Apple could let AT&T down hard

CUPERTINO, Calif., April 30 (UPI) -- U.S. company AT&T could be in a tight spot when its exclusive iPhone deal with Apple concludes, analysts said.

Apple has been talking to Verizon Wireless about carrying two of its cheaper products, BusinessWeek reported Thursday. It is also likely to look beyond AT&T for iPhone contracts when the exclusivity clause with AT&T ends.

The deal, thus far, has benefited both companies. Apple's share of the smartphone market was zero in 2006 and is 22 percent today. AT&T, meanwhile, signed up 7 million new customers since it began subsidizing iPhone sales. About 70 percent of the new customers signed in order to obtain an iPhone, BusinessWeek said.

iPhone is the only smartphone with enough clout to move people to change networks just to get one, Sprint Nextel marketing executive David Owens said.

Although benefits have been tangible, "AT&T made a devil's bargain with Apple," a high-ranking industry executive told BusinessWeek.

Smartphone service contracts are about twice as lucrative as other service contracts, taking in an average of $85 per month per customer.

Before carrying iPhones, AT&T was viewed as "behind the curve," said John Hodulik, telecommunications analyst at UBS. With iPhones in its pocket, AT&T has been given "a new life," he said.