With Sprint, Apple's iPhone loses exclusive sheen

With Sprint, Apple's iPhone loses exclusive sheen

Summary: If the Apple iPhone comes to Sprint, the tech giant loses a major tool in its arsenal: exclusivity. Can a ubiquitous smartphone continue to stay ahead of the pack?

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The tech press are in a breathless tizzy this week about the possibility, however remote, of Apple's iPhone arriving on the Sprint network.

(Here's the math: AT&T and Verizon already have it; and with T-Mobile's merger with AT&T upon us -- nevermind the legal hoops that could scuttle the whole ship -- that leaves only Sprint.)

There have been several intelligent views on what it means for the wireless phone industry. Some have noted the competition on the GSM standard (finally giving frequent travelers carrier choice for overseas iPhone use), some see the phone as a chance for Sprint to catch up to its outsized rivals, some say it's the end of Sprint's unlimited data plan (nevermind the Android phones already in its portfolio), et cetera.

But my first reaction was simply: what will Apple do now?

Like a new nightclub, the iPhone for the last three years has traded on exclusivity. The company collected on lucrative contracts -- first AT&T, more recently Verizon -- as U.S. wireless carriers scrambled to land the smartphone industry's hottest attraction.

And like a good club, Apple has managed to extend that excitement for as long as it could. It was only in January of this year that the Verizon deal happened, with an unnaturally high-profile press conference just after the Consumer Electronics Show.

Consider Apple COO Tim Cook's comment during that event: "No one more than us wants to give Verizon customers the choice they've been waiting for."

You can almost see the line of people waiting. (Even though they failed to show up on launch day.)

That's just it. Since launch, Apple has taken advantage of its esteemed reputation by making sure it doesn't let everyone in. It's good for business, of course, but it's also great marketing. Let 'em clamor at the gates. The iPhone will always be hot, and when it starts slowing down, we'll let more people in.

The iPhone continues to be attractive, despite steep competition from myriad Android and Windows Phone 7 (can't believe I'm saying that) models. However, the luster is wearing off once more: the halo effect of the iPhone is not as strong the second time around, and fewer people are willing to make a carrier switch to get their hands on the device -- mostly because there are fewer people who don't have access to the device.

So a move to Sprint makes sense: if Apple's success is already slowing on Verizon, Sprint is the next logical step. The steps come more quickly. Apple must expand more rapidly to attract the remaining customers in the U.S. wireless market, either through expanding to a new network or through offering a cheaper model to reach people who are willing to pay for data but not a $200 phone.

But there are fewer of them to begin with, at least in the U.S. No carrier will ever see what AT&T saw in those early, frenzied days.

And then what? That's the concern here. Once Apple fully saturates the market, it has lost exclusivity (and associated revenues) as a tool to stoke customer demand. It may have taken four years, but soon everyone can have an iPhone. Which is somewhat alarming, because then the iPhone must compete directly with other handsets in a carrier's portfolio.

Of course, Apple will say that its phone is superior to competing handsets, and that's partially true. But customers, in droves, have demonstrated in sales of Google Android devices that "good enough" is in fact good enough when it comes to a smartphone, and they won't lose too much sleep over whether everything is just perfect or not.

Which leaves only experience and marketing as tools to keep Apple ahead. (Technical superiority counts for something, and Apple has its own pipeline for this, but this ultimately ends up as "experience" -- few care what kind of chip is in an iPhone.) Its new challenge is to retain existing customers -- continue delighting them with Genius Bars and other Apple-controlled customer service experiences. (Sorry, carriers.)

Can Apple keep the momentum? While a ubiquitous smartphone is not an exclusive one, it can still be popular: exhibit A being the proliferation of Macbooks on college campuses. Quality matters; customer service matters. You're no longer competing on carriers or price or even technical prowess; they're nearly equal in the marketplace.

In many ways, a move to Sprint (and a successful AT&T-T-Mobile merger) is the first real challenge for Apple with regard to its popular handset. It in many ways has been riding the long, long coattails of its first entry into the market -- with such built-in popularity, it merely had to continue delivering on its promises with every new model. (No easy task, sure, but you understand what I mean: the "best phone" doesn't always correlate to the "best selling" phone. With such tremendous early success, Apple had the sales built in.)

