updated 04:00 pm EST, Fri December 11, 2009
May set stage for larger conflict
The iPhone is effectively stealing control of subscribers away from AT&T, says iSuppli. The research group notes that as cellphone carriers have grown, they have been able to depend less and less on money from voice. As a result they have increasingly turned towards data, selling not only bandwidth but services such as games, ringtones and video.
Because of iTunes and the App Store, however, iPhone owners are said to be more attached to Apple than AT&T, splitting off money the carrier would normally depend on. Apple has seen high profits, but AT&T may now lack the money to keep up with network upgrades, which are increasingly important because of the unlimited data available for the iPhone. The carrier has threatened to curb mobile data because of bandwidth constraints.
The dilemma may mark the beginning of a much larger conflict between carriers and phone makers. Nokia, Google, Microsoft and Research in Motion have all launched their own App Store equivalents, which could further divert money away from carriers. "Regardless of who wins, this battle will alter the balance of power in the mobile value chain," says principal iSuppli analyst Jagdish Rebello.