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."

There's more here than meets the eye

[daveschroeder (516195)]

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?

Re:There's more here than meets the eye

[Brian Gordon (987471)]

(This came out a lot like flamebait, but please people read the parent and then understand my raged) What, you're defending carrier exclusivity? All those things are terrible ideas and have no place in a phone for crying out loud. Expanding itunes to the iphone? What? Anyway that should be done through apple, and the carrier would make no difference.. if the iphone can connect to a web site then it can run a little itunes app that connects to apple servers, REGARDLESS of carrier.

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.

Durrr have you forgotten the people who want iphones and don't want AT&T? That's what this whole hullabaloo is about. Apple's "pleasant experience end to end" is wrong and it can't realistically expect to control things all the way to the user. It's an absolutely godawful idea on their macs- making software that's written to run on any x86 platform and then locking it down to only run on one set of hardware? Same with phones- if apple wants to make a phone that's fine but what is it doing controlling carriers? Why does the designer of the phone have any say at all as to who can service it? That makes no. sense. at. all. Apple shouldn't worry about people confusing crappy service with crappy hardware- anyone with half a brain can tell that the maker of a phone has nothing to do with the huge phone bill.. but I guess people with at least half a brain isn't Apple's target audience, is it?

Re:There's more here than meets the eye

[foxtrot (14140)]

Apple's "pleasant experience end to end" is wrong

Indeed. I really hate it when people make things that don't suck. I mean, come on, companies of America. Bring me stuff that's unpleasant. I want the suck!

Why does the designer of the phone have any say at all as to who can service it?

I don't know, perhaps the designer of the phone has features they want to include that aren't part of the standard feature set? Like being able to activate at home without having to wait for a sales droid. Or visual voicemail. Or perhaps they don't want customers of their phones to have to wade through a sea of bizarre contracts and options? But again, that's part of that pleasant experience that you think is wrong.

Re:

[Brian Gordon (987471)]

Activate at home? Oh, you mean by installing a proprietary music store application (btw why on earth does a music store have to be an application instead of a website?) which has nothing to do with the phone on the computer you might not own? Right.

perhaps they don't want customers of their phones to have to wade through a sea of bizarre contracts and options

Perhaps my point is exactly that it doesnt matter what Apple thinks. They make phones, not offer cell service, and it's none of their business what co

Re:There's more here than meets the eye

[Nicholas Evans (731773)]

Activate at home? Oh, you mean by installing a proprietary music store application (btw why on earth does a music store have to be an application instead of a website?) which has nothing to do with the phone on the computer you might not own? Right.

What did Steve Jobs do you to you, run your dog down? Jesus. I have my iPhone box right here. Did you know that it says you need a PC with Windows or a Mac and you need to have iTunes installed to use the product? It's not like Apple is dropping their evil proprietary software onto your machine when you plug your phone in without any warning.

Being able to activate myself is convenient. I liked that. I was an existing AT&T customer who had never had any problems with them - I've had some horrible piece of shit phone with them for five years or so before I switched to the iPhone. I've still never had any problems with them. Hell, I haven't -talked- to someone from AT&T about my service, ever. They send me a bill and I pay it. No bullshit involved.

I don't quite know why you're frothing at the mouth. Yes, there's some lock-in. That's advertised straight-up. You need iTunes; you need an AT&T contract. Don't like it? Then vote with your wallet and buy something else.

Re:

[mdwh2 (535323)]

Don't like it? Then vote with your wallet and buy something else.

Well that's exactly what people are suggesting. I mean, what were you thinking? No one is suggesting this should be illegal for Apple to do! But it is certainly fair game to criticise them, point out flaws in their product and suggest buying something else.

After all, Microsoft gets enough flak (including legal troubles, for them) for trying to coerce people into using its media software.

His "frothing at the mouth" is probably because we hear a

Re:

[mstahl (701501)]

What'd you post that comment from, then? An iPhone or something? You need a computer to use an iPod, too. Is that really such a huge problem?

Re:There's more here than meets the eye

[tsa (15680)]

Why the hell do you need to 'activate' the thing at all? I've never 'activated' a phone before in my life. The things just work. And I always buy my phones without a SIM lock and without a subscription. What is this 'activation' business anyway?

