Is exclusivity a good thing for the Apple iPhone and AT&T? The answer to this question depends on which side of the market you are on. If you're a consumer, exclusivity deals are rarely a good thing. On the other hand, if you are a retailer or service provider, exclusivity agreements can help increase profitability and market share. Here's an analysis of both sides of the coin.
Apple has entered into an agreement with AT&T to be the official and exclusive cell phone service provider for Apple's coveted iPhone. If you're Apple or AT&T, this is a great thing. Apple makes money on the sale of every iPhone and collects royalties from AT&T for every cell phone contract sold to an iPhone user. This is not a bad deal for Apple. AT&T benefits because, in theory, every iPhone sold by Apple will have to activate an AT&T cell phone contract. A nice piece of the cell phone service pie for AT&T. As far as these two companies are concerned, there is a lot of money to be made from this agreement. In addition, it saves Apple from having to make different phones or SIM cards for all the major cell phone service providers. From Apple and AT&T's perspectives, this is a great deal. However, this deal between Apple's iPhone and AT&T has opened the door for a massive hacking movement. I'm not sure this is such a bad thing for Apple, although they claim otherwise. Owning and using an unlocked phone is a status symbol in itself. It's a way to "stick it to" corporate America. It may be that Apple is selling more phones for this reason. It is free and effective advertising that translates into sales for Apple. I'm sure AT&T doesn't appreciate the piracy because they have nothing to gain from it. That's the business part of the Apple iPhone equation for AT&T.
What does the exclusivity agreement between the Apple iPhone and AT&T mean for the consumer? It means that there is a limited way to acquire this phone. If you already have a relationship with a non-AT&T wireless provider and don't want to switch, then owning an iPhone is going to be difficult. And if you like the music and content features of the iPhone but don't want to use it as a cell phone. Apple's iPod doesn't offer Internet access. One of the main selling points of the iPhone is its Internet capabilities and music features. If you like MP3s, videos, TV shows, and movies, then the iPhone is a dream come true. However, as soon as you open your iTunes account and plug your phone into your computer, you will be asked to sign up for AT&T's cell phone service with your credit card. If you don't pass their credit check or don't want to use AT&T, it limits you and actually prevents you from using the iPhone. In this scenario, the agreement between Apple iPhone and AT&T is not a good one for consumers because it limits free and open competition in the marketplace. AT&T has no interest in providing cell phone service offerings to iPhone customers.
However, no one likes being shut out, not even once. Stating that you have an exclusive agreement is an open invitation to all the hackers in the world to prove that your agreement is not exclusive and they will find a way around it. That's exactly what happened, and in this case, the consumer may have a partial victory. Free unlocks are available for your iPhone on YouTube for all firmware versions up to version 1.1.3. There is software available for less than $100 that will unlock your iPhone in seconds with just a few clicks. An unlocked phone will work with T-Mobile and AT&T in the US or any other standard GSM cell phone network. All you have to do is identify the appropriate SIM card. Plus, with the unlocks available, you don't need to use the cell phone service at all. You will still be able to download content to your phone, either via your computer or via WiFi. In addition, you can get Skype VOIP service for your iPhone and bypass the cell phone issue entirely. That's how the Apple iPhone and AT&T deal ended. It seems that, in the long run, AT&T could be the loser.