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AT&T Playing Hardball With Apple?
Ponca City, We Love You writes "There's some interesting speculation from Cringley on why AT&T chief executive Randall Stephenson let drop that a new version of Apple's iPhone will be introduced in 2008. The announcement is sure to cut into Apple's Christmas sales and could also cost ATT a million new customers and at least $1 billion in market cap, says Cringley. 'It is no coincidence that Stephenson made his remarks in Silicon Valley, rather than in San Antonio or New York,' says Cringley. 'He came to the turf of his 'partner' and delivered a message that will hurt Apple as much as AT&T, a message that says AT&T doesn't really need Apple despite the iPhone's success.' What may be troubling the relationship between AT&T and Apple is the upcoming auction for 700-MHz wireless spectrum and AT&T's discovery that Apple may be joining Google in bidding."
a message that says AT&T doesn't really need Apple despite the iPhone's success
Pscht, yeah right... AT&T need Apple way more than Apple need AT&T. Apple's whole business model is built around early adopters, they have shedloads of goodwill from the whole iPhone rebates debacle, and this won't hurt their business one bit. AT&T are the ones who really stand to lose out.
basically, the fact that apple will unveil a 3g iphone is (and was) obvious - with or without that att dude blabbing about it.
the people who'd care about the existence of a higher network tech iphone have either bought an iphone already or they haven't and won't get a 2.5 iphone, anyway.
he also didn't say when next year. "next year" is a pretty long time frame.
In the article, Cringely claims he has predicted for weeks that Apple may bid for spectrum.
Ok, did he predict it before business week did? http://www.businessweek.com/technology/content/sep2007/tc20070910_014733.htm
Nice of him to try to come off as a genius when basically he lifts other people's predictions or states the obvious and then acts like he's nostradamus.
He's ANNOYING.
"Good Morning, How may I assist you?"
"I hear this echo..."
"An echo? Do you mean on your AT&T phone?"
"No. It's your CEO. He is just repeating what Steve Jobs said a few months ago" "You can expect a 3G iPhone later next year... We are working on the next iPhone already, the one after that and the one after that." Regent Street Apple store in London, September, 2007
Cryonics - Keep cool and carry on.
It should not come as a surprise to anybody (except perhaps the logic-impaired Cringely) that perhaps Apple might feel the need to release a product update in a rapidly evolving market sometime before the sucker is completely obsolete. The fact that 3G capability is a glaring hole in the current model is not exactly front-page news. Also, "sometime next year" could mean a span as long as 17 months, an eternity in the cell phone market. I would expect that it will receive a flash capacity bump at the same time (at least a doubling).
Also, where does the $1 Billion number come from? The same dark, damp, place that produced the "fact" that IBM was going to lay off half of its worldwide workforce?
Cringely: Wild Speculation for folks too dumb for Dvorak.
SirWired
That should set off alarm bells in your head. A lot of his columns lately have been filled with nothing but pure speculation based on nothing but gut feeling or reading tea leaves.
I tend to ignore his columns when he goes off like that. If he talks about upcoming technology then I'll read it.
Speculation is one way to put it, crazy conspiracy theory is another.
So AT&T CEO decides to drop 1 million customers and 1 billion in market cap (!?) in order to send a message to Apple not to bid on the wireless spectrum auction, that's his theory? If I was an AT&T shareholder I'd be wondering why not just phone them instead...
Is this the same guy who predicted Apple and Intel merging
Negative moral value of force outweighs the positive value of good intentions.
I know AT&T is a much larger, more powerful company than Apple, but exactly how can they play hardball with Apple on this issue? If Apple drops them, signs with another carrier -- or even none -- for their next iPhone, it would be AT&T that loses money, not Apple. Apple has already made a nice bundle with the iPhone, so they probably don't really need AT&T anymore and as popular as the iPhone is, AT&T can be replaced. Does AT&T think that the primary reason people want the iPhone is because of AT&T? Obviously that is not the case, since so many people are unlocking them as soon as they get them. Seems like it would be the other way around, with Apple in a good position to play hardball with AT&T. Maybe I need more coffee, because I just don't see it.
I dream of a better world... one in which chickens can cross roads without their motives being questioned.
The industry is going to go through some wrenching changes because new players are going to be more willing to open their networks (for real, not pretending to like Verizon). What new players? Clearwire and Google, or a combination thereof.