Re:There's more here than meets the eye

[Phleg (523632)]

Sure you have. Well, at least, the sales droid at the store you bought your cell phone at did, with you present. The iPhone activation is nothing more than associating your SIM with your phone number, signing up for service, and agreeing to a contract. The difference being that it takes about a fifth as long, and with nobody else needing to be present.

Re:

[tsa (15680)]

I'm with you a long way. I hate the iPhone with a passion, but what do you have against the MacBook Pro? You get what you pay for in that machine's case, which is a very high quality laptop with a beautiful design and the ability to run all mayor platforms trouble-free. I love mine.

Re:There's more here than meets the eye

[phulegart (997083)]

I have to wonder about what you actually know about Apple.

I mean, are you aware of how they have been running their computer business? I'm sure that you will *say* you are very aware, and then you might begin to spew a little information that will quickly turn into a rant about how evil the company is... but just stop and think (or god forbid actually do some research) before you reply to me.

Did you know that Apple had their tentacles wrapped around every little detail involved with the manufacture and sale of their new computers for the majority of the time that Apple has been selling computers? Do you understand that this is why they are as stable, versatile, and easy to use as they are? Do you think it is just coincidence that the industry standard in professional publishing software began as "Apple Only" software? (Hint: Adobe...) Do you know that Apples were the first computers to enter into professional recording studios? Again, would you just blow this off to coincidence?

For more than a decade, while IBM users were still fooling around with DOS, MAC users were connecting to the budding internet with Prodigy or AOL or Compuserve. While PC users were trying to figure out how to get their sound cards to work, MAC users were writing music in notation on their screens and getting their "cute" little machines to play it back. And these are only some of the advances. Sure, Apple kept an iron grip on manufacturing. This was to ENSURE a quality product. And you know what? IT WORKED!

Now, personally, I've never owned an Apple. I have nothing against them, but I've never been able to afford one. I can appreciate the quality of a Ferrari without owning one of those either. Just because they are expensive, I'm not about to go on a spree hating the company.

What happens when you buy an Unlocked IPhone, and you pick your carrier, and you find that half of those nifty features that you bought the IPhone for, don't work. Whose fault is that. Is it Apples? Nope. You are the kind of person who will blame Apple, but that doesn't make it their fault. They made the phone, they worked it out with AT&T so that all the features of their phone work with AT&T as a carrier. From your argument, you don't want Apple to be dictating how EVERY other company out there that could provide phone service has to alter how their service works, just to make it compatible with the Iphone... or are you a blind hypocrite who just can't see that this is exactly what would HAVE to happen, if the IPhone was able to work with every carrier? Oh sure, Apple could lose and alter some of their features, and make their phone just like a motorola... but what would be the point?

Apple raised the bar. Plain and simple. If you don't like the IPhone AT&T marriage, DON'T BUY ONE! How simple is that? I'm not the only person to realize this. Why can't you?

Notion of phone activation, not GSM-like

[Midnight Thunder (17205)]

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.

Re:There's more here than meets the eye

[bberens (965711)]

Apple as a great understanding of the paradox of choice [amazon.com]. This is exactly why Apple customers are so damned happy even though they have so very few choices of hardware options when compared to alternative vendors. If it really gets your goat that you don't have enough options, you probably aren't in Apple's target market. That's okay though, there's no need to bash them. I don't own any Apple products either.

Re:

[by Anonymous Coward]

Apple as a great understanding of the paradox of choice. This is exactly why Apple customers are so damned happy even though they have so very few choices of hardware options when compared to alternative vendors.

So that's why mac people only have one mouse button!

Re:

[chthonicdaemon (670385)]

Ok, just a few points -- I am a pretty hardcore Linux user, I have been Windows free for about 8 years. At work (university) I use linux exclusively. When my beloved IBM laptop died I needed a replacement and bought a PowerBook G4 based on the build quality and feature set, expecting to dual boot with Linux but hoping that the BSD (and fink) would be enough to tide me over. I am a convert to the Mac way.

Now, let me just say that I don't play games. This is probably the one part of the mac experience

You're wrong

[LKM (227954)]

whoever insisted on the "Hey guys, let's have only one menu bar for every window, ever!" idea should never get to design a GUI again.

