How Steve Jobs played hardball in iPhone deal with AT&T (Cingular)

“During a visit to Las Vegas last December for a rodeo event, Cingular Wireless chief executive Stan Sigman received a welcome guest: Steve Jobs,” Amol Sharma, Nick Wingfield, and Li Yuan report for The Wall Street Journal. “The Apple Inc. chief stopped by Mr. Sigman’s Four Seasons hotel suite to show off the iPhone, a sleek cellphone designed to surf the Web and double as an iPod music player.”

“The phone had been in development by Apple and Cingular for two years and was weeks away from being revealed to the world. And yet this was the first time Mr. Sigman got to see it. For three hours, Mr. Jobs played with the device, with its touch-screen that allows users to view contacts, dial numbers and flip through photos with the swipe of a finger. Mr. Sigman looked on in awe, according to a person familiar with the meeting,” Sharma, Wingfield, and Yuan report.

Sharma, Wingfield, and Yuan report, “Only three executives at the carrier, which is now the wireless unit of AT&T Inc., got to see the iPhone before it was announced. Cingular agreed to leave its brand off the body of the phone. Upsetting some Cingular insiders, it also abandoned its usual insistence that phone makers carry its software for Web surfing, ringtones and other services. The deal also calls for Cingular to share with Apple a portion of the monthly revenues from subscribers, a person familiar with the matter says.”

“Mr. Jobs once referred to telecom operators as ‘orifices’ that other companies, including phone makers, must go through to reach consumers. While meeting with Cingular and other wireless operators he often reminded them of his view, dismissing them as commodities and telling them that they would never understand the Web and entertainment industry the way Apple did, a person familiar with the talks says,” Sharma, Wingfield, and Yuan report.

Sharma, Wingfield, and Yuan report, “Mr. Jobs flirted with other titans of the wireless industry but not everyone wanted to play ball. Talks with Verizon Wireless fell through. Mr. Sigman and other top Cingular executives were willing to cede control to Mr. Jobs and tolerate his digs at cellphone carriers, all for the privilege of being the exclusive U.S. provider of one of the most highly anticipated consumer electronics devices in years — and to deny rivals a chance to do the same, according to people with knowledge of the situation.”

Much, much more in the full article here.

[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son” for the heads up.]
Cingular’s Sigman sounds like a very smart man.

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  1. Sigman let the first brick in the wall fall down. The cell phone monopoly is going to go away. No ringtones (has to be the stupidest thing ever). Cell companies are going to have to focus on call quality, and wireless internet speeds. That is what they should be doing aways. Ringtones, NFL on a phone, Music videos. Lame. Niche markets. If you can provide people with great call quality, fast internet, cool cell phones, and competitive prices, that is all that we want.

    Oh, and no TWO YEAR contracts. If your service sucks, I will, and should be able to, change it.

  2. It doesn’t take a rocket scientist to see that:

    1) The iPod is by far the best selling digital jukebox on the planet.
    2) Among many other things, the iPhone is an iPod.
    3) There is no need for a (3) – they had you at (2).

    Here’s an interesting pair of questions: Is Sigman a registered Mac user, and did Jobs know it?

  3. I hope Steve Jobs does the same with the ‘orifices’ here in Europe.

    If the initial sales in the U.S. are as good as they promise to be, then he’ll have even more leverage with the European ‘orifices’.

  4. How about we wait and see if the iphone can live up to the hype before we declare it the device of all time. It will not put a big hurt on other carriers until there are less expensive versions. Most people will not buy it at the current price. Most people with cell phones get the cheapest phone they can get.

    I’m interested in the battery life. Not just how long will the thing last on a charge (talking, surfing and music) but how many charges will it take until there is a noticeable decrease in battery performance? Will the battery be user changeable or will we have to send it off to get a new battery? A cell phone goes through an awful lot of charge cycles especially one like the iphone that will be in use for far greater hours then the normal cell phone would be. I’d hate to buy a phone that turns out to be basically a disposable item after just one year because the failing battery costs too much to have replaced.

    I know that the battery life on my ipods have not held up that well.

  5. Capitalism has always had one goal, create a monopoly and screw the customer–he is only prey. Look at MicroSoft. Their ambition was to create a software monopoly and take advantage of the customer. The wireless industry is the same. Create a monopoly and to hell with the real needs of the cell user. Apple is the only company of which I know that is truly anti-Capitalist. They do a Vulcan mindlink with the user and provide them with what they need. In an Apple world, devices are born because they are needed; while their design and ease of use harmonize with elegance and simplicity.

  6. @ Ardie

    Your view that “Capitalism has always had one goal, create a monopoly and screw the customer…” is as wrong as wrong can be. The key to government is that they have a monopoly on the use of force. The key to capitalism is that for seller’s to prosper they must – often despite themselves (Adam Smith’s invisible hand) provide a higher quality product than their compeitors. There are no “capitaistic monopolies”. Monolithic companies that once seemed invulnerable fall all the time due to market pressue. The only true monopolies are those that are sustained by government edicts.

  7. WTF Ardie? Did you just escape from Pyongyang or something?

    Apple capitalizes THROUGH bringing the customer what they need

    before they even know that they need it.
    Just like Jobs said, the

    problem with MS is not the success, it’s that they make third rate

    products. Apple is not anti-capitalist and if they were, I’m sure the

    shareholders would like to know about it. Don’t be such a freakin’ socialist.

  8. Jobs drives a hard bargain, so what? He probably earns respect for his no-nonsense attitude and far-thinking perspectives. Jobs et al have a vision and a determination to see that vision become a reality. Apple is not going to join forces with others who don’t share Apple’s commitment and dedication to excellence and originality.

    Compare this to Microsoft lately, which is nervously repeating excuses for Vista shortcomings. In addition, Gates has shamelessly promulgated lies that many of Vista’s features are unique and extraordinary, although these same features have existed in OS X for years. Vienna (Vista’s replacement) is just another public relations ploy to conjure hope and optimism in the minds of frustrated and disenchanted Microsoft apologists. Let’s not forget that Zune has fallen off the radar with no apparent survivors and that Origami has long been declared dead and buried. Microsoft’s “innovations” are dismal failures and its flagship OS is imprisoned in the Sargasso Sea of hubris, ineptitude, and delusion.

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