“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
MPC Guy – are you new here? MDN‘s headlines are part of the humour of this site. It is flame-baiting plain and simple. Most people know not to take it too seriously. This is an ad-revenue supported site, and controversial headlines lead to more page impressions.
In all seriousness, you are right. It was pretty funny to compare the headlines from this story as they came in across the RSS feeds:
AI: Verizon passed on 5 year exclusive iPhone deal
iLounge: Verizon passed on exclusive iPhone deal
MacRumors: Verizon Rejected iPhone deal due to Apple’s terms
MDN: The freedom hating terrorist lovers at Verizon screw up the deal for the device that will likely end up saving the human race
I am surprised they didn’t include a graphic of the Verizon VP in a Nazi uniform snorting coke off the bible while listening to his Zune.
“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”
What is so arrogant about wanting to control distribution? It’s called good business sense. Apple is a company that relies heavily on branding of its products to create the buzz and demand that allows them the higher margins they get. It’s what companies who have premium products do.
All you have to do is looks at how Macs were distributed before Apple retail came along to realize that it makes a lot of sense to be able to have your own distribution channel. Prior to Apple retail, Macs were often sitting on messy shelves, covered in dust, with half working systems, being sold by people that were hostile to your product.
We all know how that changed once Apple retail came along and all Steve wants is to be able to create the same kind of selling environment for the iPhone.
Doesn’t make him arrogant, it means he’s smart. A lot smarter than people like you want to give him credit for.
macromancer – Don’t remind people that you can no longer buy a Mac Performa at Sears — we don’t want Norway to sue Apple for something else.
Mike K….
For some of what they slant, it’s no biggie at all. But damn… they sure spin things in a big way at times. You’re right though… compared to a real news site, MDN’s Takes and Titles are laughable. Just as funny, people here get so wound up over topics. You make one critical post and everyone jumps on you like you stole their girlfriend.
BTW… I think you calling me out without using common MDN vocabulary (jackass, stfu, wannabee, idiot, and such) speaks highly of you. Thanks and G’day, Mike!
—
—
As for the iPhone on Cingular/AT&T… I hope it turns out to be a good combination. Contrary to their ads, we get lots of dropped calls up and down the west coast.
I’m with vibranium. Verizon service has been great – but my contract lapsed and I’m jumping to Cingular immediately.
I hate Verizon too mainly for their horrible nav system on their phones and their stupid photo and video services. I have to email my photos and videos to my email account at 5 cents per photo! Why can’t I just plug the phone to my mac? But from reviews, Verizon has better call quality and coverage and thats the only excuse my Mom can come up with for staying with them.
Yup, Verizon blows. But coverage is a big one. The nice thing about the iPhone is that, you can pretty much use everything, except the phone without any service at all – right? I mean you plug it into your Mac and its going to sync all your personal stuff, including your iTunes stuff, and email and web browsing are wi-fi enabled, right? Anybody know for sure?
@dog…Dog sounds like you need a bone. The term is negotiation from a posiotion of strength. What if Steve had capitulated to Verizons demands. The iphone would have had most of it’s features crippled. You would only have been able to buy songs from Verizon @ $2.50 a pop and the iphones lack of functionality would not have supported it’s albeit hefty price tag. Apple would have seen a beautiful product dry up on the vine and all the reality distortion fields in the world would never be able to put it back together again. Verizon is old school Microsoft hacks. They’re in bed with the Ballmers of the world as per the MSN doody that they offer with their DSL service rather than say choosing something open source. All that being said I still think you silly to confuse arrogance with strength.
So apple wants a cut of the monthly fees huh? I wonder if this is something that is customary? It kind of reminds me of the CEO of Universal who wanted a cut of the iPod revenues. Granted, this is just speculation thrown out by Verizon’s CEO. Can’t be 100% sure it is true or even that this is what is going on with Cingular.
Yup Verizon blows.
bobchr says, “Apple would have seen a beautiful product dry up on the vine and all the reality distortion fields in the world would never be able to put it back together again.”
And this is precisely what happens every time, every time, Apple puts enough trust in a distributer, service provider or retailer, they take the Apple product and put it as far back as they can get, don’t advertise it, don’t support it, don’t use proactive sales strategies for it, and then say, see, Apple is that popular and besides, there’s hardly any software for it. And that my friends is exactly what would have happened if Apple had caved to Verizon’s demands.
Arrogant or not, Apple has learned its lessons, in some cases many time over, and its not going to play stupid any more.
Have I mentioned that Verizon blows?
I have my doubts about this story. Why would Apple seriously consider Verizon when they don’t have GSM? I suppose it’s possible Apple could have had talks with Verizon a year or two ago, before they decided to go GSM. But Apple sells internationally and really has no choice but to support an international standard.
@Chris: Apple asking for a piece of the action of carrier revenue makes sense for two reason: 1) Apple will be bringing new customers to whichever carrier gets an exclusive (think of it as a finder’s fee), and 2) Had Apple gone the MVNO route, they would be getting a percentage of the ongoing revenues. It is a very reasonable request, IMO.
The iPhone hasn’t even sold yet and MDN is labeling Verizon as stupid…
The cell phone market is NOT the computer or MP3 player market – especially outside the backwater that is the US cell phone market/networks. The opportunities for the iPhone reside mainly outside the US and that is where Apple will fight it’s largest battle for acceptance. The phone models available in Europe and Asia make most of ours look prett pathetic.
With Verizon using CDMA (and Korea, etc…) and the iPhone being GSM (at least for now), we’ll see where nogotiations pick up about this time next year.
