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Apple Can't Afford iPhone's Carrier Exclusivity
WirePosted writes with an ITWire article about the problems that Apple's AT&T exclusivity deal could pose in the coming years. Initially the company needed AT&T's commitment to the project, to ensure features like visual voicemail would work. With the iPhone a hit even at its current high price that no longer seems to be the case. Can Apple afford to stick to an exclusive carrier in the future? If for no other reason than consumer choice? "iPhones are being sold unlocked in the markets of Asia where you can't get them with a carrier plan, but they're also being bought and unlocked in the US and Europe. The message is that many and probably most iPhone buyers would like to be given a choice of carrier when they buy their iPhone. Some would be prepared to pay more as they do with other smartphones and buy their iPhone unattached to any subsidized carrier contract. The point is many consumers feel no loyalty to carriers and resent being forced to choose one."
It's not just visual voicemail, people. Jeez, if I had a dime for every time I heard that used as the only putative reason that Apple is tied to AT&T...
It's also having structured, simple unlimited data plans, which is really what makes the iPhone shine.
It's about doing things like setting your voicemail greeting all through a GUI on the phone, without having to call into some number and follow prompts. (Simple? Sure. Not a big deal? Sure. But still, one little detail among many.)
It's being able to walk out of a retailer with the iPhone sealed in a box (which itself probably has more attention to design than most handsets do), and then the ability to seamlessly activate via iTunes, with a simple selection of choices, in the comfort of one's own home in a fashion fully supported by Apple and the carrier.
It's about expanding the iTunes/iPod/iPhone/iTunes Store ecosystem with a carefully planned strategy.
It's the user experience from end-to-end (peoples' own individual gripes with AT&T or any other carrier aside).
That's the issue, and all of those things take a lot of backend work and cooperation between Apple and the carrier. It's not just a handset; it's a complete end-user experience from purchase, to activation, to use.
And yes, some customers might not "care" about all of these things. The power users, the hackers, the cutting edge geeks. But normal customers are a much larger target, and those are the people reading reviews, and those are the people who will drive to Apple's goal of 10 million iPhones. With wildly varying user experience and differences from carrier to carrier, how will the iPhone be viewed in the eyes of the iPod-buying populace?
And remember, contrary to the article's assertion, since owning an iPhone isn't mandatory, and we presumably have free will, no one is "forced" to do anything.
What about this is so difficult to comprehend?
That, and the fact that AT&T may be giving Apple as much as $200 per activated iPhone, and then 3%/month for existing customers and a staggering 9%/month for new customers on top of it, so that the end-user cost when people buy one in a store is manageable? Yeah, the iPhone might not be "subsidized" in wireless industry parlance, but you bet your ass it's "subsidized".
There's more going on here than "evil Apple" wanting "lock in". Like all products with Apple, it's about more than just buying a commodity...it's getting a pleasant experience along with it, from end-to-end. (Yeah, yeah, insert a billion gripes about how the iPhone sucks for one reason or another here. Go tell that to Google's CEO, who says the iPhone is the first of an entire new generation of products. Yes, this platform really is that special, no matter how much you, personally, might hate Apple, the iPhone, or both.)
Apple has also shown it does these sorts of things -- and going into the mobile handset business is a HUGE foray -- in baby steps. Is it any surprise that the stage we're at now has carrier exclusivity for a variety of reasons, even beyond what I've already articulated above? Just because YOU don't like it or some IT rag pundit waxes philosophic about it doesn't mean it's not the right business decision for Apple at the present juncture. It doesn't matter how many people buy iPhones to unlock them. There is a vibrant unlocking and hacking community for just about any desirable phone, including ones not available in particular markets, etc.
It may be that someday, Apple really can't "afford" carrier exclusivity. And you know what? I'd imagine we'll see a change, then, won't we?
Apple designed a phone that is very good, and found a carrier that was desperate to play ball and risk a new world order. Apple exclusivity, therefore, serves that new world order. When Apple does not have to cripple a phone in order to insure that the carrier will make enough money. The phone is as Apple wants it for it's customers that are willing to pay for good hardware, not for the carrier customers who largely want believe they are getting a good deal by paying for 'services' throughout a long contract.
