Tuesday, September 21, 2010, 11:55 am PT (02:55 pm ET)
AT&T CEO says most iPhone users won't leave for other carriersAT&T's chief executive said Tuesday that he's not concerned about Apple's iPhone becoming available on other carriers in the U.S., because most customers are locked into long-term contracts.
Speaking at an investor conference hosted by Goldman Sachs on Tuesday, Randall Stephenson admitted that the iPhone 4 is responsible for a great deal of the company's smartphone sales. But he also attempted to assure investors that his company will do well even after its exclusive agreement with Apple ends.
According to MarketWatch, the CEO told investors that most iPhone users — about two-thirds — were already customers of AT&T. In addition, strong sales of devices like the iPhone 4 lock customers into two-year contracts, meaning they won't jump ship to an alternative carrier like Verizon.
"If you look at the iPhone base, about 80 percent is either on a family-talk plan or in a business relationship with us," Stephenson reportedly said. "Those customers tend to be very sticky. They don't churn very quickly."
Stephenson's comments come soon after Credit Suisse raised its price target for AT&T, citing a study showing that only 23 percent of AT&T iPhone customers would switch to Verizon if "given the chance." Another 3 percent would depart for Sprint, while 2 percent would stay with T-Mobile, but 63 percent said they would stay with AT&T.
Neither AT&T nor Apple have publicly disclosed when their exclusive arrangement for the iPhone is set to expire, though numerous reports have indicated a potential January 2011 launch of an iPhone compatible with the CDMA wireless standard, which is what Verizon operates in the U.S. In terms of subscribers, Verizon is the largest wireless provider in the U.S., ahead of No. 2 AT&T.
There have also been rumors of the iPhone becoming available on other, smaller carriers in the U.S., like T-Mobile, as soon as this fall. As exclusivity agreements for the iPhone have ended in other countries around the world, it has resulted in even greater sales for Apple.
Earlier this year, AT&T, in federal filing, warned investors that exclusivity for "a number of attractive handsets" will end, but did not give specifics on phones or dates.
In addition, in May, Ralph de la Vega, president and CEO of AT&T's mobility and consumer markets division, downplayed the effect the loss of exclusivity would have on his company's business. Like Stephenson on Tuesday, he said earlier this year that family talk and business discount plans are "sticky" and keep customers with the carrier, regardless of options from other providers.
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