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AT&T Playing Hardball With Apple?
Posted by
Zonk
on Sat Dec 01, 2007 06:28 AM
from the trouble-in-the-boardroom dept.
from the trouble-in-the-boardroom dept.
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."
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Pscht! (Score:4, Informative)
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.
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They could even just sell the phones in the same way every other manufacturer does - unlocked units, or cheaper units subsidised by contracts.
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At this point AT&T is dead weight for Apple, I am sure.
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Re:Pscht! (Score:5, Informative)
I'm sorry, I hate Verizon (and especially Verizon Wireless) as much as anybody, but this is such a gross misstatement of the wireless industry that I'm going to piss away the 5 mod points I spent here to refute it.
Verizon is trying to "live off the fat" of their landlines while AT&T innovates? Give me a fucking break! Verizon has a nationwide 3G network. In virtually any part of the Verizon Wireless network you have full EV-DO broadband speeds. Can AT&T make the same claim? Most of their network, especially the suburban and rural parts of it, is still using EDGE (ISDN to slow DSL type speeds) or even GRPS (single channel ISDN speed).
Don't misinterpret my statement as a support for Verizon's business practices (which suck even more then AT&Ts) or as a preference for CDMA over GSM/UMTS. I'd much perfer to see a nationwide deployment of UMTS then CDMA. But the fact remains that Verizon and Sprint (CDMA carriers) both have a better data solution then AT&T right now. So how the hell can you say that AT&T is doing all the innovating while Verizon "lives off the fat of their landline business"? Hell, AT&T only became the largest carrier by assimilating the original AT&T Wireless into Cingular.
T-Mobile is in no position to invest? What the fuck are you smoking and can I have some? T-Mobile just invested billions of dollars into the AWS auction and grabbed enough spectrum to roll out a nationwide UMTS network. T-Mobile USA's biggest problem isn't funding (Deutsche Telekom has a 96 billion dollar market cap [google.com]), T-Mobile USA's biggest problem is a lack of available spectrum. As an example, they are running their GSM network in New York City off a whooping 10mhz of spectrum. AT&T has nearly ten times that amount.
The purchases of all the AWS licenses should theoretically solve this problem. Unfortunately in many areas, the Government has yet to vacate the AWS bands that were sold to the wireless carriers. Once the Government (and other users) vacate those bands, T-Mobile will (almost instantly) have a UMTS network available in the entirety of their existing footprint. They will also finally have the licenses to expand out of that footprint. In many areas (New York City) they even have the equipment already installed and the only thing preventing them from turning it up is that the AWS bands haven't been vacated yet.
Parent
Put a stop to this one early... (Score:5, Interesting)
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. [isights.org]
And Cringely was right about one thing. Google announced that they were bidding today [google.com]. 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.
Parent
Re:Put a stop to this one early... (Score:4, Insightful)
You misread the summary. By "joining Google in bidding" the poster meant that Apple will also be bidding on the 700MHz spectrum--not that they will partner with Google in bidding for it. This isn't a partnership--it's the two going head-to-head for something they both want.
Parent
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Besides the fact that Google's CEO Schmidt is on Apple's board, and that Apple and Google have a few things going on together, and bidding against Google would strain relations a bit, why would Apple go up against Google? Several things can happen:
1) Google bids, G
Re: (Score:3, Insightful)
"A similar decision will have to be made by Verizon Wireless, which this week applied ITS reality distortion field to trying to make us believe the second-largest U.S. mobile operator actually intends to open its wireless network to non-Verizon devices and services. Yeah, right.
Verizon's move is straight from the playbook of the old AT&T back in the 1970s, when that company was trying to keep third-party telephone handsets from being connected to its network. If you
Re:Pscht! (Score:4, Insightful)
Doesn't Apple sue information leakers out of existence? Not that it takes an Einstein to guess that anyway.
Apple needing AT&T? Only for a few special iPhone features. If Apple opened the iPhone to any carrier and passed off that special feature set, AT&T would likely be everyone's last carrier choice so who needs who?
