CTIA Wireless 2008

AT&T to Change Retail Experience with Microsoft Surface

| Apr 4, 2008 | Wireless Services - U.S | Show Update

| Analysts: Bill Ho, Avi Greengart

Current Perspective: Positive Vendor Importance: Moderate Market Impact: Moderate

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Event Summary

April 2, 2008 - AT&T and Microsoft announced a collaborative alliance that will transform the way consumers shop for mobile devices. AT&T will become the first company to bring Microsoft Surface to life in a retail environment, giving customers the ability to explore their mobile worlds using touch and device-recognition technology.

Analytical Summary

• Current Perspective: Positive on AT&T’s deploying customized Microsoft Surface systems at its retail stores, because Surface can enhance the retail customer experience, which can be overwhelming and complex. Surface – and the custom application AT&T is using – provides an engaging self-service approach that allows customers to explore device features and discover carrier services. It may lead to expanded service and accessory sales. It may also lower staffing costs in the future. It helps AT&T stay out in front of its competitors – T-Mobile was supposed to be Microsoft’s launch partner for Surface, but AT&T stole its thunder. Perhaps the most promising use of the technology will be helping to further train store sales staff, who will learn by osmosis while helping customers use the system and when playing with it during slow periods during the day.

• Vendor Importance: Moderate to AT&T, which captures a significant percentage of its activations through retail sales stores, and bringing Surface in provides a differentiated buying experience. While Surface is captivating, the cost of a system in every AT&T corporate retail store may not be in the cards. The upcoming test stores (likely AT&T Experience Stores) will be a beta trial of sorts to gather behavioral learning to improve on the customer experience down the road.

• Market Impact: Moderate on the wireless services segment as the systems are only initially being deployed in five stores starting April 17th. Even once the technology is rolled out to all of AT&T’s stores, it only addresses the symptoms of complexity, not the cause. AT&T may not be able to capitalize on the competitive benefits of having the technology as other carriers are free to deploy their own versions.

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Current Perspective

Competitive Positives and Concerns

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