This will make it easier for phone/device manufacturers to provide genuinely innovative products. If AT&T wants to stick it to Apple, they're going to find their bargaining position weakening. Quickly, I hope.
TWW
"Encyclopedia" is to "Wikipedia" what "Library" is to "Some people at a bus stop"
It's amusing to see the unix buddies fighting!
Quote: "Why do Americans refer to a large group of people as singular?"
Because the word "group" is singular, as is the word "company".
Of course i didn't RTFA, but maybe the columnist is referring to the way apple reacted to similar announcements in the past (they were so pissed off they terminated deals IIRC).
---- MISSING MISCELLANEOUS DATA SEGMENT --- [sigdash] trolololol
and leads to Apple & Google creating a quality & service oriented network open to any device willing to pay for access.
Deltron 3030 - Virus (music video)
I think some industry types are overestimating just how much the public follows the off-hand comments of a CEO at a luncheon.
Besides, the fact that a 3G phone is coming isn't even a secret. If you wanted an iPhone for Christmas, you wanted one, and despite knowing full well that another one was coming next year. Heck, I bought one in June, knowing full well that Apple could easily introduce a newer version in November. I'd even figured out who'd get the old one if it happened.
Net effect on Apple? Zip.
And Cringely was right about one thing. Google announced that they were bidding today. But the press release also made another thing quite clear: their application does not include any partners.
So. No partners means no Apple partnership, which means that there was nothing for AT&T's CEO to find out. Which in turn means that his comments were relatively innocent, and not "a $1 billion message to Apple CEO Steve Jobs." By my watch, it took less than ten hours for Cringely's consipracy theory to be shot down. Could be a new record.
Of course, you could spin it that Jobs, quaking in his boots at all of the iPhone sales he's already lost, called up Schmidt, pulled out of a planned multi-billion dollar deal, and Google obligingly issued the press release to cover his tracks. Yeah, right.
That's exactly how SJ would handle it.
Any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so.
make the iPhone more open to accept any service including Tracfone...
Politics is Treachery, Religion is Brainwashing
This is all about telecoms versus mobile phone manufacturers, also known as business as usual. If a telecom thinks that is business is more than just offering connection, as in being a carrier, and as more being an service provider or an experience, then the number one competitors are the handsets manufacturers as they are the ones beside operator to influence and have place in customers hand.
Just to give some examples... Nokia has worldwide market share of approximately 40%, but in US its market share is only 5%. Why is it? Well it could be because they don't manufacture CDMA based handsets anymore (direct attack against Qualcomm), but mainly because in US handset business in operator business where operators offer to consumers what they think suites best for operators not for the consumers. To operators it suites that handsets are limited or walled, and to operators it suites better that the brand power of an handset is less than the branding power of operator. This has meant that operators don't want to offer Nokias handsets as to them Nokia is too powerful player in branding and service base, and so offering Nokias handsets more would hurt their position in longer time-frame.
What basically AT&T is doing to Apple is just business as usual. Kick them where it hurts. Weaken their position and try to make a better deal with them. Also it should be noted that market situation has changed as major handset manufacturers and also lesser known Asian manufacturers are all offering and bringing iPhone clones to markets. For AT&T it could be lucrative to just get some iPhone clones from far east with bargain price and brand them by themselves.
Of course there is remote possibility that mobile operators in US are colluding against Apple. There are only few GSM based operators in US, and I could easily imagine them speaking with each other to maintain status-quo in the market. So in example AT&T kicks Apple first, then as Apple talks to T-Mobile or other player, they just throw their hands up and say "oh, but we are not interested at that price", and voila telecoms win.
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Steve Jobs has a history of choosing abusive partners, even though he knows very clearly they are abusive. First, sugar water salesman John Sculley, and now SBC, which bought the AT&T name apparently because the name SBC had such a terrible but deserved reputation.
(Anyone interested in how SBC became AT&T can watch Stephen Colbert explain in a 1 minute 14 second video: The New AT&T.)
Steve Jobs certainly knew SBC/AT&T is abusive; it was a telephone company then centered in his home state of California. He clearly knew John Sculley was abusive, he called John Sculley a sugar-water salesman before he was hired.
Remember, John Sculley arranged that Steve Jobs be fired from Apple. Then, over a period of years, John Sculley almost destroyed Apple. Eventually, Sculley was fired, Steve Jobs was hired again, and Apple became strong again.
