Apple Inc.’s (NASDAQ:AAPL) debut of the newest iPhone on all four top U.S. carriers at the same time will test the loyalty of customers at AT&T Inc. and Verizon Wireless.
The latest version of the iPhone, due to be unveiled tomorrow, will be the first to come out on T-Mobile U.S. Inc. (NYSE:TMUS) simultaneously with its bigger rivals.
That means heightened competition for the most popular smartphone in U.S. history -- right from the get-go. AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ), which used to be the only iPhone carriers, are now in jeopardy of losing users to T-Mobile’s more flexible service plans in an already saturated U.S. wireless industry beset by slowing growth.
“It’s a much more even playing field than it was last year, when AT&T had more of an advantage,” said Roger Entner an analyst at Recon Analytics in Dedham, Massachusetts. T-Mobile is “in the right place at the right time with the right product.”
Adding to the price competition, Apple will introduce a less expensive iPhone along with an upgrade of the iPhone 5 tomorrow, people with knowledge of the matter have said.
That may convince consumers to pay in full for a new phone, rather than sign a two-year subscription to get a discount, giving an added edge to T-Mobile, which doesn’t require users to sign a contract.
“Getting a lower-cost iPhone could make a big difference for T-Mobile,” Entner said.
AT&T had exclusive rights to the iPhone until 2011, when Basking Ridge, New Jersey-based Verizon Wireless started selling the device. Later that year, Sprint Corp. (NYSE:S) also got the iPhone.
Apple is also expanding its iPhone distribution overseas. The Cupertino, California-based company is close to a deal with China Mobile Ltd. to sell the device through the world’s largest carrier, a person with knowledge of the matter said last week.
T-Mobile, controlled by Deutsche Telekom AG, became a larger No. 4 carrier when it combined with MetroPCS Communications Inc. in May. T-Mobile started selling previously released models earlier this year, and now it is participating in its first iPhone introduction after missing the previous six.
AT&T, with its large iPhone customer base and compatible network technology, has become the target of T-Mobile’s advertising attacks, which promote the smaller company as an “un-carrier” that doesn’t do business like its rivals. This year, T-Mobile became the first major U.S. carrier to offer phones with interest-free financing.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.