Lenz+strategy+report

TO: Proximity Mobile team FROM: Ryan Lenz DATE: January 10, 2010 SUBJECT: Apple iPhone/AT&T strategy analysis

Here is my Apple iPhone/AT&T strategy analysis. The iPhone is one of the top mobile devices on the market and is currently associated with AT&T, however, the Google Android is a stiff competitor. Whether Gen-Y users will choose the iPhone over the Android depends on AT&T’s advertising strategy and ability to emphasize on the many applications the iPhone makes available.


 * Profile**

Apple, Inc. was founded on April 1, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne with the intent on selling simple, personal computers (Wikipedia, 2010). The company has since expanded to many other products, for example, the iPhone. It was made available to the general public on January 9, 2007 and was voted one of 2007's best inventions by Time magazine (Time, 2007). This was after Apple's CEO, Steve Jobs, had his engineers work on and investigate touchscreens in his headquarters based in Infinite Loop, CA (Wikipedia, 2010).

The iPhone is under contract with AT&T, which stresses all the features the iPhone has that other phones such as the Android does not. Also, the AT&T services upon purchasing the phone is enticing to consumers. The only let down with that is those particular contracts are for a couple years (usually two), so once you sign up, you are stuck with them, but that is the price you pay for having such a cutting edge phone like the iPhone. No other mobile services offer such a unique and sophisticated phone, and AT&T is taking advantage of that.


 * Competitive Landscape**

The smart phone is as appealing as ever in today’s world. This means that the competition to be the top dog is cut throat and brutal. Apple’s iPhone is considered the most popular of these smart phones, but other existing rivals such as the Android and Blackerberry linger. This just serves as a driving force for Apple to continue to develop and evolve via more applications and a better operating system, which is appealing to software companies that focus on developing these applications.

Apple and Google differ in their approaches for selling their respective products. Apple is a direct sales company and makes revenue off how many phones are sold. It is also in contract with AT&T, so upon buying the phone, you also get the services of AT&T. Google’s main business is advertising, but have taken on the direct sales approach with the Android. This phone has no contract with any mobile services, so consumers can buy it for a lofty $529, or have the option of getting it for $179 in a two year plan with T-Mobile (Helft, 2010). Apple can use their association with AT&T as supplying power. Since the iPhone is so popular, AT&T’s services are being bought each time an iPhone is. These services are provided under a set, multi-year plan, so once the consumer buys the iPhone, they must stick out the contract they signed with AT&T.


 * AT&T/iPhone Strategy**

Apple has put to rest its competitors time after time again. Its operating system (OS) is top notch, and other phones like the Android can only attempt to mock that same system, but it doesn’t measure up. iPhone OS 4.0 is set to be released in less than three weeks, so Google will again come up short (Technology for the Soul, 2010).

Since AT&T serves as the only provider for the iPhone, the objective is to do whatever it takes to keep the iPhone as the #1 smart phone on the market. Whether it is more advertising or variations in pricing, they need to continue to keep pace and even look to expand more to keep its competitors at bay.


 * Gen-Y Implications**

Being the most popular smart phone on the market, the iPhone is very appealing to Gen-Y users, mostly due to the various applications offered. From Wi-Fi and GPS to Google Maps and YouTube (ironically also owned by Google), you name it and the iPhone probably has it. The operating system is the best of its kind and it is very user friendly. What probably draws the most interest from Gen-Y users is its iTunes application. The iPhone acts not only as a phone, but as an iPod, too. The only drawback would be the possibility of getting stuck in a contract with AT&T. However, what the iPhone brings to the table negates that, and leaves consumers very pleased with what they’re getting.

Even with the entrance of the Android to the smart phone world, I believe that the iPhone will continue to be very successful and hold its reign as the most popular smart phone around. Google can use its advertising experience to generate a buzz about the Android, but that doesn’t take away the superior web browsing and iTunes application that makes the iPhone so popular amongst Gen-Y users. That being said, other smart phone companies have their work cut out for them.


 * References**

Wikipedia. (2010). Apple Inc. Retrieved January 10, 2010, from http://en.wikipedia.org/wiki/Apple_Inc.

Time Magazine. (2007). The Best Inventions Of 2007. Time Magazine. Retrieved January 10, 2010, from []

Helft, M. (2010, 5 January). Google Introduces Nexus One, Its Rival to the iPhone. New York Times. Retrieved January 10, 2010, from []

Technology for the Soul. (2010). Apple iPhone Vs Google Nexus One: iPhone Wins First Round [Or Why Shouldn’t You Buy A Nexus One Android Smartphone Now]. Retrieved January 10, 2010, from []