Fitt's law. [wikipedia.org] You're wrong, Apple's UI team is right. Not an opinion, either. UI design is science, not opinion.

Also, Ubuntu has a very nice UI, but Windows? I remember installing a wifi card in a Windows laptop. At one point, the installation instructions told me to open the context menu on a entry in a subment of the Start menu to get to the card's properties. Really? That's less confusing than Mac OS? You're probably used to Windows and thus find Mac OS X confusing. Fair enough. For somebody who uses b

Re:

[gilesjuk (604902)]

They want control because without control the phone companies ruin the devices and make them suck.

Vodaphone and T-Mobile are two operators that remove features from phones and hack about with the firmware purely because the phones have a feature that would save the end user some money.

It's about time a phone maker stood up to these phone operators, they are overcharging people and they've held back development of easier to use phones and convenient features.

Re:

[PitaBred (632671)]

Really? I actually switched TO T-Mobile from Verizon specifically because T-Mobile didn't do that bullshit locking down the phone's features, crappy hacked firmware, etc. My Blackberry 8800 has full access to the GPS, everything, and my buddy's 8830 doesn't. Almost identical phones, and since he uses Verizon, his is locked down.

It may be different elsewhere, but in the US, T-Mobile is a pretty good carrier.

Re:

[schnell (163007)]

I don't know about anyone else but I want hardware/software not an "experience" from Apple.

Then you don't want Apple, period. Apple's whole raison d'etre is to create a simple and elegant user experience out of complicated computer-related tasks. Apple is not interested in making the fastest or cheapest commodity computer product for other people to customize. Apple creates value to people who want their technology to "just work" by covering the whole product lifecycle with a system that - surprise - as

Re:

[mdwh2 (535323)]

My phone "just works", and it costs a fraction of the price.

Obviously I don't fit into Apple's target market (though for some reason, I still have to hear about them all the time) and my phone obviously lacks the magical "experience" of Apple - but please don't try to mislead people into suggesting that every other phone doesn't work.

Re:There's more here than meets the eye

[wickerprints (1094741)]

I can't respect the reasoning of someone who says that the end-to-end user experience is irrelevant or that the desire to design it is wrong or unrealistic--and then, in the same breath, talk about all the people who want iPhones. It's the same kind of thinking as people who say iPods should support WMA just because they're popular.

To be absolutely clear--the whole REASON why there's such demand for Apple products is because, unlike many tech companies, they DO care about the entire user experience. It makes using the product simple, easy, convenient. Would people buy Apple products if they WEREN'T easy to use, if that end-to-end experience WASN'T designed? It frustrates me to no end to hear people gripe about "user choice and freedom" but at the same time they covet the simplicity and elegance of Apple's design approach, not realizing that their interfaces and hardware are what they are precisely because it doesn't allow you to customize the crap out of it and ultimately break it in a million ways.

I've owned products by many different companies--Motorola, Samsung, Sony (and those are just mobile phones). And not a single one of them has been anywhere near as successful at designing a mobile phone interface as Apple has. It is called attention to detail. As a former loyal T-Mobile customer, do you think I was happy about having to switch to AT&T for an iPhone? I weighed my decision carefully, and like a mature adult, I made an informed choice. I am not sitting around with my old crappy UNLOCKED Motorola V3x with an indecipherable interface, whining about how the choices presented to me are not the choices I want. Would you be any happier if Apple simply decided not to develop the iPhone at all?

Some people just want to find any reason to complain.

Re:

[Lemmy Caution (8378)]

I am using a MacBook. I have an iPod. The first is a significant improvement over the alternatives in usability, the second an incremental one. The iPhone, in the context of the existing use skills of its market, has an interesting UI. But it is more entertaining and fun, than it is a real usability improvement.

The way a Mac enthusiast uses the phrase "getting it" strikes me as somewhat cultish.

