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Apple, Jobs played hard ball with carriers

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.




by MacNN Staff

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Comments

  1. climacs

    Joined: Dec 1969

    0

    good!

    nice to hear Jobs busting the carriers' balls... well one carrier's balls at least...

  1. gambit23

    Joined: Dec 1969

    0

    Actually,

    What's good is hearing about Cingular's decision to buck the trend and be flexible. Apple may be able to put out great products, but imagine what could be done with other collaborations?

  1. LouZer

    Joined: Dec 1969

    0

    but...

    So they gave concessions to be an exlusive carrier. Of course, if you can't get cingular, or have vowed never to use them again because of past experience, well, too bad apple.

    And asking for a portion of revenues isn't that big of a deal, as it most likely comes with reduced price on the phone, which, for Cingular, is a good deal. If the iPhone isn't the smashing success every Apple-fan-boy says it will be, it saves Cingular money for all those phones they don't sell.

    And, just remember, if you've got problems with your phone, you're going to have to get Apple to repair/replace it (hope you don't mind being without a phone for several days) rather then just going to the local cingular store and getting it replaced. It took me 4 days to get a replacement (and refurbished) iPod, and that was with taking it into an Apple store. And don't forget to get Applecare for the phone, as I'm sure it'll only have a one year warranty (you'll need it when you realize you can't replace the battery).

    It has been stated that Apple wanted complete control over the phone repair, since they didn't like Cingular's policy of just replacing a bad phone.

  1. climacs

    Joined: Dec 1969

    0

    baby steps

    it's a start... no one else has been able to get the carriers to change their ways. An analogue - imagine if the Hollywood studios and record labels were able to dictate to computer manufacturers how to make their machines, including loading them with a ton of DRM schemes which, for instance, would prevent you from ripping ANY CD.

    That is pretty much the paradigm with cellular carriers, at least in this country. I would love to see cellphone manufacturers eventually gain the upper hand, with cellular providers reduced to the status of common carriers. This of course is exactly what cell providers fear the most.

  1. Eriamjh

    Joined: Dec 1969

    0

    Cingular - AT&T

    Please start being consistent with this.

  1. MacScientist

    Joined: Dec 1969

    0

    re: cingular - at&t

    The company is AT&T. However, it is still known to most of its customers as Cingular. MacNN's use of AT&T (Cingular) ensures that the reader understands that it is reporting on the activities of the same company whether it refers to the company as AT&T or Cingular.

  1. LouZer

    Joined: Dec 1969

    0

    re: cingular - at&t

    The company is AT&T. Actually its at&t, not AT&T. And they're supposed to be changing their name, but they haven't yet (there's still ads for cingular out there).

  1. LouZer

    Joined: Dec 1969

    0

    Re: baby steps

    it's a start... no one else has been able to get the carriers to change their ways. An analogue - imagine if the Hollywood studios and record labels were able to dictate to computer manufacturers how to make their machines, including loading them with a ton of DRM schemes which, for instance, would prevent you from ripping ANY CD.

    Boy, that's a horrible analogy. One's about transmission services and hardware that works with it, the other about computer manufacturers and copyright holder demands. BTW, you are already technically prevented to do anything with movies on your computer, as those are saddled with DRM, and the DCMA, in theory, prevents you from ripping any of that to your computer. And the RIAA could certainly try to do the same thing with CDs and music (hey, and they have tried, too).

    A better analogy would be to compare the cell carriers to cable modem services, and having Comcast dictate what you could and couldn't load onto your computer, and everything that you loaded would cost $$$ to get it there.

    BTW, the only way that the carriers will become more 'user friendly' is if there becomes economically necessary to do so. Apple is not going to be able to drive this to happen, only the consumers can, by NOT paying for all those services they want you to pay for. But, apparently, there's way too many stupid people out there willing to spend the money so they can get some new ringtone on their cell, or email photos, or whatever, that there's no impetus for them to change. Not even if Steve Jobs asks them to.

    Of course, you could also be impressed that there was someone out there who actually didn't just kneel at Jobs' feet, kiss is a**, and say "Whatever you want, we'll give you, oh great and wise one!"

  1. zeasar

    Joined: Dec 1969

    0

    re: cingular - at&t

    "The company is AT&T. Actually its at&t, not AT&T."

    Actually, it IS AT&T, at&t is just PART of their logo.

    "It has been stated that Apple wanted complete control over the phone repair, since they didn't like Cingular's policy of just replacing a bad phone."

    Oh and its just NORMAL practice for us to take our faulty gadgets to the MAKER for repairs, I dont see PeeCee users sending their box to microsoft themselves.

  1. cayofuego

    Joined: Dec 1969

    0

    What if unlocked

    Will the iphone still work with other carriers if the phone is unlocked? Hope so.

    shop.hscene.com

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