“Verizon Wireless, the No. 2 U.S. cellphone carrier, passed on the chance to be the exclusive distributor of the iPhone almost two years ago, balking at Apple’s rich financial terms and other demands,” Leslie Cauley reports for USA Today.
Cauley reports, “Among other things, Apple wanted a percentage of the monthly cellphone fees, say over how and where iPhones could be sold and control of the relationship with iPhone customers, said Jim Gerace, a Verizon Wireless vice president. ‘We said no. We have nothing bad to say about the Apple iPhone. We just couldn’t reach a deal that was mutually beneficial.'”
Cauley reports, “Verizon’s decision to pull the plug on talks sent Apple into the waiting arms of Cingular, which will be the exclusive U.S. carrier for the iPhone. The multifunction device is expected to ship in June and cost about $500.”
“According to Verizon, Apple CEO Steve Jobs insisted that he have hard control over iPhone distribution,” Cauley reports. “The problem? While Apple and Verizon stores would have it, Wal-Mart, Best Buy and other Verizon distributors could have been left out.”
Cauley reports, “Cingular won’t talk about the financial terms or say how long its iPhone exclusivity lasts, but two people with direct knowledge of the deal say it’s a five-year contract. The exclusive is USA-only, leaving Apple free to market its iPhone globally.”
Full article here.
[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son” for the heads up.]
History will show that Verizon made a very big, very costly mistake. That they have a VP willing to explain all the details to a USA Today reporter only emphasizes Verizon’s general stupidity.
Related articles:
O2, Vodafone, Orange, T-Mobile battle for exclusive rights to Apple iPhone in UK – January 26, 2007
Rogers to offer Apple iPhone exclusively in Canada – January 25, 2007
Research in Motion downgraded due to Apple iPhone competition – January 23, 2007
RealMoney: Apple just blew up the whole damn mobile-phone supply chain with its new iPhone – January 11, 2007
eWeek: Apple iPhone fallout: ‘They must be crying in Nokia-ville and other telephony towns today’ – January 10, 2007
Jefferies downgrades Motorola on fears of market share loss to Apple iPhone – January 10, 2007
The massive FUD campaign against Apple’s iPhone ramps up – January 10, 2007
Time: ‘iPhone could crush cell phone market pitilessly beneath the weight of its own superiority’ – January 09, 2007
Analyst: Apple iPhone should be given its own category – ‘brilliantphone’ – January 09, 2007
Apple debuts iPhone: touchscreen mobile phone + widescreen iPod + Internet communicator – January 09, 2007
I don’t like Verizon.
They are nazis the way the control how and what is allowed on the phone.
Funny I say that now that I think about it, but Steve will be too. But that is Steve doing it and not the cell phone company.
Plus, Verizon has always been not as mac friendly as Cingular.
Verizon is really a stupid company – they don’t get it. That VP ought to be fired!
The company is not Mac friedly. When I bought my V810 a few years ago they tried to sell me a CD installation kit to sync my phone with my TiBook. they had no idea what iSync was all about and said that it couldn’t be done. What a bunch of idiots. All I needed was a syn cable which I bought at Readio Shack.
>That they have a VP willing to explain all the details to a USA Today reporter only emphasizes Verizon’s general stupidity.>
That VP will either get a raise or a severance bonus of $200 million or so.
I, like Denny, have seen many, many people that have had a hell of a time with Verizon in terms of syncing their “smart phones” with their Macs. Verizon is not Mac-friendly at all to say the least.
I think that Cingular is a better choice as a US carrier.
The truth is that verizon has the best network in the united states of america. But they lack international networks (phones do not work properly over seas). Edge and gprs are slow. The emails and multi media that verizon supply (data) is the fastest system out(Cdma) for usa only. Apple should and hope to change in the next 5 months should go with hsdpa.
No biggie. The iPhone still won’t be a success because I predict that Cingular’s greed will prevent it from happening. Expect to pay more than $100 a month to be able to use all the features of the iPhone.
Apple has a strategy to establish iPhone’s market. Like iPod, distribution channels will grow once the phone is established as a leading product. If it becomes popular, greater distribution will also follow.
I keep wondering if Leopard will have some sort of tie-in to the iPhone beyond iTunes and such.