Re:There's more here than meets the eye

[edwardpickman (965122)]

I still vote Flamebait and suggest you reread the parent. Apple has been the target of the mod squad for a lot of years. This whole flame war didn't start with iPhone. Everyone has complained endlessly about Apple computers because there's is little or nothing you can customize and you can't scratch build them. Here's a 411, who cares? There's an ocean of scratch built options so why does it drive the geek crowd so crazy that Apple won't knuckle under and open up? They build solid elegant hardware that runs great out of the box. I just bought two new PC systems, one from Alienware and one from XI Computers. The Alienware took some configuring because of XP not anything Alienware did so it was still a half hour before I was installing software. The XI machine was defective and after a month of screwing around I had to return it and they are building a scratch system. The point is I bought a Mac 18 months ago for an editing system. I took it out of the box, plugged it in and was installing software five minutes after I plugged it in. I've never had a hardware problem and few crashes other than specific software which also crash on my PCs. The iPhone is meant to work the same way. There's a huge number of smart phones out there if you want to tinker or go with another service. The parent did an excellent job of pointing out why they did the AT&T deal. Do I like them? Hell no but it was the ONLY company that would play ball. If Apple wants to expand when their contract is up I'm guessing a lot more carriers will be interested since they have blown expectations out of the water. My only hesitation is there are several features that strangely got left out like movie clips that I was hoping would have been added this spring. The keynote was surprisingly sparce on the iPhone front so I guess not much is going to change until next year so I may wait another year and get my current contract nearer the end before I switch. Just because a product isn't open doesn't make it evil. Apple has always done business this way but it allows them to make superior products rather than the chaos that exists in the PC world. I have endless headaches with ALL my PCs. My Mac just keeps chugging away with probably 5% of the trouble that I have with the best of my PCs. iPhones were built to do what they do and well over a million people seem to like what they do. Sure a lot have unlocked them but this doesn't mean Apple has to do anything. Also if their profits are based on kick backs from AT&T, yes a $500 phone can still be sold at a loss, then they have every right to do updates that cut off unbundled iPhones. We aren't talking digital rights here, if they don't make a profit they go out of business. Would people whine less if they sold iPhones unbundled for $750 with some features crippled?

Re:

[reidconti (219106)]

I bet you're the kind of person that gets spyware. The simple matter is that you don't have problems unless you're stupid. Yes, I'm not going to try to be more polite- that's the simple fact. Unless you are stupid, you will have no problems whatsoever. Don't install smiley toolbars, you will not get spyware. I've never known a single Windows user who actually knew what he was doing to have any problems with his machine. Apple does do a very good job at designing computers that are hard for idiots to break (ironic since Windows brought PCs to the masses) but if you don't go swinging a sledgehammer around the OS, you. will. not. have. problems.

I think the "stupid" label more accurately applies to a guy who can't appreciate that 98% of the PC-using world has the same gripes and issues with Windows. I've never gotten spyware on a Windows machine either, but that doesn't mean it doesn't ruin the computing experience for everyone; worrying about what kinds of sites you can or can't go to, loading antivirus software and keeping it updated, not using the Outlook preview pane, and so on.

"Stupid" describes a guy who doesn't understand why Apple doesn't

Re:There's more here than meets the eye

[Brian Gordon (987471)]

But without workipping them how can you justify being locked into AT&T for two years while literally _the rest of the entire world_ does nothing of the sort? And paying $600 off the bat for mediocre hardware that's so locked down you can't even change the battery, or install programs not paying a billon dollars to Apple for signing, without feeling like a criminal from all the DMCA filth spewed by Apple?

Re:There's more here than meets the eye

[reidconti (219106)]

But without workipping them how can you justify being locked into AT&T for two years while literally _the rest of the entire world_ does nothing of the sort? And paying $600 off the bat for mediocre hardware that's so locked down you can't even change the battery, or install programs not paying a billon dollars to Apple for signing, without feeling like a criminal from all the DMCA filth spewed by Apple?

Because you are making an invalid comparison.

My choices are not:
* Buy iPhone from AT&T in the USA
OR
* Move to Europe and get some other cell phone there.

My choices ARE:
* Buy iPhone from AT&T in the USA
OR
* Buy much crappier smartphone, also with 2 year contract with some carrier I may or may not like
OR
* Buy utilitarian phone, also with a 2 year contract so that the phone is subsidized.

I bought an iPhone for $399 (you know; what they *actually* cost, not $600). I don't see the big deal. My previous phone cost $150 for a "dumb" phone thru Verizon with 2 year contract, and Verizon is the devil.

