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!
I just want a Kaiser….
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if anyone is worried about the future of RIM, have a look at their stock right around the same time iPhone lanuched…seems like the marked wasn’t too worried.
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AT&T should be more worried about the precedent … that they’ll allow a manufacturer to dictate pricing and without AT&T getting a cut on the hardware. Sure, they’ll hopefully make it up on the contract (and those ridiculous ETFs), but they allowed Apple to go and change the business model just so they could get an exclusive on a pretty phone.
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Yea
They gave out dividends. BGR also posted something on it.
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What do you make of the fat that these types of comments/complaints were nowhere to be found on the conference call when they reported on June 28th, pre-iphone launch? In fact, he welcomed the competition, called it a major positive for the industry and them, and positively beamed about what a great thing it was for RIMM. Now less than 2 weeks after the actual launch, he’s expressing concern for carriers calling it “dangerous”?
If you own some stock, take your gains. Thank me in 3 months when they report.
And Rob, from our perspective, we should be rejoicing. Carrier domination is why the US cellphone industry and device choice is so awful, this is the first thing that has the potential to change that as both Josh and BG correctly point out.
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CB, I could not have said it better myself.
Every BB user is so over sensitive on every iphone comment. Relax and benefit from Apple breaking the Industry Model.
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Man!
I have not heard BG get that heated up in a while! Testify!
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Jim B. is just hating because millions of people would not line up days in advance to buy a Blackberry phone. Who would spend 600 dollars on a Curve? Jim B. needs to step up his game instead of crying over a sweetheart deal for Apple shareholders.
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“true push email and 3G, not to mention a replaceable battery and a tactile keyboard”
Jibi has summarized the downside of the iphone well. I bet Apple fixes two or three of the four issues. HTC and Blackberry will still have better keyboards.
Iphone is pulling the other companies to make better products - for sure. So the customer wins. Thanks, Steve.
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It’s not even about that. BlackBerry needs to sit back, keep their mouth shut, and play their part. Will RIM’s business dominance come to end? No, not for a very very long time. But, their consumer market just went down the tubes. I’d love to see their numbers for this quarter.
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AT & T is getting screwed? Please. I’m sick of purchasing subsidized smart phones for $400 to find that ports are turned off or front facing cameras (ala Tytn) are pulled out. Whatch the Kaiser launch with AT & T this fall, Ill buy Boy Genius lunch that the camera is sucked out of the front or some other carrier crippling magic has been smacked onto it. I’m sick of finding out that the carriers are disabling / limiting WIFI features (Read Skype, VOIP) that would otherwise benefited the consumer that is already paying through the nose in $30-50 Data plan add ons. Way to go Apple. You get down and control that carrier, and control `em good.
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BG is exactly right. But watch out the BB users are gaining in fanboy status. consumers benefit because of this change in the structure of the industry.
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Come on what did At&t really lose? Having their technical and marketing people work on branding and styling for the iphone? Figuring how to keep it cool and, keep it Apple? Worrying about credit for customers because they brought a lot of devices at cost and sold them subsidiezed?
NOT!! Their marketing and technical departments could get on with how to better market the At&t branding on new handsets. Plus how many people already renewed contracts that were former At&t wireless or Suncom customers recently and brought the iphone just because it was the iphone?
What did At&t actually do? Cater to the sale of a phone that was originally made to cater to its’ network and not one overseas. How many manufacturers do we have otherwise that do this in the U.S.? Why hasn’t RIM released any 3G devices through it’s biggest carrier/customer to help promote the network. It has for Sprint and Verizon. Even giving them 3G plus the ability to go worldwide now. Still no 3G love for At&t. At&t was smart for a change and went with someone that marketed them as well as a great network able to sell a phone that carries a brand name just as strong or stronger than Nokia, Samsung, Rim, etc. But At&t this time is the premier network for the device. Apple is a perfectionistic company behind the iTunes brand, so they are gonna work with At&t to make sure this phone works well also on At&t’s network. As this phone shines so does At&t.
Think about this is not a device another carrier overseas released first. It’s a GSM device that was released right here at home first and, they are the droolers for a change. We for the first time got to buy an unsubsidized device and, they had to wish they could get one. And its’ not a CDMA device that has to be greatly changed. Just needs to be sold for overseas use.
Thanx At&t and Apple. The American phone like baseball, apple pie, hot dogs, and chevrolet.
Sorry, you missed your chance to return to the spotlight Verizon.
At&t was a smarter choice anyways Apple. Tweak and debug for At&t and it will be world friendly unlike a CDMA device.
Posting from an 8525. Writing this makes me wanna go out and buy an iphone, ha ha.