Can you imagine the money stream into Apple’s coffers if Apple gets a piece of the monthly contract revenue? That is implied in the article as a possibility. That would be about the only reason I could fathom as the quid pro quo for giving Cingular five years iPhone exclusivity in the USA.
I misunderstoof the headline
” width=”19″ height=”19″ alt=”grin” style=”border:0;” />
stoof? Vat is stoof?
Stood sorry….
Bunk!
Verizon uses CDMA. If Apple went with that, they would have the market in S. Korea, Japan, andthe US. Forget the rest of the world.
Saying that, Verizon is the best carrier in my area.
Sigh!
I LOVE verizon. Their service is stellar.
I will leave them in a heartbeat to get the iPhone.
(My RAZR sucks. I hate it…and I just re-upped with verizon…but I’ll still jump ship.)
The question is: how much control does Apple have over the plans and what concessions, if any, did they negotiate for the same. If volume sales is the target then I don’t see Apple risking the business model by tolerating overpriced plans.
Irressistible as the iPhone may be, overly complicated, misleading plans, or draconian extra charges for busting limits, are no-go items for me – easily.
Maybe this one should have the chair graphic too — because that’s probably what Steve Jobs did when he read this. Verizon going public with the negotiations is very antagonistic. I doubt Apple will ever negotiate again without the company signing a nondisclosure agreement.
In light of the fact that I have NO cellular service choices except Verizon, this makes me upset at both Apple and Verizon. Mutual control freakage I guess…
News like this only proves it really is Monday morning – Crap.
This is a classic reflection of Steve Jobs’ arrogance with making big business deals. He has always wanted the sale and distribution of anything involving Apple on his terms (Apple Hardware – Best Buy, Circuit City; Apple as distributor – movies, music). When it comes to the end-user dealing with lots of defects on their new releases, Apple is never apologetic and sometimes will quietly offer exchanges, while most of the time you are left to inconsistent service policies quoted by incompetent AppleCare support repts.
Because of Apple’s clout, big retail and big media has always been forced to comply to his every whim, and we are now seeing the same with Cingular.
Even though Apple’s products are great, I don’t think Apple’s clout will last forever, and I certainly don’t think that there “management by arrogance” strategy is sustainable.
This could not have been a serious discussion with Verizon using CDMA. Cingular, with GSM (as well as most of the world) is the future, more features, lighter phone, better battery life. Besides, Verizon is the most self-righteous ‘take or leave it’ cellphone company, so thanks for saying no to Apple. Apple may be self-righteous as well, but at least they have a multitude of reasons for being so.
Apple has a history of having difficulties working with other companies…we will see how long the current deal lasts.
Verizon blows, all right.
>MDN Spin Zone :: How Verizon blew the Apple iPhone deal
Shame on them for not wanting to bend over while smiling and standing on one leg while Apple slaps them around and steals their lunch money!
You fellas are running the Spin Zone on high lately.
MPC Guy
—
It’s okay for me to say this because I typed it on a Mac.
Verizon’s local service here in Philadelphia is the worst! It is only superceded by their horrible customer service. I don’t even have a landline any more primarily because of them.
There was never any chance of Verizon agreeing to work with Apple. Verizon thinks that VCast is their future, and they’re making too much money ripping off their customers with it to give it up for any phone.
I’m bummed about the Cingular deal. I’ve got Verizon here in Socal and it’s the best service for coverage. I shudder to thing about going back to Cingular and their “customer service” department. Ugh… Also, I use a program called MySync to sink my palm treo, works great with .mac. Even had the guys at the genius bar show me how to set it up with the iMac.
Dang I want an iPhone, but Cingular’s lack of Customer Service is a real draw back.
Yup, Verizon blows and I absolutely hate being stuck with them. When you walk into one of their stores in the region where I live its like walking into a mafia reception room. If you’re not interested in buying into whatever their current deal is you get verbally abused, and when you make it clear that you are NOT going to buy anything that they want you to buy, they literally turn and walk away – I’m not exaggerating even a little – its truley incredible. I’ve been there four times, one of those times was for service (and I have to say that it is friendly and fast), and the other three times it was to upgrade our service. We always end up driving a little farther and going to a Verizon associate store where they can at least muster an ocassional ‘Please’ and ‘Thank you’.
Soon as my Verizon contract ends, I’m dumping them for Cingular and buying an iPhone…