AT&T looks beyond Apple's iPhone

AT&T (T) has had a rash of problems since it partnered with Apple (AAPL) and began selling the iPhone two years ago. The cause of the rash is that its data network cannot keep up with the demand from iPhone users.

While speaking last month in Pasadena AT&T CEO Randall Stephenson admitted his company may not be the only one selling the iPhone in the future. But while many AT&T iPhone customers await the day where they can buy an iPhone at, say, a Verizon (VZ) store, AT&T is also planning for the day when it either no longer has an exclusive agreement to sell the iPhone or no iPhone to sell at all.
That same day last month, Stephenson said AT&T may have missed an opportunity with Amazon's (AMZN) Kindle book reader. It turns out AT&T is looking to use its network with a series of devices in the future, including a signal-transmitting dog collar that allows owners to track their pooch, according to Glenn Lurie, the AT&T executive in charge of the iPhone and he's also in charge of finding new wireless products.

"We're placing some bets on some new business models," Lurie told Amy Thomson of Bloomberg News. "We're taking a page out of what we learned from Apple and about ourselves from the Apple deal."

Ralph de la Vega, who heads AT&T's wireless, explained further. "It's not just looking for the next great smart phone, it's looking for what are the next great set of devices that customers are going to want," he told Bloomberg. "There's a plethora of those things that are just beginning to get to market that I think will dramatically change the industry."

He wouldn't say what those game-changing devices might be. It's clear, though, that AT&T has become dependent on the iPhone, which accounted for 60 percent of subscriber gains in its most recent quarter. While the device has been driving sales higher for AT&T, it is smart of the telephone company to look for other devices it can partner with, because many are looking at its partnership with Apple as a failure.

It may be that AT&T bit off more than it could chew, as Stephenson said on May 27. As these new agreements are formed, AT&T needs to find a way to prove itself as a good data provider to these future products. While money is being made during its exclusive agreement to sell the iPhone, the reputation of the company, and Stephenson, is being tarnished due to its inability to meet the demand thrust upon it by the many iPhone users.

Stephenson knows his reputation is at stake as iPhone user complaints mount. He is personally testing the iPhone when he travels in an attempt to improve the service. "I beat those phones up. I'm on it like a hawk," he told DailyFinance on June 23. "I'm probably the most expensive drive-test the company has out there."

He should hire as many test-drivers to do exactly what he's doing to improve AT&T's service and show Apple and its customers it can handle the demand on its network from the smart phone. Otherwise, AT&T may be looking at not just other devices to help power, but life without an iPhone in its stores after its exclusive agreement with Apple expires. And Stephenson, well, if he were to lose the iPhone, he would likely lose his job as well.

Anthony Massucci is a senior writer for DailyFinance. You may follow him on Twitter at hianthony.
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