhone didn't even support 3G.
Sure a CDMA iPhone will be a re-design, but so would an LTE iPhone and the only thing that matters -- again -- is what return on that investment Apple figures they'll make.
Tick. Tick. Tick.
Time is running out on AT&T iPhone exclusivity. AT&T knows it; they're lining up alternative hero phones and preparing their investors for the day their profit reports aren't lined with Apple gold. Apple knows it; they've been talking to Qualcomm about CDMA chips and seeing what multiple carriers have done for them in almost every other market outside the US. We all know it, hence the annoying amount of rumors that keep hitting the interwebs.
It's just a matter of time and Apple and Verizon making the deal.