Will AT&T’s business go with the iPhone?
Verizon to launch iPhone. It’s official. This is great news for me personally, as I love the Verizon network and the iPhone.  More to the point, this is an interesting business case.
AT&T subscribers boomed since the partnership with iPhone. However, Verizon’s superior network proved to be necessary for iPhone continue to grow market share. So, as the exclusive contract with AT&T ends, iPhone will become available at Verizon.
I foresee troubled water for AT&T moving forward.
For the past few years, AT&T has relied on the popularity of the iPhone for growth. What it had failed to do in the last few years was to focus on what AT&T delivers, which is the network itself. The iPhone actually added to the problem. As popularity of the iPhone grew, so did subscription to AT&T. AT&T was actually not ready for such growth, and dropped calls and connectivity became an issue for many AT&T users. This does not limit to the technology that supports the network itself. This also applies to the perceived reliability and connectivity of the network.
In the world of marketing, perception is reality.  Since iPhone’s dominance in the device category placed a target on the back of AT&T, Verizon has for years launched its marketing campaign against AT&T. Perceived or real, Verizon has now built a strong reputation on being a strong network with great coverage. With the launch of the 4G network and other top-of-the-line smartphones, even smaller carriers such as Sprint and T-Mobile started their campaigns against the iPhone and its current network, AT&T.  Without 4G and without the iPhone exclusivity, AT&T is no longer competitive in the wireless category.
Of course, the executives over at AT&T are not stupid. They knew this was coming. Therefore, they put in place a few measures that would slow the herds that would move out of AT&T and into Verizon. First of all, they raised early termination fee. Secondly, they allowed for more people to get the iPhone 4 last year in a discount. In exchange, more people got locked into a contract. See previous point. This will give AT&T months if not years to catch up. However, playing catch up is never a good position. You want to be ahead of the game, not last to the game. I suspect it’ll be a while before AT&T would be back on its game. I suspect that it’ll take another innovation, from AT&T or from an AT&T partner, in order to redistribute the reputational currency in the wireless category.
The lesson from this is to always know where you stand with your partner, and who holds the ultimate power. If you’re in the power position, know to leverage it. If you’re not in the power position and you’re dependent on your partner, know to prepare for your partner’s exit. In the world of marketing, there are numerous examples of such dependency and there are numerous lessons to be learned. But such would serve as topics for later posts. Stay tuned!
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Jeannie Chan is a Brand Manager for a Fortune 500 consumer goods company. She considers herself a marketer, a traveler, and a foodie. Jeannie lives in NYC. 
