AT&T and Apple: Strange Relationship?

There seems to be quite a bit of murmuring around town from folks about the fact that Apple chose AT&T as their wireless partner for the iPhone. As a disclaimer, I was an AT&T Wireless customer way back in the mid-early 90s when mobile technology was just starting to come into it’s own, so to say that “there were problems with the network” probably wouldn’t be a terribly meaningful criticism since just about every carrier had problems in the early stages of the technology. I do question whether the current Cingular-now-AT&T has the best wireless network. I had Verizon and despite the fact that they were ridiculously and needlessly expensive and always nickel-and-diming me, they truly did have the best network. I can’t say that there was ever a time when I was complaining about conversations disconnecting. My reasons for leaving Verizon (already well documented) had to do with their lethargic response to new devices (and their need to control the phone’s interface.) Which brings me to why I believe Apple chose the folks from AT&T…

It’s simple. Apple had a vision for a mobile phone experience — and AT&T agreed stay out of the way.

It doesn’t take a rocket scientist to come to this obvious conclusion. Going with multiple partners would not have given Apple the control over the interface that they desired. The huge market for mobile phone carriers is with the network downloadables. The ringtones. The games. The extra stuff. While lucrative, these downloads detracted from the vision. For one, they decrease what may prove to be an already unstable experience on a fairly new and untested mobile platform. One thing about the iPhone is that from the start-up menu to the shut down screen, the experience screams ‘Apple’. From the font to the icons. Everything. Opening the phone to multiple carriers means that everyone wants their little “store” application on it.

Another big issue is branding. Try to find a mobile phone that doesn’t have a Verizon or Cingular or Sprint logo somewhere stamped on it. Imagine an iPod with a huge T-Mobile icon on it. It detracts from the simplicity.

Most importantly, the reason why this phone has people as crazy as it does is largely due in part to the quiet hype that was created. You had Stephen Colbert doing a sketch begging Apple to send him one. We saw “iPhone sightings” on tech rumor sites. Most of the buzz had to be created around just wanted to experience this thing. AT&T was probably the only company trusting enough of the company that created the iPod to let them just run with their vision and not interfere with the experience they were after. It’s widely known that until the very last stages of design, even Cingular/AT&T executives didn’t have any details about the device design, interface or even a mock up. They were handed the info on a need-to-know basis. And look — it worked. Even the most prying of Apple conspiracy theorists were blown away by the announcement of a phone.

And so after we understand the “why”s, it’s natural for people to speculate as to whether this was beneficial decision. And if so, for whom.

Well, Apple certainly benefits. They’re said to be selling the phone at a premium margin of around 40% (after some have taken apart the phone and estimated the cost of the parts). They’re gaining credibility as thought leaders in the technology space. Considering the traffic that I’ve seen in the Apple stores, I’m sure that they’re drawing traffic to things other than just the phone. You couldn’t get to a MacBook Pro when I went to the 5th Avenue store at about 3pm on Wednesday when I stopped by. Barring any huge physical defect or recalls, there’s no way that this could be anything but a home run for the boys from Cupertino.

And AT&T certainly benefits as well. I don’t know if they’re getting a piece of the sales from the phone or simply benefiting from the additional revenue from subscribers to the exclusive AT&T contract. Regardless, they will more than profit from whatever they spent on the investment. And quite honestly, they’ve earned it. They struggled through the laughing and pointing after the ROKR launched to no fanfare. For people like me (and there apparently have been many) who’ve decided to switch away from their current carrier for the right to own the phone, they’re getting a first chance (and in some cases a second chance) to impress people with this so-called “least dropped calls” network.

It’s been said that the public doesn’t benefit, as they are losing the ability to choose. Amazing how this only becomes a factor now. This is the way it’s always been in this country. If you want a SideKick, you better not be with Verizon. And every carrier has a BlackBerry, but perhaps not the model that you want. Sure, it’s tough to have to choose a carrier for the device, but the kids who slide their SideKick screens and type away don’t seem to mind. I agree that it’s a bit unfortunate, but going back to my feelings about the importance of controlling the user experience, this was a necessary evil.

And that leaves me with one last group who I’m sure is walking around with their eyes drooping down these days. Oh yes, that would be the good old phone carriers who don’t carry this phone. Sure, it sucks for them, but it’s impossible to feel any compassion for these companies (AT&T included) who’ve been just abusing us with fees and regulations for years. I had a good hearty laugh when I read the Verizon Wireless, “we’re sorry you’re leavin'” message. Perhaps had they listened to the requests of the hardcore techies earlier, we may have avoided this. Even without the damn iPhone. I think I’d have been willing to stay with Verizon. Certainly the network was stable. And I don’t care that the customer service sucks — I’m sure all of the carriers have sucky phone support. I just do everything I can to find what I need on message boards and via the web to avoid the dreaded “support call”. But if you’re going to be my mobile phone company, you gotta stay sexy with the devices. And that didn’t seem to be a priority — at least not for Verizon Wireless.

So, when you really take a step back and look at the AT&T and Apple relationship, it really isn’t so strange at all. It’s not a match made in heaven by two business thought-leaders. It’s simply Apple choosing the lesser of the evils. Honestly, I think Apple would have tried to use no phone company if it were possible. Not that they’re perfect — far from it. But perhaps something along the lines of a clustered network — where everyone agrees to have a box in their home or office for the privilege of connecting to the network? Kinda like Bit Torrent, but for mobile phones. Or perhaps use the Wi-Fi network. Sure, it’s not really possible now. But in five years after the AT&T/Apple deal runs out and the mobile phone companies end up as insignificant as the record companies, we may not even worry about what device runs on what network. Oh happy day.


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