Schaffner writes, “In talking with iPhone owners, just about everyone seems to love the phone except for one aspect, the locked arrangement with AT&T. In my conversations, admittedly not a scientific sampling, the carrier is the thing people would most like to change about the iPhone. As real as all of these problems are, the constant media attention to yet another issue that further lowers the market perception of AT&T. And as we all know, perception can be as important as reality.”
Schaffner writes, “By limiting carrier choices, Apple has given competing products an easier entrance into the market. I believe that if Apple had not tied the iPhone to just one carrier, the iPhone’s market share could have been even higher and would have been that much more difficult to displace as competing products come out.”
“All of this is a life lesson for IT leaders. If at all possible don’t give up control of core components of your operations,” Schaffner writes. “If you must, as Apple had to because it’s not a network carrier, keep your options open and I’d strongly recommend shorter contracts with multiple providers, even if it costs a little more.”
Schaffner writes, “I’m sure Jobs and all the iPhone users would rather be talking about all the good aspects of the iPhone rather than the problems with the carrier. Letting your partner define you is a risky proposition. Let’s hope Apple ends all of this soon by giving us some better options.”
Full article here.
MacDailyNews Take: Even if he can’t, or won’t, see it, hopefully Mr. Jobs can at least hear it. The drumbeat grows stronger with each passing day.
For reference, please see Walt Mossberg’s review of Apple’s iPhone 4.
What’s wrong with AT&T;? Just askin’.
I doubt even SJ thought the iPhone would be this big. A 5 year deal probably looked pretty good at that time, particularly in the way it gave Apple control over their product in ways others even today do not have.
Technically, if Apple increases its cash/near cash holdings by 60%, it could pretty much buy Verizon. It could buy sprint 3x over.
If VZ is worth on $83 billion, how much would it cost to start a new Apple network from scratch, leapfrogging all the outdated technologies still in use by Verizon and AT&T;and forging ahead?
$50 billion?
$60 billion?
Being a carrier is a cash rich business done right. The current players have too much money tied up in outdated tech. They’re not as profitable as Apple could be in this space with a new, hybrid tech spanning 3G and VOIP.
Carriership is a business that runs and runs. Like energy housing and food.
@m159,
Totally agree. THe past is the past but it can affect the future. I still do not like the way Verizon acts towards Apple. Let them stew with Android.
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Just a thought,
en
What part of the iPhone doesn’t do CDMA 2000 EVDO don’t people understand? Steve Jobs probably considers CDMA 2000 EVDO to be obsolete. Until Verizon Wireless has enough of an LTE network in service for Apple to consider making a compatible iPhone there won’t be any Verizon compatible iPhone.
Apple/Steve has a vision for what the iPhone should be able to do. From what I know, only AT&T;has the technical capability to fulfill this vision for the most part. None of the other carriers has enough coverage with enough bandwidth to allow what the iPhone should be able to do for every American, wherever he/she lives, according to what Apple envisions.
That’s the reason why they stay together. Period.
A vocal minority (mostly discontent bloggers) complain about AT&T;service. The rest of us realize that radio signals can’t penetrate all forms of matter and are subject to interference. Servers and access points have physical limitations and occasionally do not meet the stress of growing demand, both in terms of the amount of data sent and the number of users requesting access within a specific location.
Whine all you want. I usually turn it off as readily as the flash ad that you decry but still offer on your web site. It is usually best to read the article summaries and avoid the comments. Bonus – I am not exposed to extraneous, uninformed politics from either side.
Does anyone happen to know what AT&T;cell coverage is like around Palo Alta or Cupertino near Steve’s house or Apple HQ? Perhaps Steve hasn’t experienced what many of his customers are complaining about.
I agree that any other carrier would have struggled with the iPhone load, but that’s precisely why the iphone needs to be spread over multiple carriers.
As the noted visionary has said, “If Apple had partnered with Verizon, they would have encountered all the same network issues, and more, since they don’t have a 3G network”. STEVE JOBS in an interview with David Pogue.
Steve knows more than a lot of people who run websites.
Everyone waiting for Verizon to get the iPhone seem to forget that Verizon is the last of the control freak carriers.
Apple will not let Verizon sell Movies, TV, Music, streaming Radio, Podcasts, Books, Software Upgrades or Apps to iPhone customers. Apple won’t even let Verizon put their logo on iPhone.
What makes you think Verizon will leave the Dark Ages just to be a dumb carrier for Apple’s iPhone?
I love my iPhone and would never get rid of it……unless I had to switch to Verizon! I have used just about if not every carrier in my 20 years of using cell phones and never had customer service as bad as I did with Verizon. The worst coverage want to the old Bell Atlantic/AT & T, but at least they were nice to you when you called to complain and gave you credits on your bill for both out-going and in-cing charges. I will never use a Verizon phone again. I would give them up and go back to either a pager or nothing at all first.
Sorry that was suppose to be in-coming charges
Youʻre darn right. Apple and AT&T;should have anticipated that pre-orders would be four time greater than any previous iPhone.
I’m perfectly satisfied with AT&T;. I had been with them before the iPhone was ever introduced and continue to be with them today. Their service works fine for me. I think the press has managed to blow their problems way out of proportion. If the iPhone had been introduced on Verizon, I may not have one today.
