The iPhone: A Blessing and a Curse?

Posted by: Olga Kharif on February 03, 2009

Consultant Forrester Research came out with some really interesting data today: Apparently, consumers that switch wireless service providers for hot new devices such as the iPhone come with a risk to carriers. More than 20% end up being likely to switch plans again in the next six months.

The data, based of a survey of about 4,000 Americans, is troubling to say the least. Over the past year, the U.S. wireless market began to be driven in large part by hot new devices. AT&T comes out with a new 3G iPhone? So Sprint Nextel rolls out the Samsung Instinct or Palm Pre. T-Mobile introduces the T-Mobile G1, while Verizon introduces a slew of new touch-screen LG phones. Just look at TV cell-phone service advertising today: It’s all about the phone, and to a much lesser extent about the network.

If Forrester is right, consumers attracted by this advertising may not be the sort that the carriers want. Think about it: A carrier typically spends some $400 spent on marketing to get that subscriber, and it needs at least two years to recoup that cost and to make a profit. If subscribers churn more frequently than that, that cuts into profits. So maybe the subscriber who came to AT&T to buy the iPhone isn’t going to benefit AT&T as much in the long term as previously thought.

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Reader Comments

Paul Clisby

February 5, 2009 05:20 AM

You guys don't even pretend toward independence anymore do you. A once relevant scribe for the internet revolution continues it's downward spiral toward lowest common denominator irrelevance. What a great shame.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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