And this is where Apple may have blundered, at least in the US. The two year contract. We don't want it, we don't need it. Apple could charge half of what it made with the two year extension, $60, and still likely come out ahead in the long run.
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The whole point of the iPhone business model for Apple is to offer it exclusively so they can get part of the revenue. The idea is that iPhone as single product is so desirable that it will get people to switch from competitors (which is very expensive to achieve by traditional campaigns). And the real revolution of Iphone is that Apple managed to get this from the carriers. If there's no exclusivity, there's no revenue sharing.
This idea of Apple being "forced to exclusivity" is ludicrous; they've worked very hard to achieve the exact opposite!
The iPhone is revolutionary because it just works.
I've looked at smartphones in the past, and play with them whenever I'm paynig my wireless bill at the store instead of the mail.
Other smartphones don't have web browsers that just works, they don't have email that just works, they don't connect to the computer in a way that just works they don't have a user interface so simple my mom can use it but so powerful I'd love to use it.
I don't have one yet, because I don't NEED a smartphone. But if I wanted a smartphone, rather than just a cellphone, the "It Just Works" factor make it the iPhone or nothing.
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No one *needs* the iPhone. It is simply something that people desire.
But that's besides the point.
The article is about going global. No one is saying that Apple really plans to go exclusive around the world for the long term. They'll sign some agreements to get traction with the big carriers, and when 3G arrives, they'll adjust. They'll probably go for less than 5 years exclusive.
Technology changes so fast that this is really a moot point. I'm not even sure why people are getting excited or worried.
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Apple products Just Work except for when they Just Don't and then you are Just Fucked.
You won't find anywhere on your iPhone to configure the applications because you shouldn't need to.. but if you do, call tech support cause there aint no way to fix it self and the same goes for everything else made by Apple. It's proprietary technology and that's nothing but a disgrace in this day and age.
How we know is more important than what we know.
Any Mobile operator would have implemented visual voicemail without an exclusive deal, I would doubt that the integration level was that difficult. Apple might have to have fronted the cost.
Regarding EDGE Apple could have targeted EDGE enabled telcos. The provisioning in France was a joke - I spent 45 minutes in an Orange Shop, and still cannot change levels of iPhone plans online. Orange still has the normal provisioning system in place. So it seems Jobs only cares about the full experience for American customers. The service revenue of course would not happen, but sadly if he wants to destroy the traditional mobile world getting into bed with dinosaurs like Orange is not the way to go.
Regarding billing systems, I doubt there is much integration.
Mobile operators do all kinds of expensive integration ALL the time often with dubious rates of return. ( I have worked for all major European telcos )
Like being able to activate at home without having to wait for a sales droid.
The whole notion of phone activation is very CDMA like and is not part of the usual GSM experience. The only thing that should take activating is the phone account, and then you are free to move your SIM card from phone to phone. I have never need to activate any GSM phone I have got, so why should I need to do this with the iPhone.
The iPhone has got many things right, but this does not make it a perfect phone. There are still missing features, that some people take for granted in GSM phones, like being able to transmit files and contacts via Bluetooth and MMS messaging, amongst others. Hopefully Apple will correct this or the competition will offer something that is even better, for us to lust over.
Jumpstart the tartan drive.
It's also having structured, simple unlimited data plans, which is really what makes the iPhone shine.
T-Mobile has had those for half a dozen years for the Danger Hiptop.
It's about expanding the iTunes/iPod/iPhone/iTunes Store ecosystem with a carefully planned strategy.
Yes, that is what it is about: vendor lock-in. And that's why Apple is evil.
It may be that someday, Apple really can't "afford" carrier exclusivity. And you know what? I'd imagine we'll see a change, then, won't we?
You don't seriously believe that Apple has a lot of time on their hands? This isn't the desktop market, where Microsoft's monopoly has slowed progress to a crawl; Apple's features and UI will be cloned and improved upon within six months by a dozen phones, and at half the price.
> The message is that many and probably most iPhone buyers would like to be given a choice of carrier when they buy their iPhone
No.
The message is that many potential buyers would like to be given a choice to buy this thing. At all. Not everyone who can afford an iPhone is from the US, Germany or France. I can't buy one and use it reasonably without unlocking it.