BTW, Cingular access on the east coast stinks compared to Verizon. What is good is a shiny bauble if it drops call right and left? At least you LOOK cool…
It hardly takes the launch of the iPhone to label Verizon as stupid. I won’t argue about their network strength. But they are marketing asshats. They lobotomize phones so their software developers can add “features” that make it easier for you to buy “ring-back tones” and “V-Casts” or whatever piece of celluar crack they’re trying to push. It’s so sad for someone who wants to use their phone for something useful … like me. My Nokia 6315i can pair up with my Mac via Bluetooth no problems — my Mac even has it’s correct picture. But after the handshake, my Mac basically says, “That’s it. This poor little guy is brain dead, doesn’t understand anything else I say in Bluetooth.”
Instead, I have “Get It Now” software infesting my phone.
I don’t want to try to THINK of what would have happened to an iPhone + a spineless Apple CEO + Verizon Wireless. The horrors!!!!
MacDailyNews Take: History will show that Verizon made a very big, very costly mistake
Perhaps, perhaps…why don’t we wait until that part of History is written so words musn’t have to be eaten. Oops…I arrived somewhat late, so here is the salt
” width=”19″ height=”19″ alt=”wink” style=”border:0;” />
How can anybody say Verizon was stupid (or smart) about losing a deal with Apple when no one knows the details of the offer? Come on. This isn’t the bad news for Verizon. The bad news for Verizon is that a very influential, trendsetting, high profile company (Apple) is reinvigorating a competeing technical standard. That’s big long term trouble for Verizon.
I hope Verizon realizes that they left hundreds of millions on the table when they turned Apple down. What a bozo this Gerace guy is. Figures though that such a lame company would have such shortsighted people there running the management.
I for one will be switching to Apple’s iPhone and Cingular/AT&T as soon as my contract is up. I switched to Verizon because T-Mobile’s reception was non-existent at home, but I have had way more dropped calls with Verizon even in areas with full-bars. And, those with Verizon’s RAZR know how bad that experience is. Sorry Verizon, but I’ll be switching.
“I am surprised they didn’t include a graphic of the Verizon VP in a Nazi uniform snorting coke off the bible while listening to his Zune.”- mike k.
LMAO! Mike, they tried, they really tried, but couldn’t get it done on deadline…… they just couldn’t get the Zune the right shade of squelchy, viscousy brown. Photoshop has its limits.
That being said, this story sounds like total BS to me. The headline should more appropriately read, “Steve Jobs passed on Verizon”. Verizon are totally trying to save face here, because I think they have a clue that maybe, just maybe, they are going to get buried.
Verizon’s network IS incompatible with the rest of the world, and their customer service SUCKS. They are well known for crippling the capabilities of their phones- people complain that the iPhone is crippled now! What a laugh.
This is like those publishers who passed on JK Rowling’s little book………..
@Captain Curt: This isn’t the bad news for Verizon. The bad news for Verizon is that a very influential, trendsetting, high profile company (Apple) is reinvigorating a competeing technical standard.
Cap’n, exactly what part of “the entire freakin’ planet uses GSM except Verizon” , do you not understand, exactly?
“reinvigorating a competeing technical standard”, indeed.
soon to be ex-Verizon customerr,
Your mistake was to buy a trend-setting baubble like a RAZR instead of a phone with decent reception. RAZRs are horrid, period. They look nice though.
I will acknowledge that Verizon is a bunch of Nazis in limiting features and making people pay big-time for them. If you are someone who just wants a decent phone with reception and doesn’t care about ringtones, skins, picture downloading, etc., then Verizon has a great network.
Verizon customer service? Not great, but then it’s awesome compared to the 4 hours it took to cancel a Cingular contract when it was up. Talk about obfuscation and buck-passing…
The iPhone isn’t out yet. Cingular/AT&T doesn’t have pricing for all of the features in place, not does it have a network worthy of the phone (compare EDGE against the rest of the world outside of the US). For that matter, no US carrier has a network like Asia or Europe…
3G GSM is going to blow away 3GCDMA as far as speed… Apple made the right choise for several reasons… although I do like Verizon’s voice quality a little better, but if they can find a way to use the highspeed data for VOIP the quality could end up being better than Verizon…
I just want the sencond gen iphone, or the itablet.. something with ichat video capability..
either way I cant wait.. and I WILL NOT but another cell phone till this is available.
Thank you MonkeyBoy for the gentle rebuf. I guess I’m missing some facts. My understanding is that AT+T wireless (formerly Cingular) uses GSM technology. And that Verizon Wireless uses CDMA technology. GSM and CDMA are incompatible. Leading me to believe that one standard or another will eventually prevail. In the future most likely either AT+T or Verizon will have huge losses as one of these companys would have to convert their existing infrastucture to the prevailing technology. My premise was that the iphone could push popular support towards GSM. Where did I go astray?
Captain Curt, I think that both standards can survive actually. There would be a problem if CDMA folks could not speak with GSM folks but that is not the case. As long as there is robust support for both and the ability to call (I am not sure what kind/level of interoperability that is) all other cellphone (and other kinds of “phones”) then I don’t think Apple could force a move to GSM.
As someone who has had both Cingular and Verizon, I think it is apple that blew it here. Cingular is a terrible cell phone provider both in customer care and as a provider. Verizon is far superior in customer care and overall rated across the country as the best in reception etc. It is too bad that Apple has gone with such a second rate company as Cingular.