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Apple Can't Afford iPhone's Carrier Exclusivity 371

Posted by Zonk
from the we-like-even-meaningless-choices dept.
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."
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Apple Can't Afford iPhone's Carrier Exclusivity

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  • by daveschroeder (516195) * on Sunday February 03, 2008 @03:20PM (#22283954)
    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?
    • by Brian Gordon (987471) on Sunday February 03, 2008 @03:32PM (#22284088)
      (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?
      • by foxtrot (14140) on Sunday February 03, 2008 @04:06PM (#22284418)
        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: (Score:3, Insightful)

          by 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

          • by Nicholas Evans (731773) <OwlManAtt@gmail.com> on Sunday February 03, 2008 @04:25PM (#22284568) Homepage

            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: (Score:3, Insightful)

              by 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
          • by xaxa (988988)

            Activate at home?
            What is this activation stuff? Last time I bought a contract phone I took it home, opened the box, saw the "please charge me!" thing and plugged it in. It was then ready to use. There were some instructions about inserting SIM cards, but all that was already done for me. This is in the UK, and not for an iPhone. Is this activation just for the iPhone, or for all phones in the USA?
            • by xaxa (988988)
              Ah, a comment further down tells me that GSM phones don't need activation, which is why I've never heard of it in the UK (I don't know if the iPhone needs activating if it's purchased in the UK).
          • by phulegart (997083) on Sunday February 03, 2008 @07:33PM (#22285940)
            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?
        • Re: (Score:2, Insightful)

          by bigstrat2003 (1058574)

          But again, that's part of that pleasant experience that you think is wrong.

          No, it's part of control. This isn't surprising, as there's no company on the face of the planet which is more of a control freak than Apple, but it's still about control, not a "pleasant experience". Apple wants you to use their products in exactly the way they see fit, when they see fit, if they see fit. And that, I submit, is what's wrong here.

          No one has a problem with a pleasant experience, despite your idiotic interpretation to the contrary. What we have a problem with is the practices Apple is usin

          • by bberens (965711) on Sunday February 03, 2008 @04:47PM (#22284750)
            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: (Score:3, Funny)

              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: (Score:3, Interesting)

            by 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.
            • 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.
              Agreed, but Apple isn't standing up to them in the least. They're playing by the tyrants' rules, not challenging them.
            • Re: (Score:3, Interesting)

              by 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.
        • by Midnight Thunder (17205) on Sunday February 03, 2008 @04:34PM (#22284634) Homepage Journal
          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.
          • by nevali (942731)
            You don't need to activate the specific device with GSM, but you do normally need to activate the SIM/your account, which for 99.9% of consumers amounts to exactly the same thing.

            • by Darby (84953)

              You don't need to activate the specific device with GSM, but you do normally need to activate the SIM/your account, which for 99.9% of consumers amounts to exactly the same thing.


              WTF?!?

              Dude, most people already have accounts and SIMS you drop your old SIM in your new phone and away you go. That's all I had to do with my iPhone...well apart from evading the retarded *totally unnecessary* "activation" crap.

              Seriously, quit spouting ridiculous BS to defend a stupid idea.
              • by nevali (942731)
                And what do you do when you get a new SIM and account?

                That's right, you activate it.

                Do try to keep up.

        • I don't know about anyone else but I want hardware/software not an "experience" from Apple. For example the iPhone/Mac are innovative, they have good hardware that looks nice and you can get good support from them and a decent OS that you don't feel like you want to either install something else or make it usable (like what you almost have to do with a new computer with Windows on it) however why does the service have to be part of the product? When I buy a land-line phone all I have to do is plug it into t
          • Re: (Score:3, Insightful)

            by 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: (Score:3, Informative)

              by 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.
      • by wickerprints (1094741) on Sunday February 03, 2008 @04:12PM (#22284468)
        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.
        • First off, I appologize if this seems like flamebait, however there are just so many things that are just plain wrong in this post.