The evidence is that Steve Jobs is an extremely intelligent person with a huge anger problem. He has a reputation for being abusive himself. Having abusive partners seems to be another expression of anger, an attempt to hide his anger from himself.
But the thing that hurts the most is that the new version comes out before your 18 month contract expires meaning you have to have two contracts or just miss out on the improved version.
This is why I don't bother with contracts, your contract phone is tarnished and practically worthless by the time you are at the end of the contract.
It would be like having 20 year finance on a car.
I don't understand this either. Steve Jobs himself already announced that there would be a 3G iPhone released in 2008. I'm pretty sure it was at the UK iPhone launch. So all of this "playing hardball" crap is uninformed rumor-mongering disguised as shoddy journalism.
I wonder if apple stuck on some sort of NDA about new products and this dude leaked it without permission.
Either way, id be pissed if i was Steve Jobs.
---- Booth was a patriot ----
When he hits one, he really nails it, but when he misses it's by a lot. I posted some of this as a comment on his site, so I apologize for the duping, but:
Steve already stated that there would be a 3G iPhone, and he said to expect it late next year. Quoted at the London Apple Store opening back in September. That's not the only time Apple's discussed it.
EDGE is ubiquitous on the AT&T network. If you want data access, EDGE support is a no-brainer.
With the minor upgrades to EDGE that AT&T did over the spring and summer, the iPhone is improved, and so are the other EDGE devices (like the Treo 680, for instance) that they sell. It's a good investment by AT&T.
Right now, most of the 3G chipsets are still relatively bulky and draw fairly high-power - by 2008 that should change. But the current iPhone has really good battery life - adding 3G to that today would hurt. Apple's also stated this directly.
3G support isn't built out yet on much of the AT&T network. It's still only in the major metro areas. Kind of where EVDO was about 3 years ago. Not to mention that their 4G plans are in sync with Verizon's now.
Seriously, these aren't the toughest tea leaves to read. By the time AT&T builds out their network for 3G, Apple will be ready to use it. If Apple's contract gives them an opening to play in 700, they'll do that as well. But I count this as a Cringe miss - there's no conspiracy this time, just a lot of obvious and previously stated facts.
-- Josh Turiel
"2. Do not eat iPod Shuffle."
While not a perfect measure of a company, currently Apples market cap (159.5 Billion) is greater than IBM's (144.9 Billion). AT&T is currently at 231.7 Billion market, cap, so by that commonuly used measure, AT&T is still bigger.
I would wager that IBM didn't blow off Apple, but that IBM really couldn't deliver a performance competitive in a form with a TDP appropriate for laptops, with the final straw being Intel releasing Core2, for all intents and purposes erasing the instructions per clock advantage the PPC architecture had. (I know Apple made the jump before that, but I guarantee you that Intel shared the Core2 info with Apple).
Apple smartened up and realized that even when IBM made up for it, the simple fact was that Apple wasn't able to consistently differentiate themselves on hardware performance (and it really wasn't one of their goals now anyway), so they decided to play in the same market as their competitors, ensuring that they wouldn't appear to be left behind at any point in time. Extra bonus of Windows compatibility in the face of the market reality of desktop software. They chose to differentiate on brand, styling, and software (to an extent).
XML is like violence. If it doesn't solve the problem, use more.
You left out the part where running a 'sugar-water' company defines you as being abusive.
Please list the CEO's of Pepsi and Cocoa Cola since the formation of those companies and rate each one's 'abusiveness' on a scale from 1 to 10.
For extra credit, include the CEO's of RC and Shasta.
Apple's stock did not take a hit from the announcement, so the market clearly does not think that this is going to have a big impact on profits (in contrast, it fell quite sharply when Jobs announced the iPhone price cut).
It seems more like a difference in corporate strategy between Apple and AT&T rather than an attempt to hurt Apple. Apple traditionally likes to keep things secret until they spring it on the public. But many other companies like to let investors know where they are headed. And it's not exactly a surprise to anybody that there will be a 3G model, probably in the next year or so. The main issue is fitting it into the case while retaining battery life.
I think that the impact on sales is likely to be minor. "Next year" likely means a year from now, and many people replace their phones every year or two.
So... Let's say I went and picked up a bargain 1st generation iPhone once the 3G version emerged. I don't mind slower speeds, so long as I get service. Will EDGE be going away? Will I still have that service?
