Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Apple, AT&T had five-year exclusive iPhone deal but have the terms since changed?

By | May 10, 2010, 4:16pm PDT

Summary: Apple and AT&T originally signed a five-year exclusive deal for the iPhone, according to court documents, but with the iPad’s arrival, the terms of that deal could have changed.

Court documents have confirmed that the exclusive deal between AT&T and Apple was for five years, a timeframe that was reported - though unconfirmed - by a USA Today report three years ago. Engadget put the pieces together and excerpted parts of the court documents in its own post to confirm the earlier USA Today report.

The revelation would normally imply that there are two years left on that contract but, before anyone goes giving up on the iPhone coming to another carrier anytime soon, it’s important to note that contracts can be altered or dissolved before their expiration dates and that Apple and AT&T likely renegotiated the terms surrounding the iPhone when they hammered out an agreement around the iPad.

Bottom line: No one knows how long Apple and AT&T have left in that exclusive contract. So, in essence, nothing has changed.

But for a consumer like me, it really doesn’t matter one way or another. Google’s Droid Incredible by HTC killed the last of the iPhone envy I had left in me and, assuming that Apple and AT&T stay tight for years to come, I can only imagine that others will “Go Google” the same way I did.

Apple continues to report strong iPhone sales quarter after quarter, but competitors are starting to catch up. NPD reported earlier today that retail sales of Android surpassed iPhone OS sales - and bloggers and analysts who follow the space didn’t seem to be surprised by it.

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Sam has been a technology and business blogger for more than 18 years.

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Sam Diaz

Sam Diaz has nothing to disclose.

Biography

Sam Diaz

Sam has been a technology and business blogger, reporter and editor at ZDNet, the Washington Post, San Jose Mercury News and Fresno Bee for more than 18 years. He's a member of the National Association of Hispanic Journalists and a graduate of California State University, Fresno.

Talkback Most Recent of 16 Talkback(s)

  • "No one knows how long Apple and AT&T have left in that exclusive contract.
    "So, in essence, nothing has changed."

    Wow, at least somebody gets "it." All that talk about "the exclusivity ends [insert random date here]" was exactly that, talk. Hopefully this will shut off that particular crap spigot.

    As for iPhone envy. Hey Sam, care to make a bet as to how long after Android 2.2 is released that it takes to get on your phone? If the Moto Droid took almost 3 months, I doubt that HTC/Verizon will be as fast. I think you've just switched one form of OS envy for another.
    ZDNet Gravatar
    matthew_maurice
    10th May 2010
  • Well I love my iPhone, even with AT&T. The iPad is unlocked.
    So I can pick another network, like T-Mobile (their data rates are great). I'll have to check this all out before I buy a 3G version of the iPad.
    ZDNet Gravatar
    The Danger is Microsoft
    10th May 2010
  • RE: Apple, AT&T had five-year exclusive iPhone deal but have the terms since changed?
    @The Danger is Microsoft Be sure of the FREQUENCY of the networks involved, that you can get 3G or better from T-mobile. But the data deal with the iPad is pretty sweet... and ya don't have to actually DEAL with AT&T,. If they would do the same thing with the phone service, I'd be set.
    ZDNet Gravatar
    SpectreWriter
    11th May 2010
  • @The Danger is Microsoft
    In fact I would go with WiFi only because that gives me more storage for the same price and could use a MiFi or WiFi router enabled Windows Mobile or Palm Pre to my needs of surfing while on Go.
    --Ram--
    ZDNet Gravatar
    Rama.NET
    11th May 2010
  • RE: Apple, AT&T had five-year exclusive iPhone deal but have the terms
    "Apple continues to report strong iPhone sales quarter after quarter, but competitors are starting to catch up. NPD reported earlier today that retail sales of Android surpassed iPhone OS sales - and bloggers and analysts who follow the space didn??????t seem to be surprised by it."

    As has been stated in many other blogs/posts since this report came out: Android SHOULD be outselling iPhone OS. Android is an OS that is spread across many carriers and placed on MANY handsets from free to top of the line. iPhone OS is on AT&T and two handsets. The fact that iPhone OS maintains it's place NEAR the top is a feat unto itself. That means that that many consumers are choosing one of two phones on one carrier. If Android did not surpass total sales of iPhone OS, Google should/would be ridiculed.

    You can also look at the marketing used by some carriers using the buy one/get one model. That includes Android based phones but ABSOLUTELY not iPhones. So this boosts those stats even more.

    I am not saying this is sketchy accounting. It is completely up-n-up. It just needs to be acknowledged. When discussing over all sales figures between the two (and even RIM).
    ZDNet Gravatar
    tmhale13
    10th May 2010
  • Exactlly!
    Android is an OS that is spread across many carriers and placed on MANY handsets from free to top of the line. iPhone OS is on AT&T and two handsets

    Even with those handicaps, the iPhone has some really strong sales numbers
    ZDNet Gravatar
    John Zern
    11th May 2010
  • RE: RE: Apple, AT&T had five-year exclusive iPhone deal but have the t
    With all due respect, the conclusion date of the contract is determined by the length and the execution date. AT&T had to do some work to prepare for the iPhone, so I consider it unlikely that the deal was signed on the eve of MacWorld 2007. How important was having a carrier lined prior to serious prototyping and development? 18 months important?