          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 actually think that the reason that Apple gets such a demand isn't that they are so easy to use necessarily its because they are one of the few tech companies that seems to have innovated and has the money to market them. For example, look back a year or two and see if there were any major phones with a touch-screen interface similar to the iPhone and I bet you there w

      • by edwardpickman (965122) on Sunday February 03, 2008 @04:24PM (#22284562)
        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?
        • Actually the keynote announcement included the top two features on my wishlist: GPS (OK, not real GPS, but it does the job) and lyrics on the screen while listening to music.

          Of course, there will probably be a flood of new features soon, now that Apple is opening the phone up to 3rd party applications.
      • I don't really care much about carrier exclusivity. I pick my carrier based on the phone more than the other way around. The difference between carriers seems minor to me compared to the features of the phone. AT&T might not be my first choice of carrier, but offering iPhone makes them my first choice.

        From a business standpoint, exclusive access to the iPhone has value, and enables Apple to get better terms. AT&T's customer base and profits increased significantly based on the iPhone. It wouldn't s
    • by wootest (694923)
      There are three reasons I see for Apple ever wanting carrier exclusivity in the first place:

      * Visual voicemail. New functionality on this order demands special implementation.

      * Unlimited data. Regardless of 3G or EDGE, data on *any* cell phone that's not specifically a 3G modem tends towards ridiculous fees. If Apple had released an unlocked iPhone and asked for unlimited data plans, the carriers would laugh and ask if they also wanted a pony.

      * To gain a foothold in the total clusterfuck that is the US mobi
      • OK so for the 2nd one.. the carriers would have laughed rightly, since some phone manufacturer is being just ridiculous trying to make demands to the carriers. Why should they listen? Apple can't just demand things or else they refuse to relase their product; how dumb is that?
        • by wootest (694923)
          Of course they can't. It is dumb. Your argument is correct.

          In this specific instance, I happen to agree that there should be unlimited data plans, and there aren't that many that aren't also focused on "unlimited anything" (flat rate), at ridiculous prices.
          • Hm? Well on the subject of plans, I can't believe so many people have fallen for that.. the whole business model is that you pay for a certain amount of service every month, and then the company profits when you don't use all of it. They charge ridiculous amounts if you go over to make you so afraid of going over that you leave the company with half your plan in profit at the end of the month. Service should be prepaid, or at least a reasonable flat rate for whatever you do use and a $0 bill in a month that
            • by cbart387 (1192883)

              Service should be prepaid, or at least a reasonable flat rate for whatever you do use and a $0 bill in a month that you don't use their network.

              On that subject, if you need a no-frills cellphone plan and talk an average of 300 minutes a month (or less on a cellphone) T-Mobile Prepaid service is the best value I've found. You can buy 1000 minutes for $100 with _no_ hidden costs. That's what annoyed me off about the nextel/sprint plan I had. Officially the plan was 29.99 but realistically it was more like 37 with the stupid fees.

      • by kithrup (778358) on Sunday February 03, 2008 @03:57PM (#22284336)

        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.

    • Re: (Score:3, Informative)

      by 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

    • "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?

      • Downloading music over the air? Have you even seen itunes? You can't download music more than once even though it's flagged on your account as purchased! I bet there's some executive at Apple that thinks that bandwidth is something you have to pay for by the bit. Contrast that with Steam, where you can download your 10GB of games overnight as often as you want.
      • by 644bd346996 (1012333) on Sunday February 03, 2008 @04:32PM (#22284620)

        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: (Score:3, Informative)

        by 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
      • by HAKdragon (193605)
        You can always take the phone to a local AT&T store/kiosk and have them activate it. And you can download music wirelessly from the "Wi-Fi Music Store" and it will sync with your iTunes library next time the phone is synced. I'm not sure if you need a wi-fi connection to access the store on the phones, but a quick bit of browsing at Apple's iPhone site seems to indicate that you do.
      • by tgibbs (83782)

        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.


        Rounded off to two significant figures, I'd guess 0.0%. You spend $400 on a product and then keep it when you find out you can't use it; you take it back to the store and get your money back. Even people who don't have a personal computer probably know somebody who has one to activate the phone.
    • by gad_zuki! (70830)
      Err, those token features are minor side-effects of an exclusive deal. This was done because Apple and AT&T would make more money this way. This is also why the sidekick never took off in huge numbers. It was the first cheap smartphone with a browser. Too much exclusivity hurts everyone involved except the bottom line. Shame really, I know a few Sprint contract lock-ins who would love to have just bought the thing if they just let you.
    • by 0xdeadbeef (28836)
      In other worse, We're not going to sell you what you want to buy, we're going to sell you what we want to sell.

