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Apple and AT&T: Together Forever?


Despite entreaties, Apple may secure the albatross around its neck.

Sorry, New Yorkers and San Franciscans. Break out the hankie, Fake Steve Jobs. Despite rumors to the contrary prior to the iPad unveiling, analysts are predicting that Apple (AAPL) will extend its exclusivity contract with AT&T (T) -- burdening millions of iPhone users with the very unpopular carrier.

Perhaps the only ones relieved are Verizon (VZ) users who are satisfied with their service and don't want a flood of iPhone owners clogging up the network.

On Tuesday, Barclays Capital analyst Vija Jayant shared his thoughts on the matter with investors. He stated that the iPad was living proof of Apple's dedication to the partnership and was "a vote of confidence in AT&T's network by the equipment maker." Jayant predicted that the iPad deal suggests an extension of the iPhone's lock down nature "at least through the end of 2010."

"While iPad sales are unlikely to materially impact wireless revenues in the short term, selecting AT&T to launch its second major communications product reflects Apple's bias for the global GSM platform and the prospects of AT&T's network capability," Jayant added.

Pacific Crest analyst Steve Clement agrees with that sentiment. He notes that the tone from Apple is improving and as well as a "conservative wireless margin guidance" and an "aggressive capex guidance." In other words, it doesn't look like the iPhone is going anywhere without the AT&T anchor.

For a brief moment, there appeared to be a good chance that Apple would be releasing the iPhone from AT&T's clutches and opening it up to other carriers. Verizon was said to be the frontrunner, with T-Mobile (DT) and Sprint (S) bringing up the rear. But when Steve Jobs mentioned the iPad's 3G support with a monthly AT&T plan -- and just AT&T -- that dream faltered. It meant that Apple was willing to ignore the angry customers, scathing press, dismal PR, and an FCC investigation that came with an AT&T partnership in 2009. It meant Apple was willing to wait for the network to turn itself around.

It meant that, unlike the majority of its user base, Apple actually believed in AT&T.

While great news for the network, this comes as quite a disappointment for not only iPhone users, but also people waiting to buy a non-exclusive iPhone. Undoubtedly, Apple has speculated on the rise of popular and capable Android (GOOG) devices like the Motorola Droid (MOT) and Nexus One and doesn't see them as a threat. Although Nexus sales don't come close to the Droid's, Apple might be underestimating the draw of competitors when iPhone users can take no more of AT&T's unapologetic indiscretions.
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