    Did Engadget report an execution date?

    As to renegotiating for the iPad, I can see the possibility. On the other hand, all the iPad needs from AT&T is data, which isn't a scarcity. I imagine they got a first look, but I don't think they were in a position to demand an extension on the iPhone contract. I think Apple could make a convincing case that the iPad related data plans would mean more revenue than a 2 year contract.
    ZDNet Gravatar
    DannyO_0x98
    10th May 2010
  • RE: Apple, AT&T had five-year exclusive iPhone deal but have the terms since changed?
    I for one would love to see another network support the iPhone. I really love my device - something that I can not say for any previous phone. Thus until another carrier is able to support it - I will just have to suffer with AT&T. But that said... I would gladly pay early termination to give AT&T the boot!
    ZDNet Gravatar
    pixelm
    10th May 2010
  • On sales: it's only survey, excludes nonretail, contradict sales researches
    by research firms like IDC/Dataquest which do not rely their estimation on surveys.
    ZDNet Gravatar
    DeRSSS
    11th May 2010
  • Contract may have hurt AT&T as well
    People complain that the exclusive contract kept other carriers from selling the iPhone. But it may have also kept AT&T from selling other phones. Verizon, T-Mobile and Sprint all seem to be getting the new, sleek, fast smartphones. But AT&T customers are stuck with the iPhone, Blackberries, or older style phones. I can't switch my whole family to another, less extensive network, just to get a better smartphone. Yes, the iPhone has been mostly good for AT&T, but I think it has hurt them also to a certain degree. A lock keeps people out as well as in.
    ZDNet Gravatar
    bruceg@...
    11th May 2010
  • ZDNet Gravatar
    stevejg61
    11th May 2010
  • No Envy Here, Just gave Incredible back
    I haven't been willing to deal with AT&T's BS to have an iPhone. I jailbroke & unlocked my 3G to work with Tmobile, but they can only offer me 2G speed, which is rather lame, and the iPhone's reception has long been problematic. So when the Droid came out, I paid attention. When the Incredible came out last week, I got one.

    The problem (for Droid) remains the same. For whatever reason, ya just don't get emotionally attached to the Droids the same way. Some of it was VERY well executed (Navigation, for example, and voice recognition searches,) but after a week, it was still mostly gadgets that I don't really NEED, and they more than doubled my phone bill.

    I did the math. Incredible=$3200 over 2 years' time.
    My current Virgin service, with texting and unlimited voice is $57.50 a month (1380 for 2 years.) An iPad 32GB 3G adds $800, 24 months of service at 30 a month (cheaper than any other) is 720... total is 2900 that way, *if* I use the ipad with 3G all 24 months (no contract, my choice.) So I can get the iPad and unlimited talk, texting, etc. for $300 less than the Incredible... Hmmm.

    The decision was made at Best Buy. I touched the iPad with my own fingertips, felt how much more responsive the accelo. was, saw web pages show up as proper web pages instead of some squished version or an odd application segment. it was a little smaller than expected, but it was still spot-on. 10 hours of battery life? The HTC Incredible was 3 minutes away from a power-off in just 3 hours' time.

    I left Best Buy, went over to the Verizon store and handed it back to them. Cool gadget, but just not worth my money.

    I don't have any envy anymore.
    ZDNet Gravatar
    SpectreWriter
    11th May 2010
  • But the iPad makes a lousey phone
    so what do you make a call on?
    ZDNet Gravatar
    John Zern
    11th May 2010
  • RE: Apple, AT&T had five-year exclusive iPhone deal but have the terms since changed?
    I am surprised that I have yet to see anyone mention, when quoting that sales of Andriod recently passed sales of the iPhone, that every is (or should be) expecting an announcement of new iPhone hardware in June. So - if you don't immediately need it -why wouldn't you wait till after then to get yours? Expect to see the numbers shift after the new release.
    ZDNet Gravatar
    dwell1313
    11th May 2010
  • RE: Apple, AT&T had five-year exclusive iPhone deal but have the terms since changed?
    From what I have read about the iPhone hardware, it seems like the only other carrier capapble of being able to use the iPhone is Verizon. Based upon what has also been reported, Apple insisted on som every strict conditions, which may be hurting who ever carries their phone, which AT&T seemed the only one who would bow down to them. I'm sure that Verizon, the carrier everyone is drooling over and hoping that the iPhone will switch to is watching the situation and will make another business decison if it is given to them. However, if it affects the other customers' experiences that they already have, such as hurting network performance, they may decline. or if it cuts in ot their profits as well. The things that Apple may need to watch out for as well is if they were to switch carriers is that they may have to support multiple verrsions of their hardware - which they are reluctant to do with their Macs, and if a lot of people get on the other carrier's network and they get lots of dropped calls, poor data transmission, like what happened when it first came out - people may step back and say, hey, wait a minute, maybe the problem was not with AT&T but with the iPhone itself. That's a big gamble that Apple would have to take
    ZDNet Gravatar
    stevejg61
    11th May 2010

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