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Wow, the only reason Verizon and Sprint BB’s are labeled “World Phone” is because they had to add something in the hardware to convert CDMA into a world capable phone…in that sence, they are correct. at&t, however, runs off of the GSM network, not CDMA…so no tweaks or reformats were needed to make it a “World Cabable” phone. Honestly, Verizon and Sprint (Spr-extel especially!) needs to catch up with the times!
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Well said Josh, you make valid points. BG unfortunately comes across as immature and short-sighted, which I didn’t quite expect. Maybe I haven’t been reading long enough.
“Just wait till the iPhone supports full Exchange integration with push email, the boys up North will really be shaking in their mountain boots.”
You over-estimate Apple’s ability to penetrate the corporate market. I don’t doubt that Steve will try to bring better Exchange support to the iPhone, but it will have next to zero impact to RIM or any other smartphone maker holding market share in that area. Apple is a consumer electronics company first and foremost and always will be. Just look at the numbers for the Xserve.
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Thanks for the comment, J. My point is that RIM’s latest goal is to be relevant in the consumer market instead of corporate. They have lost a ton of potential subscribers to the iPhone. Forget the hype for a second surrounding the iPhone…I know many people that use Exchange servers in their company that would switch at the drop of the dime if the iPhone had true Exchange support. It goes back to what the individual is looking for. An email-centric device that does email fantastically or something a little more fun that can offer an amazing amount of features as opposed to just email and a crappy OS. To each their own though…
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Apple has definitely changed the game and all handset makers will have to adapt quickly. However, I wouldn’t count RIM out just yet. The market in China just opened up to them and many people will not drop $500/$600 on a cell phone. Right now I can get a Curve free with 2 yr contract with AT&T but have to pay $600 for the iPhone. That’s still a huge factor for most customers.
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I agree with Balsillie. I don’t get why people can’t see beyond the present. If the future of the mobile industry follows Apple’s lead, we will all end up with LESS of a choice. Not more. Don’t be so shortsighted people. If manufacturers demand the same treatment as Apple, we will only have the choice of the heavy-weights.
So what is so great about what Apple has “achieved”? Taking the service provider out of the game will only get you, as Jim said, “a commodity pipe” where the telcos fight for the “next big thing” leaving all other competition to the dogs. And that is a BAD thing for consumers.
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umm.. since when was a majority of the consumer market able to afford $500+ unsubsidized phones with voice/data combined packaging plans? I give credit where credit is due and the apple debute was quite a coming out, but to go so far as to say RIM has no real consumer market left to sell to is pretty ridiculous.
The current RIM consumer devices (and future) will most likely cost no more than $300 with a contract (and lower with internet specials, mail-in rebates, instant rebates etc.) Price plays a big role in many a consumer’s mind (one of the reasons the pearl has had continued success *reference “make $75 buying a pearl”*). Setting aside the features, the price alone (with contract) is enough limit the potential customers the iPhone can attract.
There is still plenty of consumer pie to go around for the pearls, curves, sidekicks and other multimedia/messaging devices. Why fight over one 1 slice? there’s still 11 other slices to go around. ;0)
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alsos this issure rasied the issue of forcing att an oher GSM carriers to pgrade their net we are stil still stuck on EDGE witch is just an extended version of GPRS
wile eroupe has HSDPA alover the place
attt as 1 or 2 hs dpa nets
Rogers HSDPA is up across the board.
the teco needds to get real.
the iphon issue
The iphone makes you enslaved to apple an itunes
an is completly web driven lik the danger sidekick an all it’s apps are webbased.
what happens when you loos your web srvice
NO/ phone serice
BB’s appz can run without srvice as they ar stored on the devices memory.
bassile has a point
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the iphone triumphed in bringing smartphones to the “consumer” market and opening the US market to the unsubsidized equipment pricing it has missed since the 80’s.
Rim is trying to make a big play for the “consumer” market with it’s Curves and Pearls but the truth is they dont do the media-centric tasks better than an iphone. The iphone is a simple conduit to more advanced features on a phone for a great many.
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Here’s some of my points following the original posting, the rebuttals and the comments.
1 - RIM has been garnering for the untapped consumer smartphone market. About 6 months ago or so, that market was wide-open for business. This included a market that was ready to pay $400-600 for a new device, such as the BlackBerry Pearl or T-Mobile Dash (HTC Whatever) or the BlackBerry Curve, etc. Apple really hit this market hard and heavy and I will say that they have definitely made the most appealing consumer market smartphone device to date.