It’s refreshing to see that MDN’s readers have more sense than the blinders equipped MDN staff.
Anyone who thinks Verizon’s old slow network could handle the iAnything revolution deserve to be a whiner.
Wake up MDN!
I don’t see it. Put this kind of iPhone stress on ALL other carriers and you will see the same problems. Sure AT&T;still needs to beef up their service, but it’s not completely their fault.
All the Steve Jobs defenders and apologists over his ATT blunder have one thing in common: they are basing their opinions entirely on what lord Jobs says.
Do these people have even the slightest notion that lord Jobs just might be shading the truth a bit to protect his bigger-than-life image so carefully created by his marketing genius?
Does anyone actually believe there was absolutely no other choice than ATT? That no one other than ATT would take a chance on the wildly successful brilliance of Steve Jobs? If so, there’s some really nice beach front property in Mississippi I would like to sell to you.
Just wondering….
The real issue comes back to how Apple originally wanted to structure the iPhone deals with carriers – Apple wanted a cut of the monthly revenue, as it recognized that this is ongoing cash flow, money being spent monthly that people will always spend, even if they don’t upgrade their iPhones.
So Verizon wouldn’t play ball because Verizon wants to control all aspects as much as Apple does, and charge people for each little thing they want to do. ATT saw an opportunity to massively increase subscribers, and jumped at the chance, but it wanted an exclusive arrangement to protect its risk-taking position on a phone it had not even seen.
A year later, once Apple realized it couldn’t do the same setup in other countries (Europe in particular), the monthly revenue-sharing and even the exclusive arrangements, Apple and ATT changed up the contract. The result was much cheaper iPhones to consumers, but Apple lost the monthly revenue but gained subsidized phones.
Unfortunately for Apple at this time, the contract with ATT was exclusive. When that ends, Apple will make the iPhone available to Verizon, T-Mobile, and Sprint. To do so now would be a breach of its agreement with ATT, which would not just cost Apple millions (or billions) in damages payments to ATT, but also damage Apple’s reputation as a trusted partner.
If Apple breaks its contract with ATT just to add additional carriers, Apple will be viewed as a company with which carriers cannot trust to fulfill its obligations, and Apple’s negotiating position will be reduced in the future.
Seeing as Apple is going to struggle to meet iPhone 4 demand for the next several months, there may not be the capability to add Verizon anyway. So Apple plays out the current agreement with ATT and prepares a Verizon iPhone 4 for future release. When that happens, there will be a big Apple media event, and Apple will receive great publicity, even if it is a bunch of “It’s about time!” headlines. And Apple sells more iPhones, which it probably couldn’t do right now anyway because Apple can’t make them fast enough.
Either way, Apple wins.
Well I am an Australian and quite frankly don’t give a toss about AT&T;or verizon – and even I’m sick of the AT&T;bashing! Give it a rest folks. Leave yourselves something to say in 2012 when the Apple/AT&T;contract expires.
@Downunder:
Since you obviously don’t have to contend with AT&T;’s network problems, why should anyone care what you think about it?
The only reason there is so much attention paid to ATT’s call quality is that the iPhone *brings* attention to it.
Verizon is a crappy company, with crappy lock-ins and charges for every last thing, and crappy customer service.
Hi there,
Got an iPhone 3GS with T-Mobile. Works great and unlimited data for 10.00 per month, unlimited minutes for 99.00 a month.
They just broke the iPhone 4.0 so I will upgrade. ATT does not deserve my business and I can not believe that Apple did not have
plenty of service requirements in their contract. It must be that ATT is the only one willing to give Apple what it wants.
Don’t have to wait for Apple to do the right thing, just unlock it.
It’s not as if Apple could have just released the iPhone to all the carriers originally, or even to just two carriers. The exclusivity arrangement benefitted Apple be cause it got them (Steve “Them” Jobs) much bigger concessions/cooperation at a time when the carriers had much more power.
The only reason the carriers have so much less power now is exactly because of the iPhone’s success, and that success was greatly aided by the favorable terms in the AT&T;deal.
Where Jobs MAY have miscalculated is in negotiating a 5 year agreement instead of 4, or maybe 3. He had to guess how long it would take before he was in the driver’s seat, and he guessed 5 years.
“Letting your partner define you is a risky proposition”
If you really think Jobs isn’t acutely, agonizingly aware of that, you haven’t been paying attention. He had two stumbling blocks: First, Verizon acted as expected and refused the iPhone because Apple–quite rightly–wouldn’t give them control over the device or customer relationship. Second, Verizon is one of the few carriers in the world that doesn’t use the GSM protocol and Apple would therefore need to produce a separate line for them and the handful of others on the same standard.
Every one of you commentors on this board is smarter than the author of this article.
Many of the comments provided offer answers to many of Shafer’s
questions and doubts.
We are, of course, not his intended audience; he’s speaking to a segment of the culture who doesn’t understand the difference between an email or a text message.
What sounds so obvious to us is news to them. To them, he sounds like an authority, to us he sounds like he’s been asleep for three years.