Parent
The word "group" is singular... (Score:2)
Because the word "group" is singular, as is the word "company".
Re:The word "group" is singular... (Score:5, Funny)
Parent
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Re:Pscht! (Score:5, Funny)
Parent
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Current market caps: AT&T - $232bn, Apple - $160bn.
Yes, AT&T is bigger, but only by about 40%.
Funny you should mention IBM... (Score:5, Insightful)
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).
Parent
Re: (Score:3, Interesting)
Jobs stated as much when he announced the Intel switch. It was all about performance per watt and t
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I doubt it will affect apple's sales. (Score:5, Insightful)
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.
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It runs Windows Mobile 6.0 & it is a touchscreen like the iPhone.
And it comes with 3G.
Why AT&T would do this... make of it what you will.
Echo (Score:5, Funny)
"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"
EVERYONE READ THE ABOVE COMMENT (Score:5, Interesting)
Parent
"Sometime next year"? No $hit, Sherlock (Score:5, Insightful)
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
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Ah Robert Cringley (Score:4, Informative)
I tend to ignore his columns when he goes off like that. If he talks about upcoming technology then I'll read it.
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Um... this is talking about upcoming technology - sort of. Why bother reading anything he writes? And isn't the point of sites such as digg and slashdot to sort of pick and choose articles from across different sites that would be worth reading. it seems the worth in the previous sentence is where I made my mistake.
well, lukcily I'm one of the masses that doesn't RTFA. life is good.
Cringley (Score:4, Insightful)
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
Re: (Score:3, Interesting)
Basically, they've got a contract with Apple; unless letting the cat out of the bag this way invalidates that contract, they continue to have their exclusive for the duration of that contract.
AT&T's interest in this deal is to rope in more subscribers. The people who wait a few months for the new iPhone are going to be signing up with AT&T. Granted they leave a few months of subscription fees on the table, but if they suspect Apple is going to knife them in
I'm confused (Score:5, Insightful)
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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.
Visual Voicemail, AT&T has it.
You seem to be forgetting the whole reason that Apple had to make an exclusive deal on the iPhone. Whoever got the exclusive had to upgrade their backend to handle visual voicemail. Not everyone was interested in doing so (at the right price for Apple, I assume).
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It's telecoms vs. manufacturers (Score:5, Insightful)
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.
Parent
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One of the reasons I stay with Sprint is that they don't wall their phones. And as far as brand power. Well I think the Razor is a good example of how a make or model can be a big deal even in the US. I keep hoping that Apple will drop AT&T and go with Sprint.
This kind of hardball will be ending soon... (Score:4, Insightful)
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.
What "success" (Score:3, Insightful)
TWW
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Re:What "success" (Score:4, Insightful)
Don't you believe it. The average consumer here in the UK certainly does understand the concept of unlocking, normally done down a local market for about £5. What they don't understand the concept of is paying £270 for a phone - phones here are things that come free with your contract, paying even £50 would be considered unusual. There are exceptions, such as the N95, but that's at the very top end of the market only and is still considered to be unusual.
Cheers,
Ian
Parent
Bad enough having a new version.... (Score:2)
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.
NDA? (Score:2)
Either way, id be pissed if i was Steve Jobs.
Cringely's like a home run hitter (Score:5, Informative)
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.
uninformed drivel (Score:3, Insightful)
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 [mobilegazette.com]
http://ezinearticles.com/?Sony-Ericsson-W-880i-Black---Experience-the-Walkman-Phone&id=534534 [ezinearticles.com]
Some of them even throw in WiFi. Those phones aren't even particularly expensive (about $15 for the Nokia with activation).
The U
Pretty soft hardball (Score:2)
It seems more like a difference in corporate strategy between Apple and AT&T rather than an attempt to hurt Apple. Apple traditionally likes to keep things secret until they spring it on the public. But many other companies like to let investors know where they are headed. And it's not
real obsolescence (Score:2)
Hero$ (Score:3, Funny)
-GiH
Steve Jobs (Score:3, Funny)
Re: (Score:3, Insightful)
"join in bidding" means they will be bidding against each other, competing.