RIM to AT&T: You’re Being Screwed.
During a friendly debate between The Boy Genius and myself the other night, the oddity that was the deal between AT&T and Apple (and all of the potential power that was given to the manufacturer) was one of the major topics of conversation. It was surmised (by me) that AT&T is being treated like a little <explicative> by Cupertino-based Apple, Inc. This would pertain to, among other things, the fixed pricing of the iPhone and the inadequate stock of devices found at AT&T stores. We all heard about how many AT&T stores depleted their stock of iPhones within minutes of re-opening the stores but there was nary a report of any Apple stores selling out on iFriday, despite rumored sales numbers in the thousands per store.
Well, it doesn’t seem like I’m the only one who thinks that the deal between AT&T and Apple may signal troubled waters ahead for the consumer and corporate customers of carriers. Research In Motion Co-CEO Jim Balsillie mirrors these sentiments, albeit a bit more professionally, by stating: "It’s a tremendous amount of control. And the more control of the platform that goes out of the carrier, the more they shift into a commodity pipe."
Well Said, Jimbo.
BG and Josh’s responses below.
Boy Genius:
Not really, Jibi. He’s mad because there is no carrier branding, and you have to activate the iPhone through iTunes? Get real. Over 300M people have iTunes, and most people buying an iPhone already have iTunes installed. Is this part of some mass scheme Jobs has come up with? Maybe…..but who cares? It provides more revenue to the manufacturer (assuming they have the clout to get a piece of the wireless service fees) and the wireless carrier. It cuts down on sales people bothering the crap out of you to choose more add-on plans, etc.
Additionally, iTunes is merely a conduit of information directly to AT&T. You don’t really think that Apple is doing credit checks, and upgrading subscriber’s accounts do you? You lost that point. He’s pissy because his monstrous company doesn’t have the power to dictate what they want to the carriers……Alas, still no Wi-Fi BlackBerry devices, yet you were the one who was so eager to point out to me that RIM has had a patent for seamless call hand-offs between GSM networks and Wi-Fi networks since mid-2005, right Jibster? Oh, ok. If RIM really gave two craps, they’d have been more insistent and consistent with what they wanted in regards to carrier implementations. What about the branding aspect? Jim is mad because the iPhone isn’t branded? Please just stop. I hate to break it to you Jimbo but, if you see an iPhone in the United States for the next couple years, I can almost 99% guarantee you that particular iPhone will be an AT&T iPhone. In fact, I think you’d be hard pressed to find anyone that knows what an iPhone is, that doesn’t know what carrier it’s on in the United States. You can’t honestly think your products look "cool" anymore though, right? That’s why you’re upset? Oh I know why…because that "consumer" market you desperately tried to grab so badly just went down the tubes. You’ve been reduced to Government, and business sales again. Wait…..now I know why you’re mad. Aw, because your #1 BlackBerry carrier in the entire world just gave you the cold shoulder. They weren’t returning your emails, because they were so occupied with launching the most hyped consumer product in history! I get it now. How about some real innovation…
The problem as I see it with RIM, and their software, is that they started out with email. They were, and still are the best in the business as an email device. They have tried hard to support modern age functionality like media, a camera, and other things, yet the issue is that their OS has to change. Looking at it from Apple’s perspective, they used an actual computer OS and took the bits and pieces they saw would fit on a wireless device. They already had the base of something great, whereas you had email. Tough luck. I know this might sound like an anti-RIM rant, but the fact is things have to, and will change up at Waterloo. Just wait till the iPhone supports full Exchange integration with push email, the boys up North will really be shaking in their mountain boots. Apple is Apple, and AT&T did AT&T. If anything, this is a huge revelation in terms of how a wireless carrier should be. They provide the service, and get the hell out. Have fun at that John Mayer concert, guys.
