How Jobs Played Hardball In iPhone Birth

Carl Bialik from WSJ writes "Apple bucked the rules of the cellphone industry when creating the iPhone by wresting control away from normally powerful wireless carriers, the Wall Street Journal reports. From the article: '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... 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.'"

Comments

On a general level...

[daddyrief]

I'm really for anything that helps wrestle proprietary control settings away from the major carriers.

Re:On a general level...

[Whiney Mac Fanboy]

I'm really for anything that helps wrestle proprietary control settings away from the major carriers.

Yup, you can expect Apple to fairly license proprietary control settings in a reasonable and non discriminate manner and help level the playing field in the cell phone market!

Thanks Apple for giving us more choice!

Re:On a general level...

[mp3phish]

While I normally do not like to praise Apple, this is one thing I commend them on. With all the proprietary gimmicks Apple tries to shove down customer's throats, they are not as bad as the gimmicky trash shoved down wireless carrier's throats. For this reason, I have to take Apple's side on this.

The wireless carriers in the US (and a few other regions) have been gouging the eyes out of customers simply because they have always been considered a premium service, thanks to the federal subsidy known as the universal service fund on landline phones. While the rest of the world commoditized their wireless telephone markets, the US wireless carriers turned them into crap shoot proprietary bullshit.

The iPhone (though I refuse to admit it is a good deal, or worth anything close to $500) is the first step in finally commoditizing wireless telephone service. Not allowing the carriers to screw up the phone's firmware is what companies like Nokia and Motorola should have done a decade ago. It is no wonder the wireless carriers are doing what they do, look at how easilly the FCC allowed SBC to buy out AT&T Wireless and then buy out AT&T long distance all in a 3 year period, consolidating almost every drop of the original baby bells.

Thank you Apple for your willingness to play Hardball. I am glad you can see through the corporate crap that is Cingular/AT&T/SBC. My only hope is that you can take the same approach to your own business model and look at yourself from an outsider's perspective, just as you have approached this problem with Cingular.

Re:On a general level...

[squiggleslash]

I'm sure a locked down phone that only runs Apple's software and is only available on Cingular, with Apple claiming that it's morally wrong to unlock a phone (such people are "bad guys") to run on other networks, is going to do that.

Anyone who thinks Apple is trying to do anything but shift power from one proprietary group to another is delusional.

Worse still, Cingular is one of the only two major GSM/UMTS carriers in the US. So it was one of the few that was truly open and non-proprietary, compared to the likes of Verizon.

I'm hoping some of Apple's innovations in the UI realm will make their way to competing phones, but right now the Apple phone itself is bad news from the point of view of opening up the industry. It represents everything that's bad about the US mobile phone industry, it's expensive, locked down, and treated by its maker as little more than a weapon to play in some insane power wars in which the end user will always be the victim.

Re:On a general level...

[Jah-Wren Ryel]

I have to confess that I'm really only concerned with that point of view and don't really care all that much about whether the mobile phone industry is "opened up" in some fashion or another. As long as the service provided is acceptable (it is) at a price I feel is not out of line (it isn't) then that about covers it for me.

Do you realize that's the exact same attitude a majority of Americans had about AT&T before the break-up? When long-distance calls were easily over a dollar a minute and it was illegal to connect a non-telco handset to the phone-line in your house?

Your perception of what is "acceptable service" and a reasonable price is shaped by the status quo and, pretty much by definition, the status quo favors the entrenched businesses and systems.

Re:On a general level...

[Grail]

Forgive me for trotting out Apple's own tired line on this subject: Licencing DRM means there will be more chances for the details of the DRM to be leaked, and thus the system will be compromised. The best way of handling DRM is to not use it at all. This will ensure 100% interoperability and allow for true competition in the marketplace.

Microsoft "licenced" their DRM system to their friends and colleagues in a system called "Plays For Sure". You might have heard of that mess when reading up about the abominable Zune media player.

DRM isn't just bad for consumers, it's bad for hardware manufacturers, content providers and anyone attempting to run a media store.

Apple does give you choice: you can choose to (a) buy the song from the iTunes Music Store and only play it on iTunes or an iPod, or (b) buy the song from a bricks-and-mortar store (ie: as a CD) and play it where you want. If the device that Apple sells you doesn't do what you'd like, complain to Apple or buy another device (or hack your iPod to give you the features you want).

