The value of AT&T’s service on the iPhone has been set at negative $400/per phone. This valuation is not from over-entitled iPhone users. It comes from AT&T and Apple.

Recently, AT&T and Apple started selling iPhones without a service contract for a $400 premium. Given the recent high profile problems at the SXWSi trade show and complaints from the media, apparently the two companies feel there is a market for iPhone users willing to pay a premium to not have their world delivered by AT&T.

Why This is News: Apple is coming out with a new generation of the iPhone, and wants to clean out the existing inventory. Typically, when a handset model is about to be replaced, the price drops significantly. Sometimes, the buyer even gets paid to take the phone (with a  contract).  It is interesting that rather than discounting the handset, AT&T and Apple think they can clear out inventory at a premium by losing AT&T. In a bad economy, this speaks volumes about AT&T’s perceived value.

Why This Matters: Presently, AT&T has the exclusive right to sell iPhones in the United States. But its exclusivity will eventually end. AT&T  should be using its exclusivity period to build customer loyalty and ensure that they keep customers once they have the choice of carrier.  Best case scenario for AT&T would be happy customers  that would want to stay with AT&T even if it did not have the iPhone.  However, it would probably be good enough if customers thought that AT&T was an important part of the the iPhone experience that they will stay with AT&T when they upgrade their iPhone.  If  customers are not loyal to AT&T, it risks a serious price war on the cost of the handset and monthly service on newer versions of the iPhone.

The Bottom Line: Right now, it seems clear that customer loyalty lies with Apple.  AT&T has announced upgrades and investments in its network that will become available later in 2009. Only Apple and AT&T know when the exclusivity period ends.  So perhaps, AT&T will clean up its act before the end of that period.

But, I suspect that its real ace in the hole is the fact that even after the expiration of the exclusivity period, customers  will only have a limited number of choices for wireless service providers. Moreover, the other three 3G service providers are likely to follow a similar short-term business model when they sell the iPhone.  As typically happens when marketing and customer service are ignored, it won’t end well, as we will see my next post: This is the iPhone’s Business Model on Crack.

Attention all folks attending CTIA in Las Vegas. Our friends at Qik will be hosting a Tweet Up on Wednesday,  April 1, at 7-10 pm.  The location is at the Las Vegas Hilton, the Pool Area on the Third Floor. The Hilton is connected to the North Hall of the Convention Center.

This is a great opportunity to connect with people interested in the intersection of social media and the mobile industry. This also is a great opportunity to build on the success of the Tweet Up at Mobile World Congress.

You can sign up and get more information at http://www.facebook.com/event.php?eid=69119667494. If you are not on Facebook, feel free to post in the comments section if you are interested in attending. I will pass the information to the folks at Qik.We will post updates here on Vantage Points and on Twitter, Facebook, etc. Check for hash tag #CTIA on Twitter.

For more information about networking events at CTIA, check out the awesome list from Mobilslate and the Mobile Monday events:

Mobileslate: http://www.mobileslate.com/ctia

Mobile Monday: http://www.mobilemonday.net/

Update: DIDX is opening their event on Wednesday, April 1, 7:30-9 pm @ Gordon Biersch, 3987 Paradise Road. You can RSVP here and learn more here.

Look forward to meeting you there.

Nine months and two Facebook redesigns ago, Jennifer Kutz wrote a post about the Wisdom of the Crowd Goes to a Trade Show. She discussed the trend of trade shows opening the show agenda selection process to their audience.  She mentioned one proposed panel in particular: Privacy and Personalization – Oxymoron or the Perfect Match?, for the SXSW Interactive show in Austin, and invited people to vote for that panel.

As SXSWi just completed, I thought it would be fun to fill you in on how things turned out. Our efforts to get the word out about the panel was successful. Privacy and Personalization – Oxymoron or the Perfect Match? received enough support that it was selected. The Guardian featured the panel in an article: @SWSXi: The impossible balance between privacy and personalisation?, and called the topic: “one of SXSWi’s core conversations.” The picture on the top left of this post is from the panel courtesy of the Guardian.

The experience also gave us an insight into the power of blogs and social media to create conversation about key issues.  We used Facebook and Twitter to point people to Vantage Points to get the word out. Rather than asking or pitching people to vote for our client, all we did was to discuss the topic and offer people a link to vote. This was a departure from the traditional PR model. But we believed facilitating conversation was more appropriate for topic and the SXSWi show audience.

The wisdom of the crowd approach has extended to voting for awards. This year, CTIA is allowing people to vote for its Emerging Technology Awards and Best of Show.  One of  our clients, Ditech Networks is nominated for its cool mStage platform which allows people to use their voice to access web applications in the middle of a mobile phone call.  You can read more about it in Technology Review. If you would like to vote for mStage for Best of Show, follow this link and choose mStage (third from left on the third line) as one of your favorites.  Feel free to check out and vote some of the other great nominated products too. It is good to part of the crowd that leads.

Update: Tweet Up location: The Las Vegas Hilton, the Pool Area on the Third Floor. The Hilton is connected to the North Hall of the Las Vegas Convention Center.

Attention all folks attending CTIA in Las Vegas. Our friends at Qik will be hosting a Tweet Up on Wednesday,  April 1, at 7-10 pm.  This is a great opportunity to connect with people interested in the intersection of social media and the mobile industry. This also is a great opportunity to build on the success of the Tweet Up at Mobile World Congress.

The location is still being determined. You can sign up and get more information at http://www.facebook.com/event.php?eid=69119667494. If you are not on Facebook, feel free to post in the comments section if you are interested in attending. I will pass the information to the folks at Qik.We will post updates here on Vantage Points and on Twitter, Facebook, etc. Check for hash tag #CTIA on Twitter.  For more information about networking events at CTIA, check out the awesome list from:

Mobileslate: http://www.mobileslate.com/blog/2009-ctia-spring-networking-events/

Look forward to meeting you there.

The best part of a global show like Mobile World Congress is that you get tuned in to how the rest of the world lives. When it comes to mobile phones, most Americans expect to carry one phone and sometimes will carry a Blackberry for e-mail and regular handset for phone calls. After watching one person after another pulling out a never ending variety of handsets over the course of the day, I started polling people as to how many handsets they were carrying.

The typical person from EMEA or Asia was carrying a minimum of three phones. One person pulled out four, jokingly said (I think) that he had one for each wife. The typical explanation was a Blackberry for e-mail, an iPhone for applications, and then a Nokia or three depending on countries (and marital status). This could explain the relative health of the mobile phone space.

As for iPhones, universally, they were jail broken (manually “adjusted” to allow it to used on any mobile carrier’s network). People looked at my AT&T iPhone with a mixture of pity and disgust usually reserved for naive children. Invariably, they would show me a great application, then shake their head and say that I can’t get it because my phone was “on network.”

Social networking on mobile phones seemed to be in the early adopter phase. While I saw plenty of tweets and Facebook updates, I did not see many people using their phones to deliver them.

As the next major wireless show, CTIA, starts in less than a month, we will report back if there is a major difference in phone habits from the U.S. based attendees in Las Vegas.