2 - In terms of corporate support and ventures, Apple is well-aware of their next stop on the SmartPhone Train Depot, already pumping up various personnel in corporate-oriented sales and engineering teams for THIS revision of the iPhone.
3 - With the previous said, it doesn’t appear these teams really know much about corporate business. I’m not really sure what their penetration success has been into the corporate and government markets, so perhaps I’m way off-base, but something tells me I’m not. I’ll leave it at that.
4 - @Rob, I agree almost whole-heartedly.
5 - @CB, carrier dictation and domination in the United States has had only a marginal impact on why we’re so far behind. This doesn’t plague just the wireless market, so one could contend that not only our ‘holier than thou’ approach to global economic dominance (of which we’re slipping), in addition to competition within a free enterprise model, has ultimately put us in the middle of the pack when it comes to new technologies adoption. Arguments can be made many ways, but I don’t think it necessarily has to do with the carriers and their leadership teams.
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Three cheers for the new world…
Hip-Hip-Horray! RIM gets a little pressure to really build a better device (and the Nokias/Motos/SEs/HTCs/Pantechs of the world too). RIM needs to spend some of their billions on marketing, and R&D, if they want to act like a real company.
Hip-Hip-Horray! RIM and the others have to finally address their reliance on carrier subsidies, and stop sucking on Ma Bells teat. Build products that are worth the money and people will pay for it.
Hip-Hip-Horray! AT&T should be kneeling on it’s knee for what Apples been able to do for them in such a short time (if rumors that as many as half the people who bought iPhones are new or switching). And if rumors of wireless MS-ActiveSync are true, AT&T should get down on both knees, because once that happens, corporate America is surely going to buy lots and lots of iPhones.
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On Jul 9, 2007 @ 7:05 pm, The Boy Genius Said:
“… Forget the hype for a second surrounding the iPhone…I know many people that use Exchange servers in their company that would switch at the drop of the dime if the iPhone had true Exchange support.”
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Here’s the problem with that statement, BG: users may want to switch to an iPhone upon support of Exchange, but corporate IT-types generally know better than to allow it. The iPhone has to get the blessing of the corporate IT department, which is very unlikely for the foreseeable future. One of the main reasons the Blackberry is so well liked by business is not just the Exchange integration, but the just-as-important security and policy control. Apple may find to a way to do oma/direct push integration with Exchange, but I don’t foresee a security “wrapper” on the iPhone OS that allows corporate control of the device down to the component level (like BES). The existing Windows mobile platform has a bare-bones version of this, and that’s a big reason it hasn’t chipped away at RIM anymore than it has in that space. WM6 and Exchange 2007 improve on it, but in the corporate world, these kinds of upgrades come s-l-o-w-l-y. Apple has never chosen to play nice with corporate IT, and frankly, either doesn’t know how or doesn’t care. Until they - or a third party - figure it out, they won’t be singing the same tune as Blackberry (crappy OS and all) when it comes to enterprise e-mail.
This doesn’t even mention the $500+ price tag (vs $100 or less for a bberry in quantity), the locked-to-Apple activation system, and really doesn’t speak to the nightmare that At&t has become to deal with in general. Couple those issues with the return-to-Apple service and battery (wtf?) replacement, and no CIO or VP of IT that wants to keep his/her job is going to approve it for large-scale deployment.
That’s my $0.02…
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It’s a big and expanding pie. This is a nascent industry - only a little more than 100 million smartphones will be sold in 2007 out of over 1 billion globally and about 3 billion mobile phones users. That’s only 10% but that number is growing at least 25% annually. RIM shipped 8.5 million devices or so over the last 12 months and has just over 9 million users. Apple’s goal of 10 million by end of 2008 still leaves plenty of sales opportunities for competitors.
Look at RIM’s distribution model (carriers are partners and they sign up as many as possible because their core technology is common and is network agnostic) and the fact that they have 300 carriers in over 100 countries. Apple’s model is to sign up one carrier in each country. The numbers just don’t add up to Apple significantly affecting RIM in the short run. Even if Apple signed up with carriers that had 50% market share in their respective countries, RIM would still grow significantly. Oh, and this process will take some time, especially if Apple really is getting a pound of flesh from the carrier.
So I love the spirited debate, but the truth is value added device makers like Apple (slick interface, full web, media, etc) and RIM (guaranteed email, wireless policy settings, remote wipe, PBX integration (now that’s something that no one is talking about!)) will thrive while the rest of the field will languish until they too provide compelling end user value.
Don’t sell RIM or Apple stock if you have it and buy more when they sell off - these trends will be around for a while and that pie of smartphone users really IS expanding. I smell an emerging duopoly! WORD!
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