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Why AT&T Wants To Keep the iPhone Away From Verizon
Posted by
Soulskill
on Sat Apr 25, 2009 11:20 AM
from the all-about-the-benjamins dept.
from the all-about-the-benjamins dept.
Hugh Pickens writes "Saul Hansell of the NY Times has an interesting post analyzing AT&T's earnings report and highlighting the enormous stakes involved in the renewal of its exclusive contract to distribute Apple's iPhone in the United States. Hansell does some rough calculations: 'If the average iPhone customer brings in $90 a month, or $1,080 a year in revenue, and the operating profit margin stays constant at 26 percent, that means an iPhone customer represents at least $561 in operating profit over a two-year contract,' says Hansell. 'Put another way, if the company gets 2.5 million new customers a year because of its iPhone exclusivity, the deal represents at least $700 million a year in operating profits — profits that it could lose if Verizon sold the iPhone, too.' With those sort of numbers, AT&T has every reason to make Apple an offer it can't refuse to keep its exclusive deal for another few years. Of course, the incentives for Verizon are presumably the mirror image, so expect Verizon to come to Cupertino, checkbook in hand, to see what sort of deal they can make. 'The benefit of somewhat more iPhone sales from wide distribution is likely to be swamped by a huge bid from AT&T to keep exclusivity, and an equally high bid from Verizon to win some (or maybe even all) of the business for itself.'"
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Apple (Score:4, Informative)
What this means is that after the bidding war that will ensue when Apple's contract with AT&T runs out, Apple will end up getting the bulk of the profits.
Re:Apple (Score:4, Interesting)
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Re:Apple (Score:4, Funny)
I personally will not buy an iphone, until I can get service from Vanessa Blouin.
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Re: (Score:3, Interesting)
I personally realized that I am getting old when I had to JFGI Vanessa Blouin.
Yeah. Me too. Kinda glad I did though.
Re: (Score:3, Funny)
I personally realized that I am getting old when I had to JFGI Vanessa Blouin.
Yeah. Me too. Kinda glad I did though.
Oh yeah, well not only did I have JFGI Vanessa, I had to JFGI "JFGI". How do you think I feel now?
Better make sure your affairs are in order.
Verizon is in Apple's Best Interest! (Re: Apple) (Score:5, Interesting)
A Verizon iPhone would be in the best interest of Apple, even if they had to give up some profits. Why?
1) AT&T's network Sucks. I have heard many complaints that the iPhone is wonderful -- at everything but being a plain cellphone.
2) AT&T's customer service sucks. DNA from a big telco. Monopoly mindset. Nuff said!
3) Mindshare is king. If there were a Verizon iPhone, there would be more Apple iPhone mindshare. I hated to leave Verizon's better network and service for AT&T's suckyness, but I did it anyways. Lower that barrier, and many more people like me would have an iPhone. In the long run mindshare = more profits!
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Re: (Score:3, Insightful)
I don't know. I just switched from Verizon to an iPhone and everyone I talk to tells me that my iPhone sounds clearer. And my house is in a Verizon dead-zone (I live about 10 miles outside of Boston -- there should be no dead zones that close to such a large technology based city).
Still have not dealt with customer service, but its not like Verizon's service was particularly great. And it was also from a big telco.
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2) AT&T's customer service sucks. DNA from a big telco. Monopoly mindset. Nuff said!
Because Verizon (nee Bell Atlantic) is so much less of a big telco then the current AT&T (nee Southwest Bell)? Both are spinoffs of Ma Bell who gobbled up as many of their smaller siblings as the could.
That said, competition is a Good Thing.
Re:Verizon is in Apple's Best Interest! (Re: Apple (Score:5, Insightful)
A Verizon iPhone would be in the best interest of Apple, even if they had to give up some profits. Why?
1) AT&T's network Sucks. I have heard many complaints that the iPhone is wonderful -- at everything but being a plain cellphone.
2) AT&T's customer service sucks. DNA from a big telco. Monopoly mindset. Nuff said!
3) Mindshare is king. If there were a Verizon iPhone, there would be more Apple iPhone mindshare. I hated to leave Verizon's better network and service for AT&T's suckyness, but I did it anyways. Lower that barrier, and many more people like me would have an iPhone. In the long run mindshare = more profits!
Experiences with cell phone companies are so varied, it's impossible to draw any conclusions approaching 1) or 2)... if anything, all you can come up with is "All cell phone companies suck."
For every "AT&T's network sucks" you'll have a "Verizon's network sucks", and the same for customer service.
As an example, my wife and I both defected from Verizon. I've been with AT&T for 6-7 years, and her since the iPhone 3G launched. She left Verizon because of several experiences with rude customer service, and spotty coverage.
