analyst :Apple is bad for networks

The closer a network's relationship with Apple, the worse it is for the network, according to a new report by analysts Strand Consultants. The report claims that there are many myths surrounding the quality of the iPhone as a sales tool.

The report, entitled ‘The moment of truth - a portrait of the iPhone', claims that the iPhone is not a magnet for a network to attract new customers and that it does nothing to increase market share, despite others saying that it does. Strand claims its research shows that not one network selling the iPhone has increased its market share, revenue and earnings as result of introducing the device, and that operators such as AT&T in the US and SingTel in Singapore have sent out profit warnings because of the iPhone.

The report quotes one chairman of a multinational operator as stating: "The iPhone effect is the effect that comes from moving our management's focus away from the 99 per cent of our customers that generate the cash flow that pays our bills."

Released today, the report states: "It is a fact that AT&T has a 29 per cent market share and that when they claim that 33 per cent of their iPhone customers have been acquired from other operators, that means that 67 per cent of their iPhone customers have come from their own customer base - they were simply already AT&T customers.

"Singtel in Singapore has a market share of 46 per cent and claims that 30 per cent of its iPhone customers have been acquired from other operators. Again this means that 70 per cent of their current iPhone customers were already Singtel customers. We have figures from 10 other operators that show very similar results; it is significantly easier to sell the iPhone to an operator's existing customers, compared to selling it to new customers.

"In fact, it would not be wrong to claim that the iPhone is helping stimulate operators' churn on their own customer base - and thereby negatively influencing their business case. The bottom line is that the iPhone is not the customer magnet that many have been claiming - quite on the contrary."

The report also claims to debunk other iPhone "myths", such as, the iPhone dominates the mobile services market, there is money to be made by developing iPhone applications, iPhone customers are creating the majority of the current online mobile surfing traffic and that the iPhone has a large market share. It claims that while sales might appear to have increased as new models have been released, the perception of success has been distorted because sales channels that were previously restricted were later widened.

In the report, Strand claims it "never believed that the iPhone was an opportunity for operators and we stated at a very early date that the closer relationship an operator had with Apple, the worse business case they would end up with."