The Mobile Internet Report Key Themes*

Carrier Exclusivity Limits Apple’s
Market Share Upside, for Now
~11MM cumulative iPhone subscriptions on AT&T, ~45% of global iPhone subscribers as of
CQ2:09
AT&T (~45% of iPhone Subscribers) strained by demand / change
AT&T’s network is strained, leading to frustrated users and AT&T has rejected / limited
bandwidth-intensive apps on iPhone
Modified 3G terms of service to ban Slingbox streaming over 3G on iPhone (5/09)
Limited Skype VoIP call feature to Wi-Fi only (3/09)
Limited CBS NCAA March Madness On Demand live video streaming to Wi-Fi (3/09)
FCC (Federal Communications Commission) launched an inquiry into AT&T’s role in limiting /
rejecting iPhone apps in light of the rejection of the official Google Voice app in 7/09
Apple options: 1) Deal with AT&T restrictions and trade unit volume for margin (unlikely, in our
view), 2) Sign on incremental carriers to create competition for best carrier network (most
likely near-term), 3) Move to a carrier agnostic strategy (likely longer-term, with ubiquitous LTE
networks and a less hardware-dependent iPhone financial model).
211