Re:On a general level...

[tbone1]

no they should both have to license them out.

You gave no good reason for this. Well, you would like to do it, but that doesn't make it right. I would like to punch politicians in the face and hit baseballs through the windows at CNN headquarters, but that doesn't make it right.

Forcing them to license their product is a violation of their property rights, which is a slippery slope. It also creates more government interference and regulation, which is the last thing we need.

Re:On a general level...

[MrNiceguy_KS]

If fairplay got licensed to the zune. No one would care.

Not true. Two Zune owners would be thrilled. The other one thinks he's got a brown cell phone with really crappy reception.

Steve Jobs is WRONG!

[Whiney Mac Fanboy]

Mr. Jobs once referred to telecom operators as "orifices" that other companies, including phone makers, must go through to reach consumers.

Incorrect. The consumers are the orifices in the telco / phone maker / customer relationship. Everyone gets to screw them.

Anyway, let's hope the iPhone enjoys more success than the last Apple/Cingular deal mentioned in the article:

But the Motorola ROKR, released in the fall of 2005 and carried exclusively by Cingular, was a huge disappointment for Apple executives. .

Re:Steve Jobs is WRONG!

[0xdeadbeef]

Most people are of average or lesser intelligence. Most people make far less than the median income. Hell, most people live and die within walking distance of where they were born. But even in third world ghettos, cell phone usage is exploding.

Your Ludditism and lack of influence are no basis for generalizations about the needs of people who buy cell phones.

Re:Steve Jobs is WRONG!

[ozmanjusri]

One word: Monopoly.

A better word: Cartel.

Re:Steve Jobs is WRONG!

[pinkstuff]

An even better word: Sex.

Before we over analyze this....

[EmbeddedJanitor]

Remember than no iphones have been sold yet. The analysis needs to wait until some sales figures are available.

Re:Before we over analyze this....

[twostar]

but we've already got iPhone Killers out there!

Still Two-Faced

[mythosaz]

...if Apple meant it, the phones would be 100% unbranded and unlocked, they'd take any GSM provider's card, and APPLE would provide simple, regional, downloadable settings (for carrier-based web proxies, etc.)

Apple doesn't have to sell them through Cingular (AT&T) or anyone else.

Bucking the system...my shiny metal ass.

Re:Still Two-Faced

[brarrr]

Dude. Chill. Nothing in the press or from Apple indicates that the phones will be locked or that they won't work with another GSM provider's card. That said, the features co-developed (ie visual voicemail) will only work w/ Cingular unless is some standard is determined and enabled by other GSM carriers & apple supports it. Only selling through Cingular? Makes sense to me if they want to have the co-developed features and still prevent leaks. Have to give to get, and they gave exclusivity to cingular. I'm sure Jobs would prefer for it to be sold directly by apple but then they'd be just another cell phone manufacturer that may or may not work. The tight integration is the whole apple hallmark thing. It did buck the system, in a way. Just not the way *you* want. I'd rather have the features work as advertised vs the crap that happens now with every phone I've ever had & differing carrier implementation...

Ignores carrier upgrades

[SuperKendall]

.if Apple meant it, the phones would be 100% unbranded and unlocked, they'd take any GSM provider's card....

And then Apple would not be able to provide features like visual voice mail which require changes to the carrier network.

What Apple gets by partnering is concessions in network development they would never get if they stood along against all other phone companies. That is the value that Apple brings to the table, making complex things easier and stuff like network improvements to handle random access voice mail are part and parcel of that. If the iPhone were just like any other MVNO phone, it would lose a lot of potential for true innovation in phone development.

What will be really interesting to see is how the open Linux phones proceed, or if they run into roadblocks.

Re:Reality Disortion Field spreading

[avalys]

Have you ever heard of something called a 'user interface'? Apple knows how to build a good one, and Motorola, LG, Nokia, and the rest of them do not.

That is what will sell the iPhone. For every geek who looks at the iPhone and says "Bah! My free-as-in-speech, open-source, ugly orange phone with the stupid name (OpenMoko) will do all that and more! The iPhone is crap!", there will be 100 normal users who try it out and say "Goddamn, this phone is so much easier to use than the POS I have now. I'm buying one."