Unlike most Americans, though, I'm not used to contracts because in the past I bought unlocked GSM phones from eBay and used them sans contract on Cingular (so I was actually happy to have the iPhone excuse to ditch Verizon and their crappy call quality and dropped calls at busy times). Back when the Ericsson T39 was hot, I bought it new on eBay from the UK, I think i paid $299. My next phone (4 years later) was a Samsung D50 slider that was just a little under $400. So $400 for the iPhone was no issue. I don't particularly like being stuck with a contract, but I've used AT&T before and am more than happy to stay with them for 2 years. Frankly, compared to the rest of the market, what I get for $400 is so much more than I've gotten in the past. Both my previous expensive phones were very nice and everything, but they weren't above and beyond different from the competition like the iPhone. And I've used Windows Mobile, for 2 weeks, before I got rid of the phone out of utter frustration.

Re:There's more here than meets the eye

[joto (134244)]

Because if you want a cellphone in the USA you have no other choice.

Is it illegal for americans to import their own unlocked cellphone from abroad? That's certainly what I would do.

sure it sucks, but in the end two year contracts aren't all that bad. They can't randomly raise your rates either. Apple is playing ball with the cell phone companies or else the iPhone would never have gotten to market,

You can't be serious. Two years is longer than the projected lifespan of the phone, even if you treat it nicely. And most people who rushed to buy their iPhone want a new phone within two years, regardless of whether it lasts that long, or not. Besides, the contract sucks horseshit regardless of how long it is, making the horseshit last two years isn't going to make it any better.

Also, I'm not interested in whether AT&T is going to raise the rates. The rates they already have are already astronomical! What I want is a free market, and that means that I'm not locked to two year contracts, and can change provider any time I feel like it. A cell-phone carrier is not something that should need your first-born son just to be able to sell you their service.

Finally, I see no reason why an over-hyped but somewhat fashionable touch-screen phone should need to play a different ball-game than all the other phones on the market. Especially when the rules of the new ball-game is to get screwed, over and over again, by bending over and letting corporate shitheads put their contracts so deep into your anus you start to blead. If they should change the rules, they should instead have tried to make it a fair game, but I guess that's asking a bit too much.

Re:

[VJ42 (860241)]

Yes, this platform really is that special, no matter how much you, personally, might hate Apple, the iPhone, or both.)

Really? From here in the UK, I still just don't "get" the iPhone. Anecdotally I don't know anyone who has one or is planning on getting one (locked or unlocked) Even the salesman in the Apple store couldn't explain how the damn thing was better than my cheap ass* £30 Nokia, apart from using vague terms like the "iphone experience" whatever that means. In the end I got him to admit that the only thing it had over my phone was the GUI, and that my phone could replicate anything else it did with a bit o

iTunes shouldn't be involved.

[Animats (122034)]

"and then the ability to seamlessly activate via iTunes"

"Seamlessly"? You have to have a computer connected to the Internet just to activate your phone? That is so lame. There's a huge population of people, especially outside the US, who have mobile phones but not computers. I wonder what percentage of those un-activated iPhones were bought by people who didn't realize they had to mess with a PC just to turn the phone on.

And you still can't download music over the air link, can you?

Re:iTunes shouldn't be involved.

[644bd346996 (1012333)]

There's a huge population of people, especially outside the US, who have mobile phones but not computers.

And none of them have any relevance whatsoever. The iPhone costs more than a low-end computer to activate it.

Re:

[daveschroeder (516195)]

"Seamlessly"? You have to have a computer connected to the Internet just to activate your phone? That is so lame. There's a huge population of people, especially outside the US, who have mobile phones but not computers. I wonder what percentage of those un-activated iPhones were bought by people who didn't realize they had to mess with a PC just to turn the phone on.

The iPhone requires iTunes for activation and OS updates (which sometimes will bring significant new features, unlike nearly all other handsets

Re:There's more here than meets the eye

[Rob the Bold (788862)]

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.

Rather than contrary, isn't that exactly the article's assertion? That no one is "forced" to buy an iPhone, and thus many who might buy it unlocked/unsubsidized don't because it isn't?

From TFA:

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 subsidised carrier contract.

So that represents a lost opportunity cost. Maybe Apple ran those numbers, paid their money and made their choice, deciding the the gain from exclusivity was worth the unlocked instrument sales. If your $200 AT&T subsidy number is right, I supposed that approximates the premium that Apple expects a consumer would pay.