Josh:
Companies are clamoring to come up with their own iPhone alternatives, releasing "hot new products" that seem to be thinly disguised attempts at integrating a bit of the Apple magic into their own newly-antiquated devices (Think HTC Touch). This is not to say that the iPhone does any one thing remarkably well, and it is missing some key features that make it next to useless for hard-core business users (Think true push email and 3G, not to mention a replaceable battery and a tactile keyboard). Nevertheless, Apple has marketed the device in such a way so as to make it look and feel like that long lost younger brother you never knew you had. Now RIM’s #1 guy has just gone on record deriding Apple for "taking advantage of AT&T." He cites the unprecedented length of exclusivity (5 years), complete lack of any AT&T branding, and proprietary non-AT&T iTunes activation process as proof of Apple’s stranglehold. Take a look at his concerns:
The lack of AT&T branding is, more or less, a moot point. Anyone that has turned on a TV or logged onto the internet during the last 6 months knows that iPhone is an AT&T device. The marketing gurus on both ends have done a pretty good job of informing us on that point. All of the marketing material, in addition to the information on both the Apple and AT&T websites clearly mark the iPhone as being an AT&T product. While the lack of physical branding is certainly unprecedented for a carrier supported phone, it by no means erases any trace of carrier association. Add to that the fact that these phones are not subsidized by AT&T, and it’s easy to understand the lack of physical branding. iTunes activation is, more than anything else, a time and energy saving measure. 300 million people have a copy of iTunes. Chances are good that your average iPhone customer is one of those 300 million. Instead of forcing prospective customers to languish in absurdly long lines (imagine how the launch and sale of 500,000 phones in a single weekend would have occurred if every customer was forced to activate in-store) to accomplish a simple task, Apple has streamlined an existing process. Nothing more, nothing less.
Balsillie contends that the launch of the iPhone represents a move away from carrier control of the wireless industry and towards the dawn of a new age in which handset companies have the upper hand. Regardless of whether there is any merit to his argument, shouldn’t this represent a positive shift for RIM’s CEO? Carrier control has led to botched launches (think Blackberry Pearl), crippled features and specs (think every Verizon handset), and more. Shouldn’t Balsillie be rejoicing at the prospect of this shift in power? However the dust settles, one thing is certain: The wireless industry has been forever changed, and no amount of complaining or finger pointing will bring back the "good old days." RIM, as well as the Motorola, Nokia, Samsung, HTC and SE, et al. best take careful note of Apple’s process, and hope like hell that they can ride the wave that Apple has initiated. Being a consumer never felt so darn good!
Jsc….You nailed THE point as to why corporate IT won’t support e-mail sync (and not just Exchange) on the iPhone even if MS Active sync becomes possible.
Even Gartner is telling corporate America to steer clear of corporate e-mail on the iPhone. And to back that up with real world evidence, I know of at least 5 CSO’s that already told their CEO that until the iPhone can be managed like a BB from a BES server, it aint gonna happen on their watch.
Maybe if BG hadn’t left the conference in Orlando too soon, he’d realize that there is more to RIM than just the BB’s.
I was wondering about the first day the iphone came out. I do feel that at&t is a fool for having the iphone on there network but not truly benefiting a lot from it. I feel that apple is basically running every aspect of the iphone. But then again on the other hand if at&t did pass up an offer like this they would probably never ever get a huge oppertunity. I guess at&t did this to set them apart from all other carriers.
I’m not really sure I understand just how Apple is “sticking it to the man”. Consumers have to buy the iphone at a non-subsidized price, yet, they still have to sign a two-year contract. Just how exactly, is this benefiting consumers?
The choice to buy a non-subsidized/non-feature-crippled device, has always been there.
I’m all for less control by carriers. However, ATT IS going to get screwed more than they think IF the iPhone can get truly unlocked. It’s already almost unlocked- now it’s just a matter of seeing if it can be activated and used on another carriers network without iTunes getting in the way. That could be the reason right there why ATT let Apple and iTunes take control- to prevent the iPhone from being used on other carriers. So in essence– it may seem that ATT is getting pimped by Apple, but really, it is ensuring they don’t get screwed by hackers and other carriers wanting to steal some of their iPhone pie.
ARHYTH, they knew the hackers would tear the phone apart. Thats why I think they didn’t do the rebates on the phones, in case they were unlocked then at-least at&t made something off the device. Everyone is so worried about the BB corp. model, however after one year look at the amount of BB in use compared to iphones, they can both exist because their are plenty of smartphone customers.
Nonsense. Some genius. Keep thinking like current handset makers and American cellphone carriers. They are clueless and the reason we are so far behind Europe and Asia in what’s available on our phones. Apple is the first to break this Wall Street short-term-profit-driven-foot-dragging mentality of carriers and handset makers.
AT&T will be laughing all the way to the bank a year from now when their faster network becomes ubiquitous and iPhones are much speedier and feature-laden than they are now. And if AT&T has the nerve to continue to allow Apple to help them innovate, then they will reap the benefit of thinking different(ly).
