See, here's the major problem with iPhone having a five year period of exclusivity (and it would be the same problem if it were anything greater than 1 year - to be totally honest) - a $500 and $600 phone is not going to be enough to convert as many people to AT&T as they think...I mean, by their own 10 million sold estimate (which is just an insane number), 1 out of every 5 current AT&T customers would have to get an iPhone...at $500 and $600, that's not going to happen -- not in the United States anyway (unless they can get businesses to adopt it - and the problem with that is that AT&T has ****** business plans). Plus, in 5 years, the iPhone will have real competitors, be on its third generation from Apple. I mean, from the demos I've seen - the interface IS amazing, but the fact remains that unless it can actually be a real replacement for the iPod (which will require it to have a capacity larger than the nano), I can't even see most normal people considering dropping that much dough on a phone (Especially when you know it's going to require either a special plan for a $20 data plan surcharge onto the existing plan). I'm stupid enough to do that sort of thing, but Cingular screwed me -- I hate them, and unless I can be assured that SBC has taken over customer service, I won't touch AT&T...period. Plus, I'd have to pay $20 more a month to get the same plan I have now - and my service with T-Mobile is stellar in my area (and my boyfriend is on Cingular/AT&T and his isn't as great).
Now here's a thought - Apple might have a contract of exclusivity with AT&T for five years, but without seeing the documents, that might only apply to the current iPhone and other iterations that are based on the same series. Meaning that other phones could be made for other providers, as long as they have a different build (even if they do the same thing or look essentially the same...other mobile phone companies have done this in the past to get around exclusive contracts). Unless there is a clause that says they can't make a phone for any other provider, PERIOD, I would expect them to eventually start courting other providers...because being with only one player is just not smart.
When you look at Apple's biggest success, the iPod, you have to examine exactly WHY it is successful. I've done a lot of thinking about this, and I feel very confident saying that it is because they released a version that was compatible with Windows. End of story. When the first iPod came out, I wanted one - I mean, I really wanted one - but as someone who uses Macs at school, but PCs at home, I wasn't able to get one right away. I eventually almost got Mac Opener and some other software that would allow me to use it on my PC, before hearing at one of the MacWorld or MacExpo things that Apple was coming out with a PC version that fall. I literally got one the day it came out. I worked at a large electronics store for five years, and Christmas 2002, I tried to convince people to go iPod, and sold a lot - but it was far from a huge hit. It wasn't until they launched the iTunes store for Windows and made the iPods singularly compatible (meaning both Mac and PC versions were in the same box) that the thing really exploded. What was great about iPod (and the Intel move), was that for the first time, Apple finally bucked the trend of being proprietary and requiring the whole world to come to them. They came to the customer instead. But with iPhone, it's the same old story - you must come to us. And for $600 plus a $60 or $70 monthly phone plan, not a lot of people are going to be knocking themselves out to switch providers to get a cool interface, a low-capacity iPod and a PDA. Especially once the "cool" wears off after 6 months (as soon as more than two people at a party have one, the whole "lust" factor will be over...which is typically when most other big phones drop in price and became easily affordable for everyone -- Apple's going to have a hard time dropping price when they are only selling to one carrier, because AT&T probably would have to take a $400 loss (that's saying they sell the phone for $100 or $200) for every phone they sell in an attempt to win customers, and even with a 2-year contract, that's tough to swallow)).
I mean, I'm sure they have reasons for this -- but Apple doesn't know the mobile phone industry, and the US market is different from other markets -- so I just hope they are prepared to sell under projections and deal with price issues. Because being exclusive to one provider is a risky move - period.
