AT&T built a solid base selling the iPhone, but Verizon gains the advantage with an LTE iPhone, forcing AT&T to shift allegiances to Android or Windows to sustain its success.
The Dallas, Texas-based carrier, which gained a first-mover advantage on the iPhone, heavily-relies on the device -- selling over 4.3 million units from January to March, representing 75 percent of smartphones sales. But Verizon, which now offers the 4S, along with Sprint, is chipping away at AT&T's lead.
Analysts expect AT&T's run as the number-one choice for iPhone buyers to end.
The current iPhone tops out on HSPA-plus speeds, so AT&T's device runs slightly faster than Verizons. But Verizon is gearing up to lure customers when the LTE iPhone arrives -- effectively shifting the iPhone advantage to Verizon's favor.
As a result, AT&T must look to alternative products, like the Android-based Samsung Galaxy S3, which offers better hardware than the iPhone 5, to compete against Verizon's faster device. But the landscape for Android is murky at best. And AT&T must be careful not to put all its eggs in Google's basket.
Still, another option lies with Microsoft. AT&T has been open to Windows software and offers the HTC Titan 2 and Nokia Lumia 710. As Microsoft makes its push to become relevant again, with the help of Nokia, AT&T may see value in pushing the underdog, throwing its marketing power behind Windows products to fight Verizon.
AT&T held iPhone exclusivity for years, succeeding largely by being a one-trick pony. At the time, Verizon, ironically, kept its number-one position due to a strong catalog of Android devices. Whether AT&T explores Android or Windows is uncertain, but the company won't have the edge with the LTE iPhone. And it must look for ways to fight Verizon with different products, or its strong smartphone sales will begin to slide.