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Yeah God Forbid They Actually Have to COMPETE (Score:5, Funny)
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Re:Yeah God Forbid They Actually Have to COMPETE (Score:4, Insightful)
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Re:Yeah God Forbid They Actually Have to COMPETE (Score:5, Informative)
last year called they want their criticism back.
when i first got the 3G network performance was bad. Over the last six month AT&T has brought it almost to the point where the iphone processor is the limiting factor. With rendering times almost equal between 3G and wi-fi.
What really gets me though is verizon can never have the iphone. Ever. It would have to be made exclusively for verizon customers. As Verizon uses phone technology that is incompatible with the majority of the world. GSM may not be the best solution, however it does have the largest user base. When will people understand this?
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Re:Yeah God Forbid They Actually Have to COMPETE (Score:5, Informative)
The article claims that both AT&T and Verizon will be moving to LTE in the future. If this ever comes to pass, and Apple releases an LTE-compatible iPhone, the technology roadblock should vanish.
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Re: (Score:3, Informative)
If this ever comes to pass, and Apple releases an LTE-compatible iPhone, the technology roadblock should vanish.
Not necessarily. Cellular carriers don't flip a switch and make their network technologies change - it happens market by market, tower by tower. Until Verizon upgrades 100% of their nationwide network to LTE - which even optimistically takes several years and costs tens of billions of dollars - then large parts of their network will continue to be CDMA, which is incompatible with the GSM-based iPhone. So even if Verizon could get access to a future LTE-based iPhone, it wouldn't work on large parts of their
Re: (Score:3, Informative)
The equipment is expensive, but is it _that_ expensive?
Yeah, it is. With 4G you are dealing with dramatically larger capacity so your whole infrastructure needs an overhaul.
So of course you start with the equipment in each tower (which is pretty expensive). You also have to upgrade the backhaul circuits attached to each and every one of those thousands of towers from copper T1s or microwave to fiber/Metro Ethernet etc. to handle the much larger throughputs that LTE supports. On top of that, throw in all the heavy-duty routers, management and QoS gear for the co
Re: (Score:3, Insightful)
People know Verizon uses CDMA. What you don't realize is that the applications, or any host-level networking protocol, doesn't care what technology it uses. Converting GSM to CDMA involves plopping a new chip in, and rewriting the data link and networking wrappers used by the OS. Properly written APIs won't even be aware of what technology is used. Blackberry has GSM and CDMA versions of phones, so it's already being done.
And it's not like Apple hates CDMA. They went to Verizon before they went to Appl
Don't worry, AT&T (Score:5, Insightful)
You have some breathing room. It will take Verizon at least a year to figure out how to disable all of the iPhone's features so their customers have to buy them back one at a time.
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Re:Don't worry, AT&T (Score:5, Informative)
GPS is locked out on my 8830 from Verizon. I needed to buy a bluetooth GPS device to go geocaching.
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Re:Don't worry, AT&T (Score:4, Interesting)
Speaking of Geocaching, the iPhone's "GPS" sucks so much you have to have another GPS device anyway. Yes, I'm speaking from experience.
I can confirm this. iPhone's GPS certainly doesn't work indoors, but my impression is that even the leaves of trees are enough to stop the GPS signal. It's also way too slow to use the iPhone as a TomTom replacement.
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Re: (Score:2, Insightful)
If Verizon tried to pull something like that, i'm pretty sure Apple would just renew their agreement with AT&T.
They want to sell as many units as possible. It hurts Verizon so badly not to be able to sell iPhones, that they'll cave, and not demand any features be disabled.
Sure, Apple would make a deal to turn off features in a heartbeat if they could make a profit from it and it wouldn't sully their brand.
Letting Verizon cripple the iPhone, which is advertised as a computing device, not just a ph
Re:Don't worry, AT&T (Score:5, Interesting)
If Verizon tried to pull something like that, i'm pretty sure Apple would just renew their agreement with AT&T.
Verizon WILL try to pull exactly that - they've demonstrated pretty much identical behavior to this many times. I left Verizon for T-Mobile because of it - when Verizon finally released its first Bluetooth phone, it disabled basic sync between a person's phone and his/her computer. I really wonder how many non-techie Verizon are blissfully unaware of some great features their Bluetooth phones would be capable of if only Verizon didn't disable them?
Now what I'd really like to see is the iPhone on T-Mobile's network...
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Re: (Score:3, Interesting)
I left Verizon for T-Mobile because of it - when Verizon finally released its first Bluetooth phone, it disabled basic sync between a person's phone and his/her computer. I really wonder how many non-techie Verizon are blissfully unaware of some great features their Bluetooth phones would be capable of if only Verizon didn't disable them?
Sprint does the same thing with all of their phones. You can take pictures and play MP3's, but you have (or they want you) to use their expensive web service to download music. If you want to actually print a picture that you took with your camera, you have to send the photo to Sprint's site (for a fee) and then go to the web and print it there. Like an earlier poster said, Verizon, Time Warner, Cox, Sprint do not want to be dumb data pipes. They want to control the content as well.
