It's looking more and more like AT&T CEO Randall Stephenson's hope/delusion, that the iPad is simply a wi-fi device and customers won't be interested in AT&T wireless service is wrong and wrong headed. This is not to say that he won't be correct and a majority of iPads will be sold without 3g connectivity. But it's likely that everyone is radically underestimating how many iPad's will be sold it's first year, and AT&T will be completely unprepared for the extra traffic even a percentage of those will mean to it's network. He's also missing the larger implications of the iPad replacing the iPhone as the Apple geek's favorite mobile internet platform. Here's typical geek thinking:
Blogger Jeff Haywood voices prototypical tech geek thinking. If forced to make the choice between having a phone or an internet connection, they quickly choose the internet connection. In fact, without even thinking twice about it. This AT&T's worse nightmare. Geeks who hate talking on the phone and prefer e-mail wonder why they're paying 40 bucks to be reminded that they're too afraid to ask for a girl's phone number.
Naturally, AT&T prefers that people pay for things they don't use, it's free money. And they prefer people are forced to keep paying for things they don't use by long term contracts. The iPad threatens both of these things, which is why Stephenson is whistling in the dark when he thinks it won't impact the iPhone business.
No, the iPhone business won't go away because of the iPad. Not everyone is afraid to call girls. But iPhone growth won't continue as quickly if people who don't really need it for voice end up switching to the iPad. And people who do need voice, wonder if they aren't better served by an alternative cheap cell phone with no contract and an iPad with no contract.
AT&T needs to rethink it's policy of forcing people to pay for what they don't use if it wants to stay competitive in the iPhone business. Instead of thinking about how much money it can rip from customers pockets in the short term, it should think about how to develop long term customer loyalty. Self identified geeks, like Haywood, should have the option of not activating their voice service, or getting very low cost "emergency" voice plans. Who knows, maybe someday they'll find a girl they can talk to and get married and need a family plan. Non-geeks who want the iPhone for voice, but don't use it to connect to the internet, should have the option of not paying for data plans. Who knows, maybe someday their grandkids will teach them how to Twitter.
In the meantime, if AT&T won't provide iPhone customers with real choices, the iPad, with a contract AT&T seems to already regret, might provide it without them.