C. Environmental Factors
Regulatory - There is one main regulatory issue that has and can continue to impact the success of iPhone. Currently, the iPhone in the US is sold ‘locked’, meaning that it can only be used with one provider (i.e., AT&T). A growing number of public interest groups want the iPhone ‘unlocked’ in the US [41]. In many European nations, competition laws do not allow the sale of locked mobile
phones [43], a situation which could eventually present itself in the US. Currently, operators with exclusive agreements to sell the iPhone in countries where there are regulatory restrictions not to lock iPhone typically have one price for iPhones tied to a contract with that operator, and a much higher price for the sale of an unlocked phone that can be used with any carrier. Some experts believe the sale of unlocked phones may simply accelerate what some believe to be Apple’s ultimate strategy of selling phones to/through multiple providers in each country [43]. However, in the US, it is difficult to determine how this will affect Apple moving forward. On the one hand, selling through multiple carriers could dramatically increase sales and market share figures for the iPhone. On the other hand, AT&T currently subsidizes the iPhone, paying a sizeable amount to Apple for each iPhone sold [44] with the expectation that this subsidy will be recouped over the consumer contract period. This allows iPhone to be sold to consumers for $99 or more depending on the model, and consumers have become accustomed to this pricing. This price drop has fueled sales of the iPhone. If unlocking regulations proceed and Apple/AT&T are forced to sell an unlocked version of the phone, will consumers be willing to pay the potentially higher prices that may result? Most likely, AT&T will not continue to heavily subsidize iPhone if it is available to all carriers. From this standpoint, the partnership with AT&T and the current regulatory environment with respect to locked phones can be considered as a key element of the iPhone’s success.