Wonder why the smoking-hot 3G Apple iPhone only costs $199, less than half the price of the original? Here's a two-word hint: Randall Stephenson.
Stephenson, who became AT&T's chairman and CEO a year ago, championed the idea of paying Apple about $300 per device, analysts estimate, to help hold down the retail cost. The subsidy, which replaces another arrangement that gave Apple a portion of iPhone service revenue, will dilute earnings through 2009, AT&T says.
On the plus side for consumers, the iPhone is now extremely affordable. At $199, the 3G iPhone costs about the same as a high-end cellphone. AT&T says it plans to offer an unsubsidized iPhone later. Cost: $599 to $699, depending on memory, putting it well beyond the reach of average wireless users.
It remains to be seen if AT&T's gamble will pay off. One thing is clear: Thanks to the iPhone, the smartphone game has changed dramatically. And so have consumer perceptions of the mobile Web, a netherworld that seemed downright hostile before the iPhone showed up.
AT&T's role in the iPhone's success could cement its place as the premier cellphone carrier in the USA. It's already helped raise AT&T's cool factor, a big deal among tweens, teens and other Web-centric customers. That's no small feat considering the brand's age — more than 120 years and counting.
The iPhone has a huge impact on carriers, which tried for years to sell consumers on the idea of wireless data, says Charles Golvin, a senior wireless analyst at Forrester. "Then Apple came along and, in a 30-second commercial, they just made it dead simple," he says. That simplicity, married to the sleek iPhone design and Web-friendly function, has energized consumers, he says. It's also raised the bar globally for carriers and established handset makers, he adds.
You'll get no argument from Stephenson. In a sit-down interview, he says the iPhone is central to what he sees as an ongoing transformation of AT&T. His goal: Turn the iconic company into a wireless goliath with global reach and intense customer loyalty.
"The iPhone has repositioned AT&T as the premier wireless brand in the world," Stephenson says. He quickly adds, for emphasis: "We're all about wireless."
And, so, apparently, is Stephenson. One of his first acts as CEO was to ask the AT&T board to approve the $2.5 billion purchase of Aloha Partners, a privately held wireless partnership. It wasn't the easiest pitch to make: Aloha had no operations, revenue or customers.
But it did have one thing Stephenson wanted badly: a hoard of national wireless licenses that could buck up AT&T's mobile Web plans. The deal was approved.
Spend time with Stephenson, and it becomes clear that he's a devout believer in the power of mobile to change AT&T and, by extension, the global community it serves. He even has a mantra for the new AT&T: "mobilization." That's CEO-speak for the idea of making all services — voice, data and video — available on mobile handsets.
As consumers obtain easy, fast access to the Internet, Stephenson believes, e-commerce will ratchet up significantly, lifting whole economies in the process. That, in turn, can help improve the lives of consumers everywhere, he says.
"This changes what you see and how people interact, socialize and communicate," he says, holding his ever-present iPhone aloft.