It doesn't matter how many people buy iPhones to unlock them.

Unless AT&T really didn't do their homework before signing the iPhone deal, I would guess that they only pay Apple the subsidy on activated instruments.

And BTW . . .

What about this is so difficult to comprehend?

Your smart-aleckness makes Baby Jesus cry.

Carriers

[markov_chain (202465)]

It strikes me that the mobile networking situation in the US right now is what our wired Internet would be in had the greedy money-grubbing carriers been in charge of designing it. Your email would reside in central offices, and you would pay $1 to send or receive one (plus $1 per megabyte of attachments). The Web would be a set of AOL-like walled gardens with mutually incompatible content formats. Yay for VCASTrated YouTube! The scary part is that there were projects at former Bell Labs developing systems along that line under the PCS label. *shudder*

nothing new

[nguy (1207026)]

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 belie

Re:There's more here than meets the eye

[kithrup (778358)]

No, most of those are the advantages Apple can give their customers with carrier exclusivity.

What Apple gets from carrier exclusivity is the ability to get a portion of the monthly charges from the carrier. Based on reports, Apple gets a significant portion of the customer's monthly payment to AT&T (and O2 in the UK, and T-Mobile in France, and ...); they would not be able to do that without the exclusivity.

Even $10/month from the customer means that Apple would be getting an additional $240 over the course of the 2-year contract; that's a pretty significant reason to continue to push for exclusivity for a while.

Loyalty!?

[fyngyrz (762201)]

...and why should we feel any loyalty to any particular carrier? AT&T doesn't serve my area, so at present, an iPhone isn't an option. This doesn't dispose me favorably towards either AT&T or Apple.

My current carrier doesn't provide many services you can get in other areas, such as video transfer and texting outside the local area. I'm not talking about extra-cost, they simply don't offer it.

On top of all this, cell service is expensive. With these things in mind, I can't imagine how "loyalty" is supposed to even come into the equation. As far as I'm concerned, I'm just looking at which side of the ship to jump off of, knowing that the next ship over isn't likely to be any better anyway.

my understanding

[fermion (181285)]

Is that Apple tried to make a phone the old way, i.e. the rokr, and it failed. It failed because carriers want a phone to drive revenue, not serve customers. It failed because Motorola was not able to become an independent entity, but kept the culture as a servant to the carriers.

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.

All phones and all data services

[xzvf (924443)]

Why can't we have all phones free as in freedom? When I buy a computer I can hook it up to any TCP/IP network and access the internet. Some I pay for and some I don't. When I buy a land line phone, it isn't locked into any phone company. I can plug it into any jack and it works. All I want from my cell provider is a data pipe to get to the internet or the voice network. Period.

Re:All phones and all data services

[Tony Hoyle (11698)]

Try just about any country in the world except the US. The a lot of phones are sold that way (and those that aren't can be released from their network for a nominal fee). You can walk into a shop and buy a SIM on its own (often they're free these days - worth it to the companies to get you on board) and sign up for a plan with no minimum contract or just go pay-as-you-talk.

I still don't get why the iphone is considered so revolutionary, except it's the only one that's permanently locked to a single carrier and has a ludicrously long minimum contract.

Why the iPhone is revolutionary...

[nweaver (113078)]

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.

Re:

[TheRaven64 (641858)]

Other smartphones don't have web browsers that just works, they don't have email that just works

I don't own a phone that really qualifies as a smartphone - it's an early 3G model with a small screen. I do own a 770, and when it's near my phone or near a WiFi point, web browsing (Opera) just works and so does email. I have friends who bought phones a year or so after me and they have web browsers that just work and which are easy to type URLs into with a pop-out keyboard. I've played with an iPhone, and it is nicer, but like OS X on the desktop it has a few UI issues that make it frustrating (altho

Re:

[gad_zuki! (70830)]

The iPhone is revolutionary because it just works.

My dads old POS cadillac just "worked." It started every time. No one would call that car revolutionary.

My treo "just works." I can make phone calls and surf the web.

I'm not sure why people keep using this tired old canard, but lots of things "just work."