I am by no means technically illiterate - I'm a computer science major at MIT. But I have long since lost my patience for fighting with badly-designed, badly-engineered, badly-implemented consumer electronics. I will be buying an iPhone when it comes out, because like all of Apple's recent products, it will 'Just Work'.

It will be a hybrid iPod/cell phone/PDA with no sacrifices in functionality, compared to carrying around three separate devices. As Jobs mentioned in his keynote, the price is still cheaper than buying a smartphone and iPod Nano separately.

Re:Reality Disortion Field spreading

[Reaperducer]

It does not even do 3G. I know in US it is not much of a problem but here in Europe 3G is happening right now and don't even think about Asia.

Well, Europe doesn't even get a chance to try it out until the end of 2007, and Jobs has already stated in front of thousands of people that a 3G version is coming. So.... what's your complaint again?

Looking forward to no more crappy software

[LinuxInDallas]

I am looking forward to trying the iPhone. In particular I'm looking formward to being free of the god-awful software that comes with most phones.

Just this weekend I decided to check an ebay auction on my samsung phone. I noticed that Sprint offers a "ebay premium" program for download. Guess what? It's FIVE dollars a month. WHAT? I already pay for internet access on my phone, why should I pay another dime to get a better view of my ebay account? If the phones came with capable browsers then this nickel and diming wouldn't be possible because the phone would have desktop-similar browsing capability. I think the iPhone is going to go a long way to helping consumers.

Understand the term

[SuperKendall]

Believe it or not, there are many de-facto standards in the mobile phone industry. One of the most famous is the voice mail icon.

Your whole rant makes it apparent you don't understand what visual voice mail is. It's not iBiff. It's, well, voicemail that is visual - as in, you get to see a list of all voice mails you have currently waiting, and then you can choose to listen to any one you like, in any order.

Now of course this is not a new thing to phones, IP phones in particualr. But the cell phone industry? They support nothing like it today. To actually be able to randomly access voice mail is, in 2006, apparently a startling concept to cell phone network providers.

Making an unlocked phone doesn't mean being forced to limit yourself to the documented features of GSM. You can implement whatever the hell you want, and let the carriers decide what they're going to implement.

And the carriers can laugh at you, and the feature is useless. Apple cannot realistically build a phone, and then release it "hoping" that all (or any) of the ideas they have get implemented. They have to make a polished device first, so that people wll actually want to buy one. If they did not the cell industry would seek to kill it fearing Apple would gain too much power. Far easier to play to the greed of a single carrier and get them to do what is needed.

The Linux phone is basically taking the path you advocate. But I really do not think it would ever be in a position to dictate new network features the way Apple currently is by basically taking hold of a carrier and shaking some sense into a very stagnant industry who really doesn't understand device development. I say that as a user of various cell phones for years, which are uniformly horrible in day to day use. The Linux phone would eventually be better but it would always be limited in potential by what the carriers allowed. I am thinking the Linux phone will eventually be able to make use of the same features that are being added for the iPhone.

Also Apple is not just supporting visual voice mail, but also push email from Yahoo and perhaps other things we have not heard of yet. Allowing Apple to help design user-oriented improvements to the network is something that eventually will improve all phones, not just the iPhone.

Odd

[king-manic]

Ken Kutaragi: Our product is so good we want the whole industry to bend over backwards, kiss our ass, then take a good old anal reaming and for our customers to pay $600 for our product.
Slashdot: Arrogant asshole.

Steve Jobs: Our product is so good we want the whole industry to bend over backwards, kiss our ass, then take a good old anal reaming and for our customers to pay $600 for our product.
Slashdot: OMG!!1! you are such a massive visionary. please come here and ream me right now.

When have poor products ever done well?

[SuperKendall]

Regardless if the product is a stinker it will sell well, because its Apple.

The Cube?

Case closed, on your argument.

People buy Apple products when they work well. Over the past few years Apple has done a good job at producing products that work well for people. It's amazng how sales follow when you build something that works.

Rumours

[hack slash]

Is it true that the iPhone will only have 1 button?