      Apple joins the ranks of the telecommunications companies, of the music industry, of Microsoft, in employing that thinking.

      Rationalize it all you want, but it is obvious there is demand in the market that Apple is refusing to meet. And while the brand-submissives whine about people "copying" the iPhone, others are more than willing to fill that gap.

      "it's about more than just buying a commodity...it
    • Yes, this platform really is that special, no matter how much you, personally, might hate Apple, the iPhone, or both.

      No it isn't. Apple fanboys have been proclaiming this since before the iPhone was released, and it wasn't true then, and it hasn't become one iota more true in the meantime. It's just a phone. That's it. It's a well-made phone, I must admit (even though I normally hate Apple design, they did a good job on this one), but nothing more. It is no more than a logical extension of the concepts which were already there, not anything revolutionary.

    • Re: iPhone and AT&T (Score:2, Informative)

      by ruffslash (1232488)
      For me, it's simple. I cannot afford the iPhone right now (and not for another 2 years). $400 for the gadget, 2-year commitment to AT&T (not a reputable company; caved in to admin demands to turn over its records to the government), another $600 to abrogate existing service commitment. FOOEY!
    • by Rob the Bold (788862) on Sunday February 03, 2008 @04:50PM (#22284774)

      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 (Score:4, Interesting)

      by markov_chain (202465) on Sunday February 03, 2008 @05:36PM (#22285086) Homepage
      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 (Score:3, Insightful)

      by 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
  • Loyalty!? (Score:5, Informative)

    by fyngyrz (762201) * on Sunday February 03, 2008 @03:20PM (#22283956) Homepage Journal

    ...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.

    • by Bodysurf (645983)

      "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."

      So switch to Verizon -- they have good coverage in 59230.

    • They get a better deal than you do!
    • by _merlin (160982)

      I've been with Hutch3 (in Australia) for a number of years now, and I do feel a degree of brand loyalty for a few reasons:

      • No service issues
      • Reasonable choice of handsets
      • Good pricing
      • Fast data
      • Intelligible contracts with no "hidden catches"
      • They have never changed my pricing plan, even though the plan isn't available to new customers any more

      If customers don't feel loyal to their carrier, it means the carrier is doing nothing to inspire loyalty, and should re-think what they're doing. Low customer loya

  • my understanding (Score:5, Insightful)

    by fermion (181285) on Sunday February 03, 2008 @03:26PM (#22284024) Homepage Journal
    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.

  • by xzvf (924443) on Sunday February 03, 2008 @03:30PM (#22284062)
    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.
    • by Tony Hoyle (11698) <tmh@nodomain.org> on Sunday February 03, 2008 @03:37PM (#22284132) Homepage
      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.
      • by nweaver (113078) on Sunday February 03, 2008 @03:54PM (#22284302) Homepage
        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: (Score:3, Informative)

          by 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

        • as I like to say.. (Score:2, Insightful)

          by QuantumG (50515)
          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.
        • Re: (Score:3, Insightful)

          by 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: (Score:3, Insightful)

          by 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
    • by dgp (11045)
      you can. they're called unlocked GSM phones.
      I use a phone i got off ebay on the tmobile network.
      works great.

      i too wonder why phones are not sold outside of carrier
      agreements in general. the FIC FreeRunner phone will
      be sold that way, and it runs on open source software.
      • The reason they're not sold outside of agreements is because the carriers refuse to charge phone and service costs separately. If you buy your own phone, you pay exactly the same monthly fee as somebody who got a "free" phone. So long as that's the case, it makes sense for customers to get the "free" phone and be locked into a 1 or 2 year contract.
  • by schnell (163007) <me@schnell.REDHATnet minus distro> on Sunday February 03, 2008 @03:32PM (#22284084) Homepage

    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: (Score:3, Insightful)

      by 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
  • by antifoidulus (807088) on Sunday February 03, 2008 @03:33PM (#22284100) Homepage Journal
    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.....
  • 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 ve
  • In a free market it is only right that there is a choice of carrier.

