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Will Apple prosper if the AT&T/T-Mobile deal goes through?

The industry is abuzz regarding the AT&T/T-Mobile deal's implications for the mobile space. But the deal would also indirectly affect Apple?s  iAd, App Store and the iPhone, plus any retailers and brands that depend on these platforms.

Think about it. More than 35 million T-Mobile subscribers will now have the option of upgrading to the iPhone, giving the App Store and iAd greater reach. 

?The deal has potential for growth in iPhone users, but that potential may be limited by the value orientation of T-Mobile subscribers,? said Noah Elkin, principal analyst at digital intelligence publisher eMarketer, New York. ?By extension, the benefit to iAd and any impact on app usage depend in large part on how many T-Mobile customers convert.?

App Store
With more than 350,000 applications, Apple?s App Store has pushed a lot of consumers to adopt the iPhone.

Research firm MarketsandMarkets expects the total global mobile applications market to reach $25 billion in revenue by 2015, 20.5 percent of which Apple?s App Store will account for.

Last year, Nielsen did a report on the state of mobile apps and found that applications draw consumers to adopt smartphones, with Apple?s App Store leading the way in terms of wooing iPhone adopters.

IPhone users download more apps than any other smartphone owner. In fact iPhone users reported downloading an average of 37 apps and Android users reported 22. BlackBerry, Palm and Windows Mobile consumers were far behind. 

Based on this data, it is safe to assume that a good portion of the T-Mobile subscribers that will now become AT&T customers will be wood to adopt the iPhone, especially with the older 3GS model now priced at $99.

But not everyone is convinced that the App Store will get a large boost in usage from the T-Mobile/AT&T merger.

According to Guillermo Escofet, editor and senior analyst of mobile media, content and applications at Informa Telecoms & Media, T-Mobile subscribers lag behind their AT&T and Verizon counterparts in terms of data consumption.

The average monthly data revenue per user (ARPU) for T-Mobile USA subscribers was $12.40 in December 2010, compared to $18.20 and $17.20 for Verizon and AT&T subscribers, respectively.

Also, T-Mobile?s proportion on prepaid users is much higher than AT&T?s and Verizon?s.

Despite accounting for only 11 percent of U.S. mobile subscribers, T-Mobile accounts for more than 20 percent of U.S. prepaid subscribers.

Mr. Escofet said that all this indicates that the average T-Mobile user profile might be less likely to purchase a high-end postpaid smartphone like the iPhone.

IAd
Assuming that more consumers do opt for the iPhone and as a result start using applications in the App Store, Apple?s ad network iAd would see a significant boost in reach as well.

?Yes over time, more iPhone users would mean more app usage and would help Apple get more brands on board for iAd because of the increase in eyeballs,? said Neil Strother, Kirkland, WA-based practice director at ABI Research.

?The deal could take more than a year for approval,? he said. ?By then who knows what the situation will be.

?But, yes, the deal will indirectly help iAd, which will now be running ads that can reach two of the big three carriers.?

Adding T-Mobile subscribers to the slice of U.S. mobile users able to purchase the iPhone will no doubt further boost iPhone sales.

Informa?s Mr. Escofet said that T-Mobile accounts for only 11 percent of U.S. mobile users.

Combine that with the current strong performance of Android smartphone sales, and it might not be enough to affect iOS market share that much, he said.

?The increase in iPhone sales that might result from the merger will help to push up iAd and App Store-download numbers, but again, I don?t think it will be significant enough to make a huge difference in the greater scheme of things,? Mr. Escofet said.

Final Take
Randall Stephenson, chairman/CEO of AT&T, speaks about the transaction

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