The New Blackberry Torch goes to AT&T – Conspiracy in the Making?

Well, the long awaited announcement has come and the Blackberry 6 operating system is right around the corner, which will debut on the new Blackberry Torch. The Torch 9800, will be a touchscreen phone with a sliding keyboard, something not available on any other Blackberry to date. The phone will be available on AT&T’s network.

What I had found interesting, which is now confirmed with today’s news, is the new phone will be on AT&T’s network and not Verizon (at least not at launch). While I am sure some people are shaking their heads, I think I have a theory.

There are 3 major players in the smartphone market today. Blackberry, Android, and Apple’s iPhone. Sorry Palm and Microsoft, but in my opinion, at this time you are not major players.

Blackberry is your best corporate solution at the time of this write up. I say at the time of this write up because technology in the mobile space is changing so quickly that by the time I hit ‘Post’ on this blog, it could all change! Blackberry provides the most secure and best messaging system. It allows corporations to setup Blackberry Enterprise Servers (BES) to connect all the devices, securely to the internal network, and control the level of security. Blackberry is proven, but in many cases, less “sexy” than the other players.

Apple’s iPhone has been around the block a few times now and it is definitely more innovative and better from an application perspective than the Blackberry. Apple has many cool features and definitely appeals to all different end users. Apple has two major issues right now holding it back. Verizon does not have the iPhone. It’s unfortunate because Apple approached Verizon first and was turned down. AT&T capitalized with securing an exclusive deal, but now the AT&T market is saturated and it is time to move on. The iPhone also does not do as well as the Blackberry (yet?) on corporate networks. This takes serious business users out of the picture.

The Android is Google’s mobile operating system, aimed at competing with the other major players in the mobile market. According to multiple reports (one specifically on Bgr.com), while the smartphone market has grown 62% in Q2 of 2010, Android has posted 886% growth. This can likely be contributed to Verizon’s influx of Android based handsets. We have seen the introduction of three very impressive devices – Droid, The Incredible and Droid X, with Droid 2 right around the corner. Since Android is open source and very developer friendly, the Android Marketplace has been very successful in the early stages. Google is also well known for its innovative ideas and as a result, the Android operating system has delivered some really cool features. Like the iPhone though, the Android system does not bode as well on corporate networks. This is not to say Android is not taking strides towards being more corporate network friendly, it’s just Blackberry is still the better choice in the corporate space (in my opinion).

So with AT&T taking on the new and improved Blackberry phone, what can we read into this move? Well, for those who know me well, I like conspiracy theories; it passes the time. What I see here, is a shift in AT&Ts strategy to proactively protect itself in the marketplace. Ask yourself, what is the bread and butter of AT&T today? What really allows AT&T to compete with Verizon? It’s not their customer service or network. It’s not the fact that they are GSM over CDMA – most people who own a smartphone probably couldn’t even tell you the difference. The one thing AT&T has over Verizon is the iPhone and once Verizon also has the iPhone, AT&T could be looking at some troubles ahead.

AT&T’s exclusive contract with Apple has been up since the beginning of this year. My gut tells me that Verizon would have already made a move to get the iPhone; except, that would have cannibalized the up and coming Android phones. Instead, Verizon is taking on as many Android users as they can (probably worked this out with Android vendors to keep them happy), locking them into the Android system (Verizon is offering a deal where you can get an early upgrade to one of the new smartphones, if your contract is set to expire anytime this year). As soon as the year is up and Verizon locks as many users as they can into the Android that is when the announcement will come; iPhone to Verizon. Now the hold-outs will be able to get onto the iPhone and anyone who was on AT&T, just for the iPhone can defect. In addition, anyone locked into the Android, who really wanted an iPhone, will end up paying full price for the iPhone – and people will do this! Some consumers will likely be angry with Verizon, but in the end, Verizon wouldn’t have done anything wrong. In fact, it would have all been a pretty good business move, to keep most parties happy.

So what is my point? What does this have to do with the new Blackberry being on AT&T? Well, while the Android and iPhone are both competing for the innovated user who likes the “toy” factor on their smartphones (toy in a good way), the Blackberry is the one phone meant mainly for the corporate user. If your AT&T, you have had your time with the iPhone and can only now sit and watch to see how your user base reacts to Verizon finally putting it on their network. If you are Blackberry (RIM), you might not be too happy Verizon has a new love called Android. So the new Blackberry going to AT&T seems like a match made in heaven. AT&T starts concentrating on the corporate end user space, allowing Verizon to cannibalize itself between the Android and iPhone systems. In addition, with AT&T being on the GSM network (which can be used virtually anywhere in the world), corporate end users that travel globally make a lot of sense.

Looking towards the future, I see a shift of end users between Verizon and AT&T. Verizon is finally staying on top of new and innovative phones, and gone are the days of waiting 2 years for yesterday’s best smartphone. AT&T on the other hand will continue to compete in the Android and iPhone market, but will shift it’s interest to Blackberry and the corporate end users. While these are all conspiracy theories wrapped around some factual evidence, I throw in the caveat that it might be far from the truth. The only hope is that considering the theories at least passes some time away. : )

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3 Responses to The New Blackberry Torch goes to AT&T – Conspiracy in the Making?

  1. I also wonder if AT&T is providing RIM with increased revenues per unit sale of the new phone. The precedent for this is that AT&T has been a good deal for Apple Inc. because of the relatively large revenues AT&T passes along to Apple per phone activation. This has driven up AT&T’s costs, perhaps inhibiting them to upgrade their network as fast as Verizon has been doing, which has effectively set their network up for failure as users jumped onto the AT&T network. Now that Apple has obliquely admitted that the AT&T network is nearing the saturation point for iPhone sales Apple, while used to the higher margin sales from their exclusive agreement with AT&T may be in position to move to a more mass marketing model with a move to other wireless networks like the powerful Verizon.

    In this way, it makes sense that AT&T would try to simply grab the next rope available to them by striking an exclusive agreement with a major handset manufacturer. I’ll make two uneducated bets though. First, I believe that the agreement will mandate that AT&T provide RIM with extraordinarily higher returns in order to make it work for RIM to take the risk in launching their new phone exclusively on AT&T’s network. Secondly, I believe that the agreement will be short lived, say six months, or that RIM will quickly introduce other phones with similar or better features on other networks shortly after launch. This will allow RIM to get exclusive marketing as well as a unique revenue steam to support their new platform as well as functioning as a test bed for future products. Either way, it doesn’t seem to bode well for AT&T in the long term as their profit from the iPhone platform may suddenly start to erode in the next six months if/when Apple decides to introduce an iPhone on the Verizon network.

    As for me, I’ll be sticking with my Moto Droid.

  2. Liss says:

    I like a good conspiracy theory first thing in the morning and yours tend to be right on or at least very entertaining… however, now I need to go look up what RIM and GSM mean. It looks like I’m going to have to put work in to be a supportive friend 🙂

  3. ChatStu says:

    RIM is Research in Motion – maker of the Blackberry phones.

    GSM stands for Global System for Mobile Communications. It’s the most popular standard used in the world. AT&T and some other providers use GSM. Verizon uses a different standard called CDMA, which was developed by Qualcomm (communications company). CDMA stands for Code Division Multiple Access. I won’t go into GSM and CDMA differences; unless, you really want me to explain them. Just know they are 2 different ways of communicating over mobile devices. : )

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