Will Curiosity in the iPhone Translate into Big Business for AT&T

Implications: 1. Many consumers are looking to Apple iPhone to redefine phones as the Apple iPod did Mp3 players 2. Will the iPhone help reverse AT&T’s declining share in new mobile customers?

Analysis: Analysts generally agree that the iPhone with its sleek touch screen will change what consumers expect from mobile phones. Many of AT&T’s competitors argue that they have competitive devices that take sharp pictures, allow music down loads and are designed for extensive use of text messaging and internet connectivity. However, it is a confirmation to Apple’s brand and reputation that many consumers are looking to Apple to redefine phones as the iPod did mp3 players.

A recent study found that 64 percent of the US mobile phone subscribers were aware of the iPhone and 14% of that group was highly interested in buying one…This is an extremely high awareness and interest for any product before it has hit the market.

AT&T launch of the iPhone is about moving the whole AT&T brand. This is a challenging time for AT&T Mobile. AT&T’s share for new monthly subscribers has fallen over the last year from 29.5% in Q2 2006 to 25.8 in Q1 2007. Also AT&T is doing worse in terms of churn than Verizon. AT&T is now losing 1.7% of all subscribers per month compared to Verizon with 1.1% monthly churn. (T-Mobile’s churn is 2.6% per month and Sprint’s is 2.3%).

It is expected that the interest in the iPhone will also generate interest in AT&T’s other products. The iPhone will drive huge amounts traffic to AT&T’s stores. However, the timing would be better if AT&T was ready to deliver “Three Screen” and a stable U-Verse service at the AT&T Experience Stores.