iPhone making cell phone networks irrelevant

Tom Dougherty, CEO – Stealing Share

12 January 2011

People only care about the phone, especially if it’s an iPhone

I am in awe of the brand power of Apple. If you have read this blog for any length of time, you know I am a self-confessed Apple loyalist. As you may know by now, Verizon announced that it will start carrying the iPhone 4 next month. Verizon finally gets arguably the world’s most popular phone and Apple gets access to “The Network.” But does anyone care about phone networks?

What I found so interesting about all of the news and opinions surrounding this news was that the discussion was primarily centered around the iPhone instead of Verizon. In recent memory, I do not think that Verizon has ever scheduled a press conference with the magnitude of the one it had yesterday.

And really if you think about it, this was a press conference about the iPhone not Verizon. Verizon is just the new host for the iPhone. The phone made the announcement newsworthy and Verizon’s role is simply to support it.

“In fact, one might go so far to say that bringing the iPhone to Verizon has made phone networks practically irrelevant.”

 

phone networksI believe there were three winners with this announcement: Apple and the customers of AT&T and Verizon. Clearly, Apple is the big winner as ultimately it has access to more customers. However, the customers of AT&T and Verizon also stand to win as each company is fighting a battle for users with the same device. That most likely means that consumers can look forward to service costs becoming more competitive.

The big loser is Android. There are a great many Verizon customers who settled for a Droid because their contracts prevented them from switching to AT&T for the coveted iPhone. I have a sneaking suspicion that Droid will soon become the defacto free phone when a customer signs a two-year contract.

What is so interesting about this from a brand perspective is that the brand that phone networks like Verizon and AT&T sell (Apple’s iPhone) is what is spurring change. This is evidence that Apple’s brand power far eclipses that of either AT&T or Verizon. In fact, one might go so far to say that bringing the iPhone to Verizon has made phone networks practically irrelevant.

Neither AT&T or Verizon or any of the other phone networks evoke brand preference or loyalty and this is a problem for them. Without any reason to choose, the default becomes price – a position I’m sure neither AT&T or Verizon want to claim.

Unless they do something quickly to reinforce their brands in an effort to create preference, phone networks will only be able to compete on price and promotion. The best chance they have as it stands now is the hope to be the exclusive provider of iPhone 5.

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