Apple will terminate its existing iPhone carrier exclusive agreements within a year according to a new investor note issued by Piper Jaffray senior research analyst Gene Munster, who anticipates the deals will end next summer with the introduction of a new and improved iPhone device. "For various reasons [Apple] moved from an exclusive relationship with French wireless carrier Orange to a multi-carrier model," Munster writes. "In France, the company now enjoys dramatically higher market share (in the 40 percent range vs. about 15 percent in ROW) than in countries with exclusive carrier agreements (such as AT&T in the U.S. where the iPhone has market share in the mid-teens). We believe Apple is seeing the increased unit sell-through more than offset the slightly (~10 percent) deteriorated economics per unit involved in non-exclusive agreements." Insiders have indicated that Apple's newest iPhone deal with China Unicom is not an exclusive.
AT&T's current iPhone agreement is scheduled to expire next year--sources have told The Wall Street Journal the operator is in talks [1] with Apple to extend the deal through 2011. In an interview with the publication, AT&T CEO Randall Stephenson declined to discuss the terms of AT&T's current agreement with Apple, confirming only that it's a multi-year partnership. AT&T said last month that it has about nine million iPhone customers.
Munster's report also speculates that Apple is dissatisfied with its current iTunes premium video efforts, specifically the digital storefront's scarcity of original series content from cable network HBO and its limited movie availability windows. "We believe Apple is unhappy with the current status of video on the iTunes Store and is working to change it," Munster notes. "These changes, however, will take time, in the form of lengthy negotiations, in order to bring the rights for TV and movies up to speed in a digital world."
Munster predicts that Apple will eventually a monthly subscription option for TV shows on iTunes, promising unlimited content to broadcast and cable content for less than $50 a month. "While timing on the launch of such a new product is very uncertain given the negotiations that would need to take place, Apple may work to launch it simultaneously with a new version of Apple TV, or an updated Apple TV software within the next year," the analyst writes. "Moreover, we believe Apple has wisely avoided a subscription music model, as music listeners prefer to listen to their own music, and listen to it frequently. Movie watchers, on the other hand, prefer to rent, and typically only want to see a movie once or twice. Likewise, TV viewers are not accustomed to purchasing TV shows on an a-la-carte basis, and a subscription TV service would likely be more appealing."
For more on the Piper Jaffray investor note:
- read this AppleInsider article [2]
Related articles:
Half of iPhone [3] users download premium apps every month
iPhone [4] now 69 percent of U.S. smartphone traffic
Links:
[1] http://www.fiercemobilecontent.com/story/t-talks-extend-iphone-exclusive-through-2011/2009-04-15
[2] http://www.appleinsider.com/articles/09/08/31/apple_expected_to_offer_iphone_on_new_u_s_carriers_within_a_year.html
[3] http://www.fiercemobilecontent.com/story/half-iphone-users-download-premium-apps-every-month/2009-08-27
[4] http://www.fiercemobilecontent.com/story/iphone-now-69-percent-u-s-smartphone-traffic/2009-06-25