IT people are all too often the tail wagging the dog. It’s their job to find solutions, not dictate policy for their own convenience. CEOs are going to fall in love with the iPhone, and IT departments are going to be tasked with implementing iPhone access.
Apple already is working on an Exchange solution (as if Exchange isn’t already some boondoggle that’s been foisted on corporate America). And they will also no doubt have a solution for wiping the iPhone remotely. Apple, after all, controls the hardware and the software. How hard can it be to create a corporate iPhone just for that purpose? And one without a camera, too!
An IT person where I work has already shown some foresight by saying if those two things are taken care of, they will be happy to add iPhones to Blackberries and Windows Mobile phones to our world-wide corporate network.
It’s not like Blackberries and WM Phones are all that great to begin with.
Eric –
Perhaps your IT department is more “forward-thinking” than many others, but just because you want to run your iPhone on the corporate network doesn’t change the reality for most companies. The iPhone is a pretty UI; nothing more. CEO’s will NOT sacrifice network security for a pretty toy, unless it plays nice with everything else. Further, the solution has to be ubiquitous, consistent and supported – no “open source” garage-ware is going to suffice for the enterprise when it comes to wireless device management. At&t, a year from now, will be just another monolithic wireless carrier with many of the same problems it has today. They will also be at a point where the surge in new iPhone customers has subsided and they will be looking for a new revenue source…
At&t’s “faster” network is no faster (worse, if you are looking at latency) than Verizon’s and Sprint’s. They have some serious catching up to do in coverage area, that’s for sure. And do you think the competition will be sitting on their hands this whole time, crying in their milk because they didn’t sign up to be Steve Job’s gimp?
Apple won’t the company to give it to them. In two decades, Apple has failed to capture the interest of corporate IT departments, either from a lack of desire or a lack of direction in that arena. I just don’t see the iPhone – a purely consumer-oriented device – being some kind of golden key that unlocks the doors to the enterprise IT departments.
RIM is more likely to tap into a huge pent-up corporate demand with Enterprise-friendly VoIP integration embedded into the device (and more importantly, back-end). The goal – Seamless handoff between corporate wireless and cell networks – all with end-to-end encryption and device policy control. And ask most corporate types that deal with wireless (and data) carriers the absolute LAST company they would ever want to deal with when it comes to playing nice with an Enterprise IP-PBX system? Oh yeah, At&t. (Admittedly, VZW is probably second worst in that realm).
Yes, it is IT’s job to find solutions, and I can say, unequivocally, that the iPhone isn’t an enterprise solution. It isn’t even close.
The US trails Europe and Asia in some areas when it comes to wireless, and is sufficiently equivalent in others. The simple fact that the FCC did NOT mandate GSM as an air interface actually has driven wireless data innovation at a faster pace than it likely otherwise would have occured. The 3GPP based (in large part) their next-gen wireless standards on progress made in data and lessons learned by US-based CDMA carriers (and vendors, like Qualcomm). These advancements only came about as quickly as they did because the US-based carriers were allowed to try something “different” – something most European carriers claimed could never work.
…
“The iPhone is a pretty UI – nothing more.”
Sheesh, might as well have a tatoo on the forehead:
“I don’t get it.”
You’re probably right about security keeping the iPhone off corporate networks for some time into the future. And wireless tehcnology being not as bad as it seems to us regular consumers. But the fact of the matter is, Apple can design a business phone if they want. And yes, it is might be consumer-oriented at this point, but that doesn’t mean they can’t fix it and make it better. But you’re right, it does mean Apple has to get serious about the enterprise.
But to claim it’s just a pretty UI just means you’re like all the handset makers out there who think all you have to do is slap features on a phone and get it out and it’s “as good” as the iPhone.
They are “genetically” incapable of making a user interface that can match the iPhone. They are engineers. And products designed by engineers are like the proverbial camel being a horse designed by a committee.
They will need to take a few wacks at it before they’ll be able to compete with the iPhone. But of course, some people will proclaim any piece of junk as just as good as the iPhone, simply out of hatred for Apple. But in the meantime, Apple will be making better phones. The iPod naysahers in 2001 said it would never fly. I see history repeating itself. To this day, some people claim that not having an FM radio on an iPod makes it inferior!
The next couple years are going to show just how bad phone makers are at comprehending the value of user experience. Maybe they’ll catch on, but only if they actually hire some real designers who have veto power over board members at Motorola, Nokia, Sony, etc. And yes, I know that’s backwards to how it works now. Thus my skepticism.