A good day to be an Apple (AAPL) shareholder

By: ispeculatornew
Date posted: 01.11.2011 (5:00 am) | Write a Comment  (4 Comments)

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It had been discussed for ages and some had started to fear it would never happen. Apple’s Iphone has been the company’s door into the smartphone market and while it continues to compete with both Research in Motion and Google’s Android, Apple had one obvious issue in its most important market. While users in almost every other market in the world had the choice of at least 2 different carriers, US consumers were stuck. They needed to use AT&T (T) if they wanted the Iphone.

Even if AT&T was perceived as the top carrier, it would still take away significant market share. But knowing that AT&T is perceived as having many different issues, as offering inferior customer service and coverage was a good enough reason for many to look at Iphone alternatives. The other big thing was that with no competition, AT&T was able to offer the plans as if it were running a monopoly.

I had suggested offering the Iphone on Verizon (and other carriers) in my post about being Apple CEO Steve Jobs for a year and was surprised that there would be arguments about that specific point. But there were. The main thing that were said were that we didn’t know the terms of the transaction and how much AT&T was paying Apple to be the exclusive carrier. That is true. But that is not my point.

Long term vision

I consider that no matter what AT&T was offering, it was for Apple’s benefit, not for the users. In the short term that can work. But in the long term, Apple will be better served by offering a better product to its customers. The phone, the software, the apps are obviously huge parts of that. But so is the plan that users can get. Customers had been asking for unlimited data plan since the launch of the Iphone and Verizon (VZ) will be offering it as one of its options, which great news for potential customers. In the long term, being the number one phone will be worth a lot more than whatever AT&T is paying.

How important is this step?

Estimates are that Verizon will add 10 million additional Iphone users in 2011. That is 10 million users that will log into Itunes, buy Iphone apps and give even more incentives to outside providers to develop software and hardware for Apple users. It is a critical step in my opinion.

What’s next for Apple?

I know that many do not agree with this and it’s unlikely to happen given the history but support Adobe Flash would be a great way to take away the 2nd most important reason why users to not buy the Iphone. Apple has announced that limited support for Flash will be integrated through Apps so that is one big step. The next one obviously would be having the internet browser support Flash even if it were to notify users when something crashes because of Flash (such as what Mozilla’s Firefox does).

Disclosure: Long Apple, No positions on Verizon

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4 Comments

  1. Comment by Zavi — January 11, 2011 @ 7:29 am

    I think it’s a great news for Apple too. I’m all the way blackberry, but I can understand some people not willing an iPhone because of AT&T…

    BTW,what’s rollover minutes? And why can’t AT&T offer unlimited data plan?

    Questions are ‘how many AT&T users will switch to Verizon’ and ‘Will Verizon for the iPhonee succeed where AT&T failed’?

  2. Comment by IS — January 11, 2011 @ 7:51 pm

    @Zavi – rollover minutes means taking the unused minutes from one month and using them in another basically. And AT&T might switch to unlimited but without competition, they did not have much of an incentive to do so!

    And your question is a good one, the estimates are for a few million customers in 2011!!

  3. […] A good day to be an Apple (AAPL) shareholder […]

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