End of exclusives will benefit Apple as it defends store model
Published: 24 November, 2009
READ MORE: France | Apple | AT&T | Orange | iPhone
As new speculation surfaces that AT&T will indeed lose its iPhone exclusive in mid-2010, the advantages to Apple are becoming clear over the Atlantic, where the end of exclusivity is boosting its market share (and carriers are still taking most of the margin hit of targeting the mass market and competing on price with rivals).
The iPhone has been available from all three French operators - former exclusive provider Orange plus Bouygues Telecom and SFR - since April, after the government banned sole rights deals. The wider distribution boosted Apple's value market share to 32% in the third quarter, from 21% three months earlier, according to research from Bernstein. "The expansion of iPhone distribution has clearly benefited Apple, helping it to more than double sales in three months," Pierre Ferragu, analyst at Bernstein, told Dow Jones. The gain has been made mainly at the expense of BlackBerry, he added.
Morgan Stanley estimates echo the findings, saying that Apple's French market share rose by 17% between Q2 and Q3. As a result, France is now the biggest market for the iPhone in Europe, with more than 600,000 units sold in Q3 according to Gartner. In global market share terms, Apple rose from 1.9% in Q2 to 2.6% in Q3.
Analysts expect a similar effect in the UK, where O2 lost its exclusive recently, with Orange now offering the iPhone and Vodafone due to launch it after Christmas. "Exclusivity in France ended in April. Our numbers show that shelf share tripled and market share doubled quarter on quarter," said Strategy Analytics analyst Neil Mawston."Given that the UK market is pretty similar and the brand strong there, yes, you can extrapolate that."
So while the iPhone remains AT&T's key competitive weapon, there is rising conviction that it will lose its sole rights next year. Brian Marshall of Broadpoint AmTech is the latest to raise the specter, telling Bloomberg TV that he thinks the deal will change in 2010. He said in the interview that Apple gets a $450 subsidy from AT&T for each iPhone it sells, but that after June the subsidy will drop to $300 for all carriers, so that Apple will need additional partners to boost revenues.
Meanwhile, Apple has been defending its controversial App Store approval process, which has seen some high profile developers defecting recently. In response to the FCC's ongoing enquiry into Apple's handling of the Google Voice app, the firm claimed about 95% of programs are approved for the store within 14 days of submission and only 20% are not approved as originally submitted. About 8,500 apps and updates are put forward each week for the iPhone and iPod Touch. Last week, Apple updated its Developer Center web site to enable coders to track the status of their software as it makes its way through the approval process, breaking it down into nine status levels.
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