Will they stay or will they go?
That’s the big question AT&T executives are likely asking themselves about the millions of iPhone customers who may consider leaving the operator once the popular smartphone is offered on other carrier networks in the U.S.
While AT&T has not said when its exclusive deal for the iPhone ends, the company has been preparing shareholders for a day when the iconic device will be available to its competitors. Rumor has it that Verizon Wireless, AT&T’s chief competitor, will get a version of the iPhone in January.
A recent survey by the market research firm Morpace found that 34 percent of those surveyed who already own an AT&T iPhone are waiting to upgrade their phones until the iPhone becomes available on another carrier. And about 47 percent said they’d at least consider moving over to Verizon for the iPhone. About a quarter of all AT&T subscribers said they were somewhat or very likely to switch to Verizon for an iPhone.
Morpace’s sample was relatively small. Out of 1,000 respondents, only about 100 were current AT&T iPhone subscribers, but Jay Heyboer, vice president of technology and Advanced analytics at Morpace, said the findings are still statistically valid.
The results aren’t too surprising given the flood of bad press AT&T has gotten over the past couple of years. iPhone users around the country, particularly in urban areas, have flooded the Web with complaints about the iPhone’s slow 3G speeds and dropped calls. Preorder problems with the iPhone 4 didn’t help AT&T’s reputation either as millions of potential customers were shut out of ordering the phone ahead of its launch in June.
One thing seems to be clear: iPhone owners are very loyal to the iPhone and Apple brand. About 77 percent of current iPhone owners say they intend to buy another Apple phone, according to a recent survey conducted by the Yankee Group.
Half of current Verizon Wireless customers said they are very likely to buy an iPhone once it comes to Verizon’s network.
(Credit: Morpace)
And it looks like there is pent up demand for the iPhone on other carriers, despite the fact that wireless users on other networks now have the choice of many other competing phones, such as the Google Android phones. The Morpace survey also found that half of Verizon Wireless’s current customers said they were likely to get an iPhone once it comes to Verizon’s network. This is interesting considering the strong sales that Verizon has seen for the Google Android phones, such as the HTC Incredible and the Motorola Droid, Droid 2 and Droid X. The Yankee Group also found that a third of all smartphone owners of all types who intend to buy a smartphone intend to buy an iPhone. In fact, Apple is the most popular choice for a future smartphone among all mobile phone owners, according to a blog post written by Carl Howe, an analyst with Yankee Group.
Whether or not consumers will be as loyal to AT&T as they are to Apple and the iPhone is the big question.
Consumers on Verizon’s network continue to give the company high marks in terms of satisfaction for its network. In May, ChangeWave Research released data from a March 2010 survey that found 49 percent of Verizon’s customers said they were very satisfied with their service. In second place was Sprint Nextel with a 35 percent satisfaction rate. T-Mobile and AT&T both tied for last with only 23 percent of their customers who said there were very satisfied.
Verizon also came out on top in the fewest number of dropped calls in the ChangeWave survey. Only 1.5 percent of customer calls were lost over the prior three months. The dropped call rates were 2.4 percent for Sprint and 2.8 percent for T-Mobile, while AT&T was at the bottom with customers reporting 4.5 percent of their calls being lost. The dropped call rates marked Verizon’s best since September 2008 and AT&T’s worst over the same time frame.
But when it comes to retail satisfaction or customer support, Verizon drops to the bottom of the pack. A recent JD Power and Associates survey ranked T-Mobile USA as the highest in price promotions and in-store sales. Sprint came in second, AT&T third, and Verizon Wireless was last in this survey.
In terms of customer service, Vocal Laboratories(Vocalabs) recently released results from a survey that indicates that Verizon placed lastout of the four major U.S. wireless carriers when it came to satisfying customer service calls. Customers were interviewed following customer service calls to rate their experiences following the calls.
When you compare actual churn rates, or the rate at which customers drop one carrier’s service for another, AT&T and Verizon are neck and neck. For the second quarter of 2010, Verizon reported a churn rate of 1.27 percent and AT&T reported a churn rate of 1.29 percent for AT&T.
By contrast, Sprint and T-Mobile still have much higher rates of churn than either AT&T or Verizon. What this means is that regardless of whether they are satisfied or not, customers are much more likely to stay with AT&T or Verizon than they are these other carriers. And customers are just as likely to leave Verizon as they are AT&T.
Could this change when the iPhone finally comes to Verizon? Perhaps. But analysts warn that what consumers say they will do and what they actually do are two different things.
“There seems to be a significant number of people willing to consider switching from AT&T to Verizon for the iPhone,” said Morpace’s Heyboer. “Of course, the percentage of people who actually make that switch will probably be lower. But I think we are certainly picking up on dissatisfaction of some consumers and an openness to pursue other options.”
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