Buyer’s Remorse: Apple-AT&T Is Five Year Deal

Engadget digs up legal docs and related newspaper articles from several years ago that seem to unequivocally assert that Apple’s exclusivity deal with AT&T is for a term of five years (from 2007):

[W]e’ve been doing some digging and we can now confirm that Apple and AT&T entered into a five-year iPhone exclusive in 2007, based on court documents filed by Apple in California.

The article goes on to ask whether the contract is still valid. If it is that would probably mean no Verizon or other non-AT&T iPhone until 2012. In that context Apple is . . . how shall we say it? . . . screwed.

Today NPD released figures that showed Android had outsold the iPhone in Q1 in the US. Of course, All four major US carriers are now selling Android devices vs. one selling the iPhone. And AT&T’s network reputation has taken such a beating at the hands of Verizon that I would guess it has lower confidence ratings with the public than Sprint’s much maligned network. 

Android beats the iPhone in selected ways (voice input, navigation, multi-tasking [for now]) but the iPhone remains a superior device overall; and all things being equal most people would choose the iPhone if given the choice. The recent ChangeWave survey of Verizon customers all but confirms this, showing considerable pent-up demand for the iPhone among Verizon customers.

Whatever the drivers behind the five year deal (perhaps some hard bargaining by AT&T in exchange for all the license and subsidies given to Apple) Apple now must be feeling buyer’s remorse rather acutely.

The gap between Android and the iPhone is being rapidly closed. All the AT&T defectors have already defected. While the iPhone “4G” or “HD” will likely bring upgrades and some new subscribers, those numbers will be nothing like what happened a couple of years ago, before the range and choice of Android handsets in the market. 

People contrast the iPhone and Android as the battle between “closed” and “open.” That’s not entirely accurate. But in a very critical sense it is: the one-carrier relationship. It has gone on long enough, but apparently it will go on for another couple years.

And that will wind up costing Apple in the long run. Caveat emptor.