How Apple played it smart with iPhone exclusivity

“Apple’s trajectory with exclusivity reflects a very smart and elaborate plan which helped make the iPhone the success it is today, and now that exclusive carrier deals are ending, Apple stands ready to reap the rewards it has sown.,” Darrell Etherington writes for GigaOM.

“Carriers no longer need convincing that Apple’s model can be lucrative for them, even if it does mediate their relationship with customers to some extent. Apple doesn’t need to make concessions to negotiate with carriers anymore; if anything, the reverse is true,” Etherington writes. “Also, the illusion of scarcity is no longer necessary to make Apple’s products appealing in the eyes of buyers; even after more than a year since introduction, the iPhone 4 is the highest selling Apple smartphone in the U.S. and iPhone owners are the most likely to stay with their handset maker more of any smartphone buyers.

Etherington writes, “On the flip side, ending exclusivity across most major markets opens up Apple’s business to a huge number of new potential customers… The staged ending of exclusivity also means that Apple effectively gets a brand new launch every few years. An iPhone might note be totally new anymore, but it is new to a network’s subscribers if an exclusivity deal was previously been in place on a competing network… In the end, we all benefit from Apple’s approach to exclusivity. Consumers get a pure iPhone experience, mostly unadulterated by carrier demands, software and restrictions. Apple gets more control over its product, and a staged global rollout of its handset that keeps momentum rolling in its favor. Carriers, too, benefit.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Edward Weber” for the heads up.]

12 Comments

  1. What the hell is this guy talking about? Apple wants to open as many channels as possible with the carriers. Look at Verizon, China Mobile, KDDI and so many others just this year alone. This guy’s crazy if he thinks exclusivity is like a nightclub or something. It isn’t. Apple wants to get as many carriers as possible adopting the iPhone or be left in the dust when Android grabs that space.

    1. The exclusivity set the stage for handset maker (Apple) autonomy. By initially offering exclusivity, Apple was able to turn the carrier/manufacturer model on its head, where the Apple gets to dictate the nature of the hardware and installed software/apps, not the carrier. Yes, Apple wants as many carriers on board as it can get, but now that that the Apple model is entrenched, other carriers can be brought on board with the same rules. That major change in business model would never have happened without the original exclusive deals.

        1. The only way Apple could have lost sales is if they were unable to sell what they made.

          Throughout the brief history of the iPhone, their manufacturing always struggled to keep up with the demand. They sold EVERY single device they could possibly make. Having it on more carriers wouldn’t have changed that; it would have only made many more consumers frustrated for having to wait longer shipping times.

          1. Clearly not written by an accountant or a CEO. Or any sort of visionary. Any company has difficulty getting enough product to meet demand, if it sets sales forecasts then does better in reality, given complex supply arrangements and a very long lead time.

            If Apple had been willing to treat the iPhone like any other commodity in the world and sell it like the iPad or iPod or Mac, or a car or a lawnmower, then it would’ve set different sales forecasts which, in my opinion, could’ve and would’ve been way higher than those it set under it exclusive-carrier regime.

            Frustrated consumers? How about the tens of millions who had no hope of buying an iPhone simply because Apple chose to dictate which carrier they would be tied to, in markets where no carrier would bow to Apple’s demands, the government would not permit such brutal policies or consumers who refused on philosophical grounds to be bullied into Apple’s straitjacket.

            I want an iPhone like crazy but will never buy one so long as I cannot choose my carrier.

  2. At a higher level, how is this different from what other phone manufacturers have done? I recall seeing phones exclusively on one network, only to be allowed on other networks 6 months later. Clearly, the iPhone, the media, and the following is way different, but the strategy is common, albeit a last-decade type strategy.

    And I agree with Ballmer’s left nut…Apple wants and needs to open up the floodgates big time with all the potential competition.

  3. But he does make an interesting point about the leverage that Apple has with the carriers. The carriers had all the power before the iPhone. AT&T became a partner in a new unknown territory of manufacturers holding more power. They were the guinea pig as it were. Now the other carriers are falling all over themselves to get their hands on the iPhone, no matter what it takes. That might be a lot different if Apple would not have taken the course it did.

    1. DMac, totally agree. These youngsters forget how things were like BIP, Before iPhone!!

      Carriers would make mfgs stop or block funtions so they could sell that item vs the mfgs.

      Just a thought,
      en

      1. Second that, and now that everyone has the knowledge of how an iPhone is supposed to work, no carrier dares try to cripple it on their network, because consumers will just switch networks to get the full deal. I was frustrated for years with phones that could do a lot more than the carriers enabled, because they wanted to rent the functionality back to you, like voice dialing or custom ringtones. Apple has done the world a great service.

  4. The iPhone’s exclusivity may have been good for Apple and AT&T, but it has not been good for iPhone customers. Now Verizon has entered the game, but they are just as expensive (and just as restrictive) as AT&T. What iPhone customers really need is for the iPhone to be available on all major carriers, which could lead to price competition that is nonexistent today.

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