Apple and AT&T Agreement Aftermath

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Table of Contents

Executive summary
Analysis of Facts
Problem Statement
The Solutions of facts
Competition from other players
Recommendation

Executive summary

Apple and AT&T, the largest U.S. mobile service provider entered into an agreement that would see both companies introduce the iPhone into the U.S. carrier market of handsets. According to the agreement, AT&T would be the soul service provider for iPhone while the iPhone company would be the sole distributor with the latter holding 10% of iPhone revenue.

IPhone as a brand did much better in terms of sales than their previous brand, the iPod reason being that the iPhone encompassed the iPod in a cell phone and in nearly 74 day had sold one million set of the new iPhone, which is the highest number of handsets ever sold by any cell phone company in the history of US mobile handset industry.

Although the iPhone had done much better than iPod which had taken two years to sell a similar number, the iPhone faced steep challenges from other smart phone and cell phone providers.

Analysis of Facts

The new iPhone displayed Apples prowess in developing new application like the user interface (UI) technology. This application allowed iPhone handsets to have a multi-touch wide screen than having a key pad; the screen took most of its surface giving the new handset a unique and catchy shape. The touch screen functionality improved the iPhone video quality and functionality.

Problem Statement

By apple signing with AT&T mobility meant that phone users in the U.S. had to subscribe with AT&T Mobility. This locked users into a commitment which lasted for two years with the same carrier.

AT&T offered GSMs voice network which was in contrast to other network providers who used the CDMA standard, AT&T mobility offered it client’s unlimited access to its Edge network. This limited the iPhone. On top of this, the new iPhone handset faced a lot of pressure from other quarters.

Firstly, the handset could not support the 3G network, it was relatively slow to other smart phone handsets that were on the market, according to business this was a raw deal as the phone could not much modern business enabling trends like e-mail and browsing, the iPhone manufacturer could not upgrade the handset because it relayed on the Edge network, which provided only 2G to 2.5G.

Also, the plan by iPhone to face out cheaper models of the brand and reduce the price of the 8GB and the 4GB iPhone provided unprecedented challenges especially with its customer.

The Solutions of facts

The iPnone set to resolve the problems of the handset by Promising to launch a 3G enabled handset by late 2008, but in the meantime advised its customers to migrate and tap into the Wi-Fi technology that was generally faster than the Edge network.

The iPhone general manager, Steve Jobs, decided to tackle the problem of facing out cheaper iPhone handsets by mollifying those customers with cheap iPhone handsets with a $100 Apple store credit.

The other problem that presented itself with the new iPhone was that its memory was too low to other music players and also its capacity could not be expanded. In addition to this, the handset relied on a non-replaceable battery that had a lifespan of only one year. This problem was eradicated by coming up with a handset that had a high memory and also having a replaceable battery.

Competition from other players

The iPone faced a lot of competition from other handset makers who offered music enabled cell phones and smart phones like Research in motion BlackBerry, LG Prada, Samsung F700, and Nokia N95.

These cell phone manufacturers offered similar applications to those of iPhone and some went further to offer quality video definition and high music storage capacity like the Sony Erickson walkman phones that could store up to 8,000 songs.

To beat the high competition, iPhone had to diversify its market where it ventured to other countries like Germany where it partnered with Deutsche Telekom’s T-Mobile.In France, iPhone partnered with Orange division of France Telecom. In Britain, iPhone was in agreement with Mobile operator O2 as their sole distributor and service provider.

All these new markets offered an edge over other competitors in terms of customer volumes, making the iPhone emerge as the most successful cell phone manufacturer in the shortest time in the history of cell phone industry.

Recommendation

For iPhone to keep its market base, then it needs to improve on a few of its applications. This include increasing the memory of the iPhone to be popular with its young clients who are interested in storing large files of music and also its business class customers who are interested in saving information either through downloads or emails.

Lastly, iPhone should take into consideration the fact that majority of phone carriers in America use handsets that are less than $100 and iPhone handset retailing at double this amount reduces their clients’ realism, although, they may argue that the cost is compatible to quality.

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