Free the spectrum. . . Save the world. . . Make $$$
-GiH
Cringley has *always* been about rampant speculation, and he's usually wrong.
this is why i am a t-mobile customer
parturiunt montes, nascetur ridiculus mus
This one quote makes the entire thing a non-story, and it's obvious that many of the commenters below haven't read it. And yes, it's a real quote - google any section of it and you'll pull up a dozen stories on it from mid-September. The AT&T CEO can't leak something that Jobs already said in public, which means we can stop theorizing about the motivations behind or repercussions of such a leak.
Warning: Apple/Nintendo fangirl. Likes her electronics cute & cuddly. May be rabid.
Or, maybe 13 months?
This is a bit silly since Steve said they would move to 3G very soon in the initial iPhone announcement. But if it were some attempt to hurt Apple, there is a very easy way for Apple to exact revenge. Since they are now shipping and supporting unlocked phones (in europe), they could simply announce that from now on updates to iPhone would work with unlocked phones no matter where they are unlocked (hint hint that includes jailbreak phones). Sales would take a jump and AT&T wouldn't see a penny of those.
Sorry. I started on that post back in August.
I'm a slow typist.
So, here's the play: Apple and Google merge, then buy out AT&T...or Verizon, or whichever wireless provider you care to name...
And Jobs says, "Okay, FUCK AT&T. Pull their contract on grounds of assassination of our business model; sue them for our projected lost business; and start shipping iPhones for Verizon only. Let's see how they like their new potential customers flocking straight to the competition." Then AT&T's stock price drops.
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The US free market: two halves of a government-granted duopoly are free to set the market price.
Having abusive partners seems to be another expression of anger, an attempt to hide his anger from himself.
I don't think this is a psychological issue, I think it's a business issue. Apple has abused a number of their partners in the past, and probably the only companies willing to partner with Apple at this point are companies that are themselves used to playing hardball with their own partners. Any company who thinks of a partnership like this as a long term, mutually beneficial, cooperative relationship would probably not be talking to Apple.
Right now, most of the 3G chipsets are still relatively bulky and draw fairly high-power
Sorry, but that's uninformed drivel.
3G and 3.5G handsets come in slivers that are a few millimeters thick and have excellent battery life:
http://www.mobilegazette.com/nokia-6500-classic-07x05x31.htm
http://ezinearticles.com/?Sony-Ericsson-W-880i-Black---Experience-the-Walkman-Phone&id=534534
Some of them even throw in WiFi. Those phones aren't even particularly expensive (about $15 for the Nokia with activation).
The US phone market is several years behind Europe technologically. In part, that's because it's so fragmented and because the US chose frequencies different from the standard ones used mostly everywhere else.
Oh, and you can get a 3.5G iPhone-like phone: the Samsung F700; it looks superb, and squeezes a full keyboard into something with roughly the same form factor and look as the iPhone:
http://gizmodo.com/gadgets/cellphones/apple-iphone-vs-samsung-f700-which-is-touchscreenier-235112.php
That's interesting.
At the time, Steve Job's remark to John Sculley was understood by many people to be a huge insult. I am supposing that people still think that Jobs intended, maybe unconsciously, to insult Sculley. At the time, Jobs was so abusive that the Apple board of directors was insisting Apple get someone else to help operate the company. I suppose Jobs did not like that idea, but realized he could not arrange anything better. So, he insulted the candidate.
Obesity is a terrible health problem in the United States and elsewhere. Using billions of dollars of advertising, sugar-water companies encourage unhealthy consumption of calories. The resulting obesity kills some people. Does that qualify as abusive in your mind?
Stephenson probably doesn't understand the rules of Apple's game. He blurted what he wasn't supposed to. He probably didn't hurt anything. The iPhone isn't for geeks who get 3G. It's for Joe Insuranceadjuster, who just wants a cool phone with some extra goodies. Net effect on anybody...Nada. Unless you count it as blogfodder and fuel for the punditbots. His Steveness probably lay awake last night long enough to think, "what a jackass," then didn't lose any additional sleep over it.
In theory there is no difference between theory and practice. In practice there is.
A few years ago, ATI's CEO hinted at an investor meeting that Apple was about to release a brand-new iMac, and that the entire line would sport ATI graphics hardware.
Two days later, Apple did indeed release a new line iMacs... all of which contained nVidia graphics hardware.