Now, it must deliver on less tangible fronts. We all know Apple can deliver quality products. But so now can other companies. Can it continue to weave the narrative -- or will rivals see the writing on the wall and begin nurturing customer relationships that go beyond the cash register?

Topics: Telcos, Apple, Hardware, iPhone, Mobility, Smartphones

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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30 comments
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  • Don't see this happening

    So what, are you saying most Apple users will jump ship and buy and Android phone?? Have you heard of iCloud? or things like AirPlay? Apple users are also very loyal, I don't see many going and buying a Windows phone...

    Me personally, I got my eyes on that new MacBook Air!
    Hasam1991
    • I'm not suggesting any of those things.

      @Hasam1991 I'm suggesting that loyalty is becoming a more important place to fight over customers once everyone has the option of buying one. I'm suggesting that the gap in "jumping ship" is much smaller than it used to be. I'm suggesting that, moving forward, it will take a lot more effort to reap far fewer rewards.
      andrew.nusca
      • The smartphone market only has 20%->30% penetration.

        @andrew.nusca

        So there is still lots of room for growth. Most of your logic makes little sense.
        Bruizer
      • RE: With Sprint, Apple's iPhone loses exclusive sheen

        @andrew.nusca -- the "jumping ship" is much smaller because there are products that can compete with the iPhone. When it first came out there wasn't much/anything that could do what it did. Now that there are some solid(mostly solid) Android phones, there isn't a need to switch to AT&T to get the iPhone. That is why the iPhone didn't get the big numbers the expected when the opened up to Verizon. They still sold and will sell alot of iPhones on Verizon, but the "wow" factor of an iPhone is not as big as it was. Not because of its "exclusivity", but because the competition has gotten better.
        DustinU
      • RE: With Sprint, Apple's iPhone loses exclusive sheen

        @andrew.nusca Hopefully you used a good two-ply toilet paper to write this article; single ply definitely wouldn't hold this piece of FUD
        smoody
    • RE: With Sprint, Apple's iPhone loses exclusive sheen

      @Hasam1991

      But thats always been the issue. Apple has no issue selling to exsisting Apple users. It will keep sales going but if that is all they have it will stagnant growth. Apple is having huge growth in the PacRIM and it has helped stem the growth on Android.

      I think mobile users will have greater choice and the value of iCloud / AirPlay only matters if you use other Apple products so again - limited audience. Your trying to cut the mobile buying public into one cloth that lives and breaths the Apple ecosystem.

      I have no need for iTunes, iCloud or OS X (Dropped Apple when they dumped PowerPC support).
      MobileAdmin
      • So iCloud does not integrate with Windows?

        @MobileAdmin

        Oh wait. It does....
        Bruizer
  • sorry, you are way off target

    You can buy an iPod at Best Buy, Walmart, K-Mart, Target, and scores of other establishments. It has no sheen of exclusivity but still dominates the market in a way that no other manufacturer can do.

    When Apple releases iPhone6, the clamoring for it will be just as loud as it was for the 4 and 5, maybe even louder because more people will have access to it.

    People do not buy iPhones because of its sheen of exclusivity, they buy it because (1) it is a better phone and offers them a better experience than other phones and (2) there are a lot of Apple users who will always want the newest product, even if their old one works just fine.

    The cell phone market is not an exclusive night club where elitists look down their nose at people who are not good enough to get in. If someone says they don't like their new iPhone because someone on Sprint has it too, that person is a fool.

    Exxon did not become the largest seller of gasoline by remaining exclusive, they became the largest by making their product available to as many people as possible.
    Mr Bob
    • Sprint iPhone users might be gaining a much better connection

      @Mr Bob I agree with you. The only company that needs to worry about Sprint is AT&T (maybe Verizon too). iPhone users are often bitching about the crappy AT&T service. Sprint may even debut an LTE/4G iPhone. Maybe?<br><br>If anything, the Sprint iPhone users will be the Star Bellied Sneetches.
      texbob
    • I don't buy it either

      @Mr Bob --- I agree, "exclusivity" wasn't a factor in iPhones growth. In fact, if they wouldn't have kept it exclusive to AT&T they would have seen more growth.
      DustinU
      • RE: With Sprint, Apple's iPhone loses exclusive sheen

