When I first read this report from GigaOm my initial thought was, “Please God don’t let AT&T hang onto the iPhone until 2011.” That would truly suck, as I would love to use the iPhone as a phone (crazy idea, I know) but have little faith that AT&T will substantially improve its network in 2010. Thankfully Credit Suisse’s Jonathan Chaplin’s theory is a bit…basic:
We believe there is a 75% probability that AT&T keeps exclusivity in 2010. We arrive at this probability through a two step process: First, we try to determine whether the Apple / AT&T agreement expires in 2010. The consensus view is that it does; however, we couldn’t find compelling evidence that this is the case. We conclude that there is only a 50% probability that it ends in 2010. Next, we try to determine whether AT&T bids for another year of exclusivity if exclusivity does end in 2010. We conclude that they would and that they can afford to compensate Apple such that Apple would be economically indifferent. Our approach yields a 25% probability for this outcome. Taken together, we see a 75% probability that AT&T keeps exclusivity for another year.
I expect more from a Swiss banker (like Claudio Castagnoli). Is it me or does Chaplin’s theory seems third-grade-ish?