AT&T may just have done the same exact thing. If you're doing business with Apple, do not fuck with the NDA, or you will almost certainly find yourself out of your lucrative and exclusive contract with them.
This is Apple's mode of business, and it is absolutely sacred to them. AT&T slipped up, and now they are going to have to pay the price.
-- If you try to fail and succeed, which have you done? - Uli's moose
Don't look at market cap and start comparing one company to another. You *cannot* do that. It is not that simple.
Remember year 2000 and value of Nortel? Where did that "value" go? Or Worldcom?
Apple is the smallest company of the 3 mentioned. They have the least number of employees by far. They serve the least number of customers. Their market cap is so high because of speculation on part of the investor. IBM and AT&T are by far larger companies that are much more stable than what Apple is today. That is just an economic fact. Just look at P/E ratio of Apple vs. IBM or AT&T for comparison. Or the book value of the companies. Or the assets.
Today, Apple is a semi-niche company (graduated from niche few years ago). It cannot weather the same turmoil like AT&T, IBM or Microsoft. Although in many ways it is still more valuable than something like Google (very speculative there - like Nortel in 1999 IMHO - will advertising market hold in recession?).
As with the chips, it is just a business decision of Apple to switch suppliers for what they view as a better value.
People keep quoting the 1-2 million handsets sold by Apple as being a large number. I hate to bring reality into this argument but the growth in mobile handset sales this year in China alone is over 10 million units. There are startup mobile handset makers in China who within 18 months of their creation have sold over 7 million handsets so Apples numbers look rather poor too me. AT&T have realised what many within the industry have, Apples sales although generating allot of publicity are small fish in the scheme of things.
(after building some sort of small empire of lower priced (or crappy quality, or both) that was in great contrast to the established jewelry businesses.)
Although widely regarded as "tacky", the shops and their wares were nevertheless extremely popular with the public, until Ratner made a speech at the Institute of Directors on April 23, 1991. During the speech, he said:
" We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, "How can you sell this for such a low price?" I say, because it's total crap. "
He compounded this by going on to remark that some of the earrings were "cheaper than an M&S prawn sandwich but probably wouldn't last as long."
The speech was instantly seized upon by the media, and an estimated £500m was wiped from the value of the company. He was sacked 18 months later, and in 1994 the Ratner name was expunged from the company, now renamed the Signet Group.
Even today, Ratner's gaffe is still famous in the British Retail industry as an example on the value of branding and image over quality. Such gaffes are now sometimes called Doing a Ratner, and Ratner himself has acquired the soubriquet "The Sultan of Bling". Ratner has said in his defence that it was a private function which he did not expect to be reported, and his remarks were not made seriously.
I meant 17 months from the release of the original iPhone.
SirWired
Ok, I first heard about Cringley being referenced on different boards, I thought he had some kind of inside scoop, or at the very least, keen insight. Only... here we are yet gain, leaning in to listen to an ENTIRE write up, predicated on misinterpreted information.
Was Stephenson sending Jobs a message by disclosing that the iPhone 3G was coming out in 2008?
Um, dude... read the paper much, blogs, ? Back in September, Steve Jobs commented publically that the 3G iPhone should be expected to arrive "later next year". Maybe Cringely only did a Google search on "iPhone 2008", and it didn't return "later next year", so he ran with it? This was the news from the O2 launch. Is Cringley memory a bit dusty?
Jobs Confirms 3G iPhone Coming 2008 - Sept 18 2008 http://www.pocket-lint.co.uk/news/news.phtml/10212/11236/apple-iphone-3g-coming-2008.phtml
The worst part of this, is I see a title on my Slashdot feed saying "AT&T Playing Hardball with Apple?" and I lick my teeth for an interesting story... only to find an entire conversation based on one man's misinterpreted information. In Cringley's column "Faster iPhone faster! Kill!! Kill!!", he predicted a 3G iPhone by Christmas. I mean, then there was the built-in H.264 encoding on all Apple products, etc, etc. I mean, it might be fun to talley up if there are ANY correct predictions by Cringley, except I think we can almost assume he's probably running at 95/5 ration, in favor of poor prognosication.
They are no longer interested in the razor thin margins obtained in hardware, all controlled by Microsoft from their dominant position in the OS market.
Once you take that into account, those moves make perfect bussines sense
IANAL but write like a drunk one.
Steve said they would NOT move to 3G, as it was a battery killer. No plans to do so. It'll still kill batteries next spring.