“Steve Jobs made no secret of his disdain for wireless carriers,” Steve Wildstrom writes for Tech.pinions. “In 2005, when Apple was still denying any interest in getting into the phone business, Jobs sneered at the four major U.S. carriers as the ‘four orifices’ through which the wireless business passed. With the launch of the original iPhone, Apple made a concerted, but failed, effort to change how the wireless carriers did business by getting AT&T to sell the phone without a subsidy.”
“Jobs had to make a peace of sorts with the carriers because that was the only way to get the iPhone into the hands of customers,” Wildstrom writes. “But now he seems to be wreaking posthumous revenge on his old foes.”
Wildstrom writes, “The problem is simple. The carriers are selling tons of iPhones. and Apple is collecting all the profit… There’s not a lot carriers can do about it. The original deal Apple offered in 2007 was almost certainly better for them. Apple relented after AT&T pushed to renegotiate the deal and, more important, additional carriers outside the U.S. refused to go along with Apple’s terms. The carriers got what they wanted, and now they are paying the price, having yielded control to Apple over pricing, branding, apps. and just about everything else in the customer experience.”
Read more in the full article here.
MacDailyNews Take: Apple’s revolutionary iPhone (brings record subscriber gains to carriers).
Ask T-Mobile USA how life’s treating them sans iPhone.
Related articles:
Sprint posts net loss but revenue gain on Apple iPhone; best quarterly subscriber gain in six years – February 8, 2012
AT&T sold 7.6 million iPhones and fewer than 1.8 million Android phones in Q411 – January 26, 2012
Analyst: Verizon’s record iPhone sales signal waning demand for Google Android phones – January 24, 2012
Isn’t this article a little like giving away the magicians secrets? And then pointedly telling the cable operators to watch out or they’ll fall into the same trap. Here’s hoping they’re too arrogant to notice Apple’s left hand while the right hand is providing the dog and pony show.
Bout time.
They have been Making out like Bandits for Decades,
Charging us an “Arm and a Leg” for their Crappy Service & Crappy Devices.
Yeaaaaaaaa, (Thank u Steve Jobs)
There is a glaring mistake, even in the very first paragraph of the article, which is simply too gross to be overlooked.
Apple NEVER attempted to sell unsubsidised iPhone. The original iPhone was sold for $500, fully subsidised (even Ballmer got that right with his response “Five hundred dollars?? Fully subsidised??? And without a keyboard????).
The subsidy model was different for the original phone, though. Rather than getting $450 upfront from the carrier, Apple was taking some $200 upfront, plus some $8 – 12 per month (depending on who made the sale — Apple or AT&T) for the duration of the initial contract (two years), bringing the subsidy up to around $400 – 500. The retail price of the original iPhone was around $850, not that anyone could actually buy it that way. The phone was sold locked to AT&T, only with a two-year contract (with a $20 unlimited data plan on top of the chosen voice plan).
With 3G, Apple gave up the monthly subsidy and chose the standard up-front one. The amount of subsidy became the largest in the industry by far ($450).
He left out an important fact about Apple’s initial pricing structure: Not only did some international carriers object, but it was actually ruled illegal in France and some other countries. Apple had to either keep two different pricing models in place, or switch to the same model everywhere. Plus, AT&T wanted to renegotiate because it realized that it was losing subscriber revenue.
The bottom line is that it doesn’t really matter which sales model Apple uses, people want iPhones, and if a carrier doesn’t have an iPhone available to sell, people will switch carriers to get one.
I still don’t see what the carriers are crying about. They’re getting their two year contracts and getting more satisfied customers, too. The consumers should be able to use the smartphone they want to use. After all the carriers are really just data pipes and that should be their prime function. Maybe they better figure out a way to stay ahead of the bandwidth curve. At some point there has to be some wireless technology that will serve data at unbelievable speeds without requiring some costly infrastructure.
It seems the carriers are making as much money and getting as many subscribers as they’ve ever had and they’re still complaining. Jeez. Nobody is forcing them to carry iPhones. Don’t all smartphones gobble up bandwidth. Plus, when older iPhones come back to their network, the carriers are getting free and clear subscribers without subsidy costs. Bitch, bitch, bitch…
The Carriers are just assholes. They aren’t even data pipes. Steve was right about this one.
Why do I pay $80 a month??
Isn’t all wireless transmission just Data? Why am I paying for calling and texting?
I can’t wait for the day that Apple finally crushes the other wireless carriers, either by starting their own carrier company, and then completely b*ttf*cking Sprint, Verizon, and AT&T for being jerks to their customers….
First sentence nails it.
Steve Jobs was right, in my opinion, for expressing his disdain for an industry set up using a socialistic business model of complicated subscription tiers, high overage penalties, and built in equipment subsidies, all of which disproportionately benefit those who use the most services, and change phones every chance they get.
The entire basis of the article looses it’s foundation if we were to all buy our phones, own and use them for as long as we like, and pay only for the services we use, with a reasonable service charge for access.
The cell phone companies are hurting themselves in the long run by adopting their socialistic business model.
That model is not socialist. It is debt slavery. Get the goodies up front and pay back with interest over time. Pretty much the Amercian way these days.
Yep, deregulation leads to socialism every time.
Uh,
I don’t think you really understand what socialism is. Then again 99% of Americans don’t either.
I agree that many/most do not understand what socialism is.
When everyone pays into a “pool” and then takes from that pool according to their need/want/desire, I call it a socialist model. When some members of a pool subsidize the services and equipment used by others in the pool, then I call it socialist. In this regard, I consider the cell phone tier pricing model to be socialistic. If you disagree, then maybe you do not understand socialism.
If they think THIS is brutal, just wait till Apple reveals their own network. It’s going to be a bloodbath.
Seriously, I’d love to see Apple save up its cash and eventually take on the wireless carriers, the cable companies, the ISP’s and the content providers. It’s always these guys who muck things up and make the entire experience much less than what it could be.
That would have been nice under Steve Jobs, a moral person. The potential for bad is great if Apple controls the hardware, the pipes and the content of the future. Power corrupts.
I understand what you’re saying, but the likes of Google, Microsoft, Verizon, AT&T, Cox Cable, ABC, Sony, etc. aren’t good alternatives. Power corrupts, yes, but who cares as along as Apple provides the best?
What the carriers own, that cost billions to acquire, is wireless spectrum. The carriers have also built-out many, many billions in infrastructure to use that spectrum.
Apple can upset the Apple cart by buying an existing carrier (Sprint) and building out a superior infrastructure that simply works better and is more available.
However, I think Apple will take out the Cable companies first by offering a la carte TV channels on a subscription basis.
Then, Apple will be in the same position in both markets -the content provider riding on someone else’s network to the customer.