Falling AT&T Iphone sales might lead to lower prices

ITHINGS SELLER Apple might have enjoyed reporting that its sales shot up but according to figures from partner AT&T, those Iphone figures weren't all that they seemed.

The US mobile operator, still the only one in the US to carry the Iphone, announced today that it had activated 2.7 million Iphones during the past three months. That sounds mighty impressive until you look at the quarter prior, when the firm added 3.1 million Iphones onto its network rolls.

While these figures cover the post-Christmas sales slump, Iphones should be more resistant to seasonal sales patterns as it's unlikely too many fanbois have wealthy relatives that will pony up the best part of a grand to buy them an Iphone with a contract. Therefore these figures show mounting trouble for Apple in the way it conducts business with mobile operators.

The Iphone wasn't a landmark device for its hardware but rather for Apple's ability extract exorbitant fees from mobile networks for them to get the franchise to carry the smartphone. Not only were operators forced to subsidise the phone but Apple took a chunk of the ongoing monthly bill. Given that mobile networks had to reinforce their infrastructures to cope with the extra traffic being generated by the Iphones, the deal seemed hugely in favour of Apple. So these figures reported by AT&T might just be the start of Apple losing its hold on the mobile network operators.

Here in Blighty sanity prevailed after two years and most major operators flog Apple's smartphone now. Although prices are still disgracefully high, a wider range of plans has meant that the Iphone has become less of a financial burden for most consumers. The variety of plans has also helped the adoption of the Iphone, with AT&T's figures showing that adoption is growing faster outside of the US.

Given the case, AT&T can argue that being able to flog the Iphone at a much lower price, either by having Apple subsidised it or by lowering Apple's cut of the monthly bill, will help sales. AT&T's bargaining power is higher than, say, O2, due to the fact that only one other network, T-Mobile, runs a GSM network in the US. T-Mobile did a pretty good job of showing how importent its network was with the Nexus One in January, so Jobs could be stuck with meeting AT&T's demands.

With Android devices flooding the market, those who want a smartphone, not just an Iphone, have many choices. In the US, Verizon has done exceedingly well with the Motorola Droid, and over here in Blighty handset manufacturers HTC, Motorola, Sony Ericsson, Samsung and LG are all piling onto the Android bandwagon. The drop in sales figures seen by AT&T might spur the realisation that Apple doesn't have the market all to itself and could signal the point at which Steve Jobs has to realise that he can't expect operators to bow to his demands any longer.

Operators here would seize upon any sign of weakness from Apple. For them, some aspects of the Iphone such as the App Store do nothing but add cost to their network. Apple's goal of ever growing sales might not be met if operators like AT&T continue to post decreasing activation figures. For consumers such a change could mean lower handset costs, although it's unlikely operators will reduce their astronomical data tariffs any time soon. µ