Can Apple Afford To Keep iPhone A Cingular Exclusive?

apple cingular exclusive for iphone

Steve Jobs made a few noteworthy announcements in his keynote this past January. Among them, Mr. Jobs boldly announced that he expects to push 10 million iPhones out of Cupertino, CA. by the end of 2008. Great! I really hope Stevie can meet his objective. But, 10 million units in a year and a half seems quite the lofty goal. And just to top off his keynote, Steve said that the iPhone would be a Cingular exclusive! It seems that everyone has just accepted this to be fact and that Cingular would indeed be the only carrier offering the Apple iPhone. But, will that really be the case?

Well, the good news is that the global market for "smartphones" (the term is used loosely here) has increased significantly through 2006. Market research firm IDC puts the global sales of "smartphones" at around 80.5 million units for 2006. That’s a lot of smartphones. And there’s still more room for growth in the "convergence device" market.

And, why would Steve announce a goal with a 1.5 year timeframe? And why would he release the iPhone in the middle of the year? Well, by releasing it mid-2007, Cingular can still say they have the exclusive on the iPhone through year-end (discounting those rumors regarding a slight 2-week exclusivity window for Cingular). And then there will be a whole year for Apple to release the iPhone to other carriers, and take advantage of the global market.

So Apple really can’t afford to do a Cingular exclusive for very long. Cingular only has about 70 million subscribers to date, only a portion of which will be at the end or near the end of their contract. If Apple was to keep the iPhone exclusive to Cingular through 2008, essentially 1 in 7 will have to buy an iPhone to meet the 10 million mark. But smartphones only account for 10% of the mobile market, so there are really only about 7 million potential customers. Cingular would need to sign up 3 million new customers in order to meet Steve’s objective (that is, if all 7 million get the iPhone).

And something else to think about, this whole exclusivity shebang may be Cingular’s way of rewarding all their third party dealers. Cingular recently required all authorized dealers to carry Cingular exclusively. And now throngs of people will be hitting those same dealers for new line activations.

Fear not, all you iPhone fans on non-Cingular GSM networks and outside the U.S. The Apple iPhone will be coming to you after a scant 6 month waiting period. But if you really cant wait that long, sign up with Cingular (I know I will), or move to the U.S.A. (it’s really not as bad a place as everyone says).

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