    However, the mobile phone industry is one where to all intents and purposes the choices are "rock" and "hard place". Which makes me wonder if it really matters in this case.

    Phone companies are not your friends. They are not out to give you a good, nor fair, deal. Not one of them. Every transaction with them is one of compromise. Regardless of whatever your contract says you'll be paying the same amount of money either way, with any pr
    • Re:No choice... (Score:4, Informative)

      by owlnation (858981) on Sunday February 03, 2008 @03:41PM (#22284176)
      I think it's why they're called cell phones. Cell as in "imprisoned".
    • by Lally Singh (3427)
      I don't disagree. But I'd like to point out that what makes a company give customers fair deals is a level of trust between customer and vendor.

      Some vendors give you good deals, give you good service, and a fair price for them. Unfortunately, lots of customers consider a fair price only to be equal to the lowest price in the market, ignoring the long-term cost of the rates (e.g. lower up-front costs in exchange for higher monthly fees), quality of service provided, etc. Those vendors that give customers
  • by DECS (891519) on Sunday February 03, 2008 @03:47PM (#22284244) Homepage Journal
    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]

    • 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?

      Probably, but at what cost? This will depend on the terms of the contract. I am just curious whether AT&T needs Apple more or whether Apple needs AT&T more. This is an important point, because this will define who owes what if the contract is broken, and who is most likely to opt for pulling out of the contract fi
      • by DECS (891519)
        The best agreements involve partners who both need each other. Apple needs exclusive partners with the iPhone to push its unique features, gain lower service fee terms, and promote the iPhone. Apple wants providers to benefit from exclusive availability of the iPhone. AT&T had little opportunity to gain on Verizon until it had a unique phone that nobody else could get. I'd imagine that in addition to the 40% defection to AT&T that new iPhone users caused directly, that there was also a large number
  • My loyalty is at the carrier that provides the most reliable services, not necessarily the cheapest.

    This said - I'm still not willing to pay an outrageous sum of money to get good service, but a sensible. If a certain phone has what it takes to satisfy my needs/requirements then I select that phone and uses it with the carrier of my choice. But if the phone is locked to an operator I'm not willing to switch carrier just because I want that phone. In that case it's either an unlocked version or skipping th

  • The point is many consumers feel no loyalty to carriers and resent being forced to choose one

    I hate to be pedantic, but isn't this statement fundamentally contradictory? If they have no carrier loyalty, then why should it be a problem to switch networks if they really want to use an iPhone? If the desire to use an iPhone is greater than the desire to stick with your network then it could be argued that you lack (sufficient great) carrier loyalty. If the desire to stay with your current carrier is greate

  • by webword (82711) on Sunday February 03, 2008 @04:07PM (#22284428) Homepage
    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.
  • GSM data is a joke. I'll take my CDMA any day of the week.
  • Who cares! Apple missed an entire demographic by bringing out a product that was essentially obsolete on day one. First, it max's its data throughput at EDGE. For a phone that is heavily dependent on data services, this was idiotic. Unless Apple has a nifty trick up their sleeve to 'enable' HSDP at some later date, the iPhone usefulness is limited by this. Shoot, if it had HSDPA they could've integrated a camera and real-time VTC a la iChat (I've used iChat over my tethered V3XX via an HSDPA connection
    • by p0tat03 (985078)

      Yeah, it sucks that the iPhone only has EDGE, but if Steve is to be believed, and the battery life would've been seriously compromised with HSDPA, then I actually prefer it this way. There are engineering limitations that are yet to be overcome.

      I don't get this argument that the browser has limited Web 2.0 capabilities. This is in comparison to your Blackberry, which has NO Web 2.0 capabilities? Or any other common phone browser that ALSO has zero Web 2.0 capabilities? None of your phones can run Google A

  • iPhone SIM lockdown (Score:4, Interesting)

    by gullevek (174152) on Sunday February 03, 2008 @08:38PM (#22286272) Homepage Journal
    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.

Dennis Ritchie is twice as bright as Steve Jobs, and only half wrong. -- Jim Gettys

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