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View Full Version : Could Apple Destroy The Cell Phone Industry?


Rocco Augusto
09-16-2007, 12:10 AM
<div class='os_post_top_link'><a href='http://www.news.com/8301-10784_3-9774864-7.html?tag=nefd.only' target='_blank'>http://www.news.com/8301-10784_3-9774864-7.html?tag=nefd.only</a><br /><br /></div><em>&quot;Remember when I told you that I believed Google could kill the cell phone industry by participating in the wireless spectrum auction? Well, what if I told you that Apple may participate in that same auction and the possibility of it destroying the cell phone industry is just as great? First off, Apple has the necessary funds in the bank to buy the wireless spectrum right out from under Google. Sure, it may seem like an unlikely battle because the two companies are practically in bed with each other, but let's not forget that this is business. Now that we have the financial element out of the way, we should consider the impetus for such a move. Well, if the past few weeks have been any indication, Apple is in no way happy about its relationship with AT&amp;T and would probably do anything it could to get out from under it.&quot;<br /></em><br /><img border="1" alt="" src="http://images.thoughtsmedia.com/resizer/thumbs/size/500/spt/auto/1189886844.usr8.jpg" /><br /><p style="margin-bottom: 0in;"><br /></p><p style="margin-bottom: 0in;">Wow... I love how everything is magically better in the land of make believe. For starters, when exactly did Google and Apple start sharing a bed? I wouldn't call a few widgets for the iPhone and intimate relationship and I definitely wouldn't try to make their relationship sound as thrilling and exciting as an episode of Dallas. Also how in the world could Apple be upset with their relationship with the new AT&amp;T? From my understanding, Apple managed to strong arm themselves into an arrangement that not only gave the one trick pony of a company a large profit margin on their handsets, but also gives them a cut of the profit AT&amp;T makes each month by forcing customer to activate their phones with data packages that they might not even use or want! If anyone should be upset, it should be the other handset makers that have been marking phones for the carrier for years and have to sit back and watch as the newcomer gets all of the special treatment. </p>

Mark Larson
09-16-2007, 01:31 AM
Wow, I don't know where to start...
Also how in the world could Apple be upset with their relationship with the new AT&amp;T? From my understanding, Apple managed to strong arm themselves into an arrangement that not only gave the one trick pony of a company a large profit margin on their handsets, but also gives them a cut of the profit AT&amp;T makes each month by forcing customer to activate their phones with data packages that they might not even use or want!

Looks like you're sympathetic to AT&T. First off, nobody was strongarmed. Apple went to Verizon first, didn't get what they wanted, then went to AT&T. ATT was fully within their rights to refuse Apple's terms, but they didn't. How is that "strong arming"?

Customers are also not being "forced" - AT&T is just saying that if they don't want to activate with a data plan, they don't have to activate with an iPhone at all.

If anyone should be upset, it should be the other handset makers that have been marking phones for the carrier for years and have to sit back and watch as the newcomer gets all of the special treatment.

This is not a playground where everyone plays by teacher's rules and everyone gets a turn. This is business, and Apple came up with a bombastic product that is making MS, Palm and everyone else quiver in their boots, and AT&T recognized a blockbuster when it saw one. Its Samsung, Motorola, Nokia etc's fault that they don't deliver compelling enough products that the carriers bow down to them.

Remember what happened when Nokia wanted AT&T to leave their phone's wifi in? AT&T didn't buy Nokia phones for almost two years after that.

The carrier subsidized model is broken, and Apple is taking full advantage of it.

Rocco Augusto
09-16-2007, 05:48 AM
Looks like you're sympathetic to AT&T. First off, nobody was strongarmed. Apple went to Verizon first, didn't get what they wanted, then went to AT&T. ATT was fully within their rights to refuse Apple's terms, but they didn't. How is that "strong arming"?

Customers are also not being "forced" - AT&T is just saying that if they don't want to activate with a data plan, they don't have to activate with an iPhone at all.

I'm nowhere near sympathetic to AT&T, with the current price drop of iPhone handsets only two months after release, I believe all iPhone customers should have been granted cash refunds instead of this gift card joke. If Microsoft would have pulled a stunt like this there would have been cries of class action lawsuits left and right. This is just another example of both AT&T and Apple screwing customers.

As for strong arming, I hear he stories day in and day out from the people I know in AT&T corporate still about the constant threatening by Apple to take the iPhone to T-Mobile if they didn't get a cut of the monthly fees or didn't get to control the phone activation process or didn't get a huge cut on hardware costs. AT&T eiither played by Apples rules or lost out to thier main GSM competitor. After the PR nightmare of yet another name change, AT&T couldn't afford this loss and Apple knew that.

This is not a playground where everyone plays by teacher's rules and everyone gets a turn. This is business, and Apple came up with a bombastic product that is making MS, Palm and everyone else quiver in their boots, and AT&T recognized a blockbuster when it saw one. Its Samsung, Motorola, Nokia etc's fault that they don't deliver compelling enough products that the carriers bow down to them.

