Apple and its exclusive domestic iPhone carrier, AT&T, are in talks to extend the carrier’s exclusive right to offer iPhone service in the United States. AT&T’s current deal expires next year, The Wall Street Journal reported.
Not having the terms of the deal has been a handicap for observers, who see this as a crossroads for Apple. The Cupertino, Calif.-based company has had success with the iPhone, selling nearly 14 million units last year, but a chance to expand into other markets can be tempting, say some analysts.
Consumers have already shown Apple that the device, which has had a halo effect, is enough to make them switch carriers to AT&T. “My sense is there are some people who turn from one carrier to another because of a hot device they really want,” said Lewis Ward, mobile consumer services research manager at IDC.
Just months after Apple released its iPhone 3G last July, consumers began switching to AT&T from other mobile carriers. Nearly half (47 percent) of new AT&T iPhone subscribers who switched came from Verizon Wireless, 24 percent came from T-Mobile, and 19 percent from Sprint, according to the NPD Group.
“The terms of the deal are obviously confidential, and that would make a big difference with how hard of a bargain they can drive with AT&T,” Ward said.
If Apple decides to end its contract with AT&T next year, it could offer the iPhone through other CDMA carriers, including Sprint, Verizon, MetroPCS and U.S. Cellular.
“If we are talking about Sprint and Verizon, there is a difference and a fair amount of investment there with the chips, but they have an opportunity to have a much broader market and can do cross-carrier pollination,” Ward said.
Doing so, however, would bring some complexity to the table, Ward added.
“As we’ve…