Apple and AT&T – A tale of two companies
It is difficult to tell that Apple and AT&T share a product sometimes, such as when the time rolls around to announce earnings. How can the results of the two companies be so different?
Apple is the manufacturer of the iPhone. Earlier in the week, they held what could have been seen as an earnings celebration. It was almost a non-stop report of good news on all fronts, with the iPhone at the forefront of glad tidings. It is the smartphone star of the moment, outshining all of its competition, at least for the moment, and Apple is doing phenomenally well with the iPod and personal computer lines, especially the MacBook and iMac. Everything is coming up roses.
AT&T is the exclusive U.S. wireless provider for the very same iPhone that is at the heart of Apple’s all-star lineup, yet when they released quarterly earnings reports today, their profits continued to be flat, according to a Marketwatch story. They continue to sign up more iPhone customers (who have no other choice), yet they do not seem to be able to make big money with the device, or with the rest of their hardware and services lineup on the wireless side. The disparity between the two sides of the iPhone juggernaut seems unlikely.
Part of it is certainly that AT&T pays much more for the iPhone than they sell it for. But that is true for the most popular phones at Verizon, too, and they do not seem to have many profit problems; that what expensive rate plans and contracts are for. Carrier-subsidized handsets are the rule in the industry and not a specific problem for AT&T. Yet AT&T continues to lag behind Apple in making a profit from the iPhone, which should be a golden goose.
The cost of the phone is not likely the culprit. The major problem appears to be the state of the AT&T network and the management practices that let it get into its current horrid condition, plus customer service that barely qualifies for the name. In short, AT&T manifests a tendency to treat their customers poorly and to lag behind the other wireless carriers in cellular innovations and service. They consistently shows up at or near the bottom in these two critical categories. As long as their network ranks last, and they continue to provide shoddy customer service, it doesn’t matter what the cost of the phone is.
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