        @DustinU @Texbob

        Thanks for your comments. I'm on Sprint and look forward to being able to buy an iPhone. If I wanted "exclusivity" I would buy a Coby phone. Instead, I want quality and that is what makes the iPhone #1.
        Mr Bob
      • RE: With Sprint, Apple's iPhone loses exclusive sheen

        @DustinU

        That assumption has ALREADY been disproved, at&t exclusivity is gone....the iPhone hasn't seen much growth
        Doctor Demento
      • RE: With Sprint, Apple's iPhone loses exclusive sheen

        @Doctor Demento >>at&t exclusivity is gone....the iPhone hasn't seen much growth<<. Wrong. From Macworld.com "Chief operating officer Tim Cook also noted that the iPhones other U.S. carrier, AT&T, reported an increase in iPhone activations during the quarter, despite increased competition from Verizon. Between AT&T and Verizon, Apples iPhone business in the U.S. grew 155 percent, according to Cook."

        I think 155 percent is good growth.
        Mr Bob
    • RE: With Sprint, Apple's iPhone loses exclusive sheen

      @Mr Bob @Mr Bob I think we'll have to agree to disagree, then. Because I find it hard to imagine so many people lining up for a product they've never tried.

      (Also: People need gasoline to get to work. People don't need iPhones.)

      I think it's hard to contest that the iPhone has become a sort of cultural icon. I'm not suggesting it's the only thing moving these units, because if they were of poor quality, it'd show quickly. But you're turning what I said into the inverse: I'm not saying people look down on others because of this air of exclusivity, I'm merely saying that those who don't have it want it for some unknown reason. How many more smartphones can you say that about?
      andrew.nusca
      • Careful with the comparisons...

        @andrew.nusca

        <i>People need gasoline to get to work. People don't need iPhones.</i>

        Maybe not needing an iPhone per se, but smartphones are quickly becoming as "needed for work" as the computer has been these past couple of decades.

        And needing gasoline to get to work was once (not as long ago as you'd think) also not quite as universal as it is now.
        daftkey
      • It is a question of &quot;wants&quot; VS &quot;needs&quot;.

        @andrew.nusca

        People will happily buy "wants" before "needs".
        Bruizer
      • RE: With Sprint, Apple's iPhone loses exclusive sheen

        @andrew.nusca >>Because I find it hard to imagine so many people lining up for a product they've never tried.<< I also find it hard to believe, but there are still huge numbers of people outside of the Apple Store, some camping out days in advance, to get Apple's newest product.

        Reading all the comments I think this is where we are at. Sprint will/may get the iPhone. You see some downside to that. Many of us disagree. As you say, we'll have to agree to disagree.
        Mr Bob
  • RE: With Sprint, Apple's iPhone loses exclusive sheen

    I agree with Mr. Bob, this article is way, way off. What is so exclusive about getting an iPhone? There was never anything exclusive about the iPhone. At this point, everybody and their brother has an iPhone.

    The iPhone stood out because it was the first, or one of the first, to package a phone, PDA, and Mp3 player all in one device. When the iPhone came along, the best thing going was the Palm Treo where you had your PDA combined with your phone. It could play music, but it was so inconvenient. With the iPhone, you could do all functions at the same time and can even send text messages. It's the best of all worlds wrapped in one convenient package - that is what makes the iPhone special, not exclusive. Anybody can get an iPhone online at Amazon or Best Buy and there is nothing exclusive about these places. I have looked at several copies of the Robb Report and the DuPont Registry and I've never, ever seen an iPhone in either one of those periodicals. If it's not in there, then it's not exclusive.
    Gadget Girl
    • Just to be clear.

      @Gadget Girl You're conflating "luxury" and "exclusivity." For years, only about 30% of the U.S. market had access to the iPhone. Now with Verizon, it's about 60%. That still leaves a third of the market. (And just to be clear, this is just wireless customers overall. Smartphones make up about 50% of these customers. And iPhones are 27% of that figure, according to Nielsen figures for early 2011. So while millions of people have iPhones, "everybody" it is not.)<br><br>You may not consider this "exclusive" enough but the fact remains that there are millions of American wireless customers who are on carriers that don't make the iPhone available. And that's what I'm getting at.
      andrew.nusca
      • And opening the availability will only benefit the iPhone

        @andrew.nusca

        All you have to do is look at how opening to other carriers world wide has allowed iOS to maintain market share growth even when going against >30 other manufactures and >300 other devices.
        Bruizer