Smartphone Options Dictated by Device Exclusivity

Sprint launched the EVO 4G just before Apple unveiled the details on the iPhone 4 at WWDC. Verizon is planning to launch the new Motorola Droid on June 23–the day before the iPhone 4 officially goes on sale. Both moves seem like marketing ploys intended to divert attention from the next generation iPhone, but device exclusivity and carrier contracts create a situation where these marketing stunts have little impact on which smartphone businesses adopt.

The reality is that devices don’t really compete directly against each other. Media outlets like PCWorld are able to pit the EVO 4G, Droid Incredible, and iPhone 4 directly against each other and evaluate the features and functions, and pros and cons of each, and declare a “winner”. However, most businesses have an existing relationship with a wireless provider–narrowing the choices and determining the “winner” by default rather than on its merits.

I have a friend who was an early adopter of the iPhone. He waited in anticipation of the initial launch and camped out in front of the Apple store to be one of the first to own the revolutionary smartphone. He loved his iPhone, and eventually upgraded to the iPhone 3G. He liked it so much, he got his wife an iPhone as well.

Now he uses a Motorola Droid. Why the change of heart? Was he so impressed with the Android platform and the capabilities of the Motorola Droid that he was compelled to drop his beloved iPhone and switch carriers? No. He got a new job with an employer that does a lot of business with Verizon. The business relationship between the two means that the new employer is tied to Verizon wireless service, so he was forced to switch from the iPhone to the Droid.

To be fair, he loves the Droid. I am fairly sure if he actually had a choice between the two he would select the Droid, or some other next generation Android smartphone at this point. However, the point is he doesn’t have any real choice. He can maybe get a Droid Incredible, or the new Motorola Droid when it launches June 23–but he can’t choose the iPhone, or even the Android-based EVO 4G because he is locked to Verizon.

The carriers recognize the value of that contractual relationship as well. That is why AT&T enables customers to upgrade months before the contract actually expires. The wireless providers know that once the contract expires, the customer is in a position to truly consider all options and select the wireless provider and smartphone that works best. Better to allow customers to upgrade to cutting edge smartphones earlier and renew the contractual obligation than to risk losing customers to the competition.

The Android platform recently made headlines for beating the iPhone in total unit sales for the quarter. I cautioned that the stats don’t accurately represent how the two platforms rank due to the fact that iPhone sales may have been down as a result of the iPad launch, and in anticipation of the upcoming iPhone 4, while Android demand is artificially inflated by sales gimmicks like buy-one-get-one-free deals.

To truly measure how well the iPhone and cutting edge Android handsets like the HTC Droid Incredible fair against each other in the real world, they both need to be available from the same carrier. As long as Verizon and Sprint can’t offer the iPhone, and AT&T insists on providing only second-rate Android options, there is no valid head-to-head comparison of the two.

There are businesses out there with expired contracts, or new businesses that haven’t yet committed to a wireless carrier. There is certainly marketing value for the wireless service providers and the smartphone manufacturers to advertise products and services. Unfortunately for many professionals, the marketing effort is wasted because there is no real choice as long as device exclusivity exists.

You can follow Tony on his Facebook page , or contact him by email at tony_bradley@pcworld.com . He also tweets as @Tony_BradleyPCW .