Re:

[mdwh2 (535323)]

Could you explain just worksTM please, because this doesn't appear to be a meaning that matches up with my understand of "just works". Do you mean to say that web browers, email and computer connection on other phones don't work? Strange, even my dirt cheap phone does all that.

If the market had really got to the stage where just working was "revolutionary", don't you think there would have been more of an uproar about the state of other phones? But no, everyone else carries on with their phones working just

Another "analysis" missing the point

[schnell (163007)]

Apple is trying to upset the traditional business model for handset makers in that they wish to get a cut of recurring subscriber revenues, not just a one-time equipment sale. Apple is able to get this revenue (which in the long term means more than the phone sale!) precisely because it has granted exclusivity to a single carrier. If AT&T was no longer guaranteed to capture the vast majority of iPhone subscribers, it would neither have (a) implemented the needed Voicemail and EGDE network upgrades and the billing system+iTunes interface, or (b) agreed to give a cut of subscriber MRC to Apple.

The simple calculus here is that carriers will do special things that Apple asks for (changing the way they bill and provision customers, plus handing over a cut of service revenue) in return for Apple doing something the carriers ask for (exclusivity). I don't think anyone would sensibly argue that carrier exclusivity is in the best interest of all customers, but that doesn't mean you're really tied to it. Those with the means and technical knowledge will continue to purchase and unlock phones to their hearts' content - that's the beauty of a GSM ecosystem (well at least for 2 of the 4 main US carriers). Apple and all the carriers internationally that it deals with - plus all the cellphone users who just want all of their cool Apple features to work with a minimum of hassle - will continue to pursue the exclusivity model for the foreseeable future.

Re:

[kevinbr (689680)]

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

Steve's insistence on not having subsidies is dumb

[antifoidulus (807088)]

Steve Jobs wanted to change the way cell phones are bought but ended up just making so many annoying restrictions, even for customers that want to use AT&T/T-mobile/Orange that he ended up destroying the "simple" experience he so desired. He wanted people to be able to buy the phones directly from Apple without having to sign anything in store and/or online. However, when people started to unlock the phones Apple put in place tons of walls even for buyers that plan to use Apple's carrier. For example, you cannot buy iPhones with cash or Apple gift cards(in the states anyway). They announced this right before Christmas and many potential iPhone buyers already let it be known that they wanted Apple gift cards for Christmas so they could buy the iPhone. Instead, Apple just kicked them in the teeth.

What I don't understand is why, when Apple dropped the price, they didn't just make the price drop a subsidy for AT&T customers instead. They could have offered $200 off AT&T service after the first month that wasn't applicible to cancellation fees, and could have extended it to early adopters so they wouldn't have felt burned. Would have allowed Apple to drop the price to AT&T users(well, it would take a few months to see all the savings I suppose), and would have given Apple 50% more revenue from unlockers. But I think Steve was just so set against "subsidies" that he decided to take the "I'll do anything to prevent you from getting an unlocked iPhone" route instead. I think that costed Apple not only customers and revenue, but a LOT of goodwill too.....

So Apple is supposed to violate its contract?

[DECS (891519)]

Can Apple afford to stick to an exclusive carrier in the future? If for no other reason than consumer choice?"

Can Apple leave its five year exclusive contract with AT&T? If for no other reason that to heed the cautionary woes of a Computerworld writer with tenuous grasp of business and markets?

The problem with wags is that they talk about Apple, Microsoft, AT&T, etc as if they were characters in a play they were writing, apparently unaware of the real world constrains of money, technology, personnel, opportunity cost, and other resources. They write like they're genus for printing ignorant wishful thinking that sounds good only if you don't know what else is involved.

Video Game Consoles 2007: Wii, PS3 and the Death of Microsoft's Xbox 360 [roughlydrafted.com]

What's the problem?

[webword (82711)]

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.

iPhone SIM lockdown

[gullevek (174152)]

Last week a guy from America was here in our Tokyo office and he wanted to use his iPhone SIM card in a japanese phone, bummer, does not work. It worked with his previous plan, but well, iPhone SIM is so locked down, nothing works. Plus, the iPhone has no G3 so there is no way it will work in Japan anyway.

Another example why lockdown is just plain stupid.

Re:No choice...

[owlnation (858981)]

I think it's why they're called cell phones. Cell as in "imprisoned".