I doubt the iPhone is really the blockbuster everyone thinks it is. if it was than there really wold have been no reason to cut the price so fast. Heck, even the RAZR sold more handsets at the $600 price tag than the iPhone did. While the iPhone does have style, thats all it has which is why AT&T is still selling tons of Palm, Blackberry and Windows Mobile handsets each day. Aplle hasn't changed the game, they havejust shown us that some people will by anything. ;)

Anthony Caruana
09-16-2007, 07:46 AM
Gee I'm glad i don't have to get a cell phone deal in the USA. Life is much easier in Australia (where I am). Jumping between carriers is easy, we have full number portability (transitions between carriers happen while you're in the shop) and pretty much every handset can be purchased unlocked so you can cherry-pick carriers. If you happen to buy a carrier-locked phone because of some sweetheart deal, when the contract's over the carrier has to unlock it.

I'm not sure who is responsible for the way the Apple/AT&T deal is playing out but it looks to me to be the result of poor market and regulatory design. Both businesses are trying to do what's best and the market design means that the customer gets shafted.

One other thing - if Apple bought some spectrum and set up their own network they'd still have to make a deal woth the other carriers (I assume) so that their customers could make calls between networks. I'm pretty sure AT&T, etc won't do that for free.

Mike Temporale
09-16-2007, 02:00 PM
There's little chance that Apple will pull out of it's agreement with ATT. I'm sure both had lawyers reading over the agreement for months and months. If anything, the next release of the phone would be on another carrier.

I've heard lots of stories about other carriers that are in negotiations with Apple to carry the iPhone and the battles that have come up over adding the carriers name to the front of the phone. We're not talking about removing apple or iphone. Just adding "CarrierX" to the front of it.

Microsoft has been in this arena for a while now and have played by the carriers game from the start. Microsoft can't release updates to Windows Mobile because the carriers want to test the update first. Apple has managed to do it their way because the carriers are desperate to carry the iPhone. It just goes to show what some good hype can do for negotiations. ;)

kdarling
09-16-2007, 02:19 PM
Too many myths being repeated.

1) Apple went to AT&T first in early 2005. In mid 2005 they ALSO approached Verizon. The idea was to sell two versions of the phone. Verizon said no to all the control Apple wanted. Apple later signed an exclusive with AT&T, which was smart only on the latter's part.

2) All carriers subsidize their phones. Apple demanded that the subsidy go to them, not to the customer. Since this was no skin off AT&T's back, they agreed.

3) Repeat: Apple gets your subsidy (~$300-400 over two years), so you still owe AT&T a $175 ETF because that money was paid out. It was simply given to Apple, not you. And that's on top of the 100% hardware markup until recently.

4) Apple further demanded that only they have control over pricing, sales locations, and warranty work. So any gripes about those areas should be pointed solely at Apple. AT&T simply provides the bandwidth.

5) AT&T didn't even see the phone until December 2006.

Jason Dunn
09-17-2007, 01:29 AM
If anything, the next release of the phone would be on another carrier.

I always thought that the exclusive AT&T had with Apple was for all iPhones for a five year period, not just one phone...

aristoBrat
09-17-2007, 06:23 PM
For starters, when exactly did Google and Apple start sharing a bed? I wouldn't call a few widgets for the iPhone and intimate relationship and I definitely wouldn't try to make their relationship sound as thrilling and exciting as an episode of Dallas.
Wonder if they're talking about Google's CEO being on Apple's Board of Directors?

Jason Dunn
09-17-2007, 06:40 PM
Wonder if they're talking about Google's CEO being on Apple's Board of Directors?

Indeed, I think that's exactly what they're talking about - that's not something you can underestimate...

Mark Larson
09-17-2007, 06:54 PM
I'm nowhere near sympathetic to AT&T, with the current price drop of iPhone handsets only two months after release, I believe all iPhone customers should have been granted cash refunds instead of this gift card joke. If Microsoft would have pulled a stunt like this there would have been cries of class action lawsuits left and right. This is just another example of both AT&T and Apple screwing customers.

I speak from the POV of someone who didn't buy an iPhone, but the reaction was over the top - in EVERY hot new tech product, there is an initial hype period and the price drops after the hype cools off. How many of us have paid more than $600-$700 for hot new HTC devices?

As for strong arming, I hear he stories day in and day out from the people I know in AT&T corporate still about the constant threatening by Apple to take the iPhone to T-Mobile if they didn't get a cut of the monthly fees or didn't get to control the phone activation process or didn't get a huge cut on hardware costs. AT&T eiither played by Apples rules or lost out to thier main GSM competitor. After the PR nightmare of yet another name change, AT&T couldn't afford this loss and Apple knew that.
I don't see that as strong arming, that is just business as usual.

I doubt the iPhone is really the blockbuster everyone thinks it is. if it was than there really wold have been no reason to cut the price so fast. Heck, even the RAZR sold more handsets at the $600 price tag than the iPhone did. While the iPhone does have style, thats all it has which is why AT&T is still selling tons of Palm, Blackberry and Windows Mobile handsets each day. Aplle hasn't changed the game, they have just shown us that some people will by anything. ;)

I think the original RAZR showed us that people will buy anything if they're told to by the IB. :)

The iPhone is game-changing - for $399 you can get a Mogul or an iPhone. Which would the average consumer prefer? MS and HTC need to step it up, MS has rested on its laurels far too long with the ugly and non user-friendly UI of WM.