Re: (Score:3, Insightful)
Apple has caved to AT&T in ways that sully their brand before.
The biggest example is the in-store-activation-only fiasco with the 3G launch. Compare and contrast that experience versus the original iPhone; when you could go in, plonk down your money, get the hell out of there, go home, and activate at your leisure. That idiocy alone pretty much guarantees that as soon as the iPhone is available on another carrier, I'll be dropping AT&T.
Apple has also pulled apps from the store at AT&T's behest
Re: (Score:3, Interesting)
HAH! That's why I detest Verizon and wouldn't mind trying AT&T. Verizon expects you to buy your own pictures back from them. I've [still] got one of those LG phones where Verizon forgot to turn off OBEX/OPP and I declined their generous offer for a free firmware upgrade.
Re: (Score:3, Funny)
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CDMA / GSM (Score:5, Insightful)
I thought Verizon couldn't use the iPhone because it's GSM and Verizon uses CDMA. There isn't a CDMA version marketed anywhere in the world, they're all GSM. The only options in the US are AT&T and T-Mobile, any bid from any of the other companies would pretty much require them to front the cost of making a CDMA version of the phone since it'd only sell in the US.
Re:CDMA / GSM (Score:5, Informative)
Apple said from the beginning it did not want to use CDMA because of its limited range to only North America. GSM is used around the world. Verizon Wireless execs have recently said (check out macrumors and appleinsider.com for the specifics) they don't expect to make an offer to carry iPhones until they roll out 4G LTE technology (aka the next GSM version), the same 4G technology ATT is using.
You won't see an non-ATT iPhone until LTE hits.
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Apple unlikely to make iPhone available to others (Score:3, Informative)
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Aren't iPhone sales down? (Score:2)
I think, at least until another model ships, iPhone sales have peaked in the US.
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No.
Sold 3.79 million last quarter; a 123% growth over the same quarter last year.
Re: (Score:3, Insightful)
Look at any quarterly sales report from just about any company and you will see a pattern for the quarters, it's almost never a steady anything (rise, loss, flat-line) it's always fluctuating by quarter. That's why it's customary to compare against the same quarter last year, it would be the same part of the fluctuation and would more accurately reflect a rise or fall.
what that means for us (Score:2)
is the price of the iphone should drop because AT&T is paying more into the kickback fund at Cupertino.
I don't see this as a particularly bad thing, as long as AT&T doesn't hike their contract cost to offset it. Chip away some of that 26% and put it back in my pocket thx.
Verizon rejected.... (Score:5, Insightful)
From my perspective the commoditization of the networks can't happen soon enough. The network maintainers SHOULD be separated from the service providers, and the service providers should lease the network from the maintainers, like Virgin Mobile does now. This will increase competition, and be the best for the customer. The same thing should happen with internet service.
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Re:Verizon rejected.... (Score:5, Informative)
Furthermore, you've done bad research. Not only did Apple consider making a CDMA phone, Verizon completely rejected them [engadget.com]. In essence neither the latter half nor the former half of your post has merit.
Parent
Ring Ring (Score:4, Funny)
Switching from a GSM phone to a CDMA phone is simple, ... on the hardware side it's a matter of swapping out the modem.
Ring Ring!
It's for you!
It's analog radio engineers, everywhere, saying they want you to come over for a... a party. Yes, a party. To celebrate the ease of switching out radios.
I think I hear the FCC in the background gathering pitchforks too. Not quite sure what the intent is there.
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AT&T Crappy Service (Score:3, Informative)
Apple doesn't want to make different iphone models (Score:5, Insightful)
just like with computers, apple wants to make only minor variations of a model. for the iphone it's how much storage you want. with their computers it's only a few minor variations as well.
more choices means more expensive to produce, more testing, etc. Less profits due to higher costs.
and with CDMA, why make a phone for a dying technology?
Apple is an unamerican, anticompetitive company .. (Score:3, Funny)
that has been manipulating the market and the public for years. Sadly, many consumers have bought into an elitist, exclusionary scheme to milk the world, all so a few people can live like kings.
Personally, I believe Apple never would have been successfully in a free and open market. We citizens tragically have let the greedy overrun the ethics and principles that America was built upon and should stand for. Sadly, we've become tools of the overly-affluent and power-mad.
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This comment is rated Funny. I've reread this twice, but I still don't understand the joke. Can someone explain it to me please?
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It's funny because free markets encourage monopolistic behavior, and any kind of antitrust activity is regulation of the otherwise free market.
iPhone on Verizon wont happen (Score:3)
No way will Verizon be willing to give up control over app approval for phones on its network (look at the BREW crap they have on their phones now).
No way will Verizon be willing to give up the Verizon music/ringtones/movies/tv/content store for the ITMS
No way will Verizon be willing to allow GPS and other things without taking its cut.
Re:Whoever writes the biggest check will lose (Score:5, Insightful)
Sounds a lot like....
Brett
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