updated 11:45 pm EST, Sat February 17, 2007
Apple forces AT&T's hand
Apple's entry into cell phone market will not only revolutionize the handset market, but is also changing the way mobile carriers do business. A new Wall Street Journal report claims that Apple has forced AT&T (Cingular)--its exclusive partner for the iPhone in the US--to "Think Different," forcing the normally heavy-handed mobile carrier to relinquish control of the development process and winning many concessions from the largest cell phone carrier in the US. The report also claims that Apple has negotiated to a deal to share a portion of the monthly revenues from subscribers, changing the way handset makers and retailers do business with mobile carriers.
"Apple bucked the rules of the cellphone industry by wresting control away from the normally powerful wireless carriers," according to the report. "These service providers usually hold enormous sway over how phones are developed and marketed -- controlling every detail from processing power to the various features that come with the phone." Jobs reportedly was also very dismissive about the abilities of mobile carriers to understand their consumers' needs and other technology trends.
The report says that Cingular agreed to leave its brand off the body of the phone; however, during the iPhone demo at Macworld Expo in January, the 'Cingular' brand appeared on the screen of the handset. In addition, Cingular also abandoned its usual insistence that phone makers carry its software for Web surfing, ringtones and other services, the report said.
Only three executives at AT&T (Cingular) earned the privilege to see Apple's iPhone before it was announced, the report claims. AT&T was willing to play by Apple's rules to become the exclusive mobile carrier for the iPhone in the US and also prevent its rivals from offering the device. Previous reports claim that Cingular has a five-year exclusive agreement.
"Top Cingular executives were willing to cede control to Mr. Jobs and tolerate his digs at cellphone carriers, all for the privilege of being the exclusive U.S. provider of one of the most highly anticipated consumer electronics devices in years -- and to deny rivals a chance to do the same," the publication wrote.
Apple, however, first began peddling its consumer device to Verizon, but Apple's "rich financial terms" and other demands were the primary reasons that Verizon Wireless, the No. 2 cellphone carrier in the US, passed on the chance to be the exclusive distributor of the iPhone almost two years ago.