Tuesday, May 08, 2007

I hope Apple will buy its soul back from AT&T one day

Apple wants to make sure nothing goes wrong at the launch of the iPhone. For a while, everything else is taking a back seat, as customers are suffering in silence. You shouldn't expect any iPod updates any time soon. Leopard has been delayed. But the worse news is the oldest: Apple is teaming up with AT&T in an exclusive deal, tying all U.S. purchases of the phone to an AT&T subscription plan.

Apple gets help in something it has never done before: launching a mobile phone.

In exchange, it has agreed to sell its soul.

Everyone congratulated Apple for playing hardball with yet another industry (after successfully tackling record labels): there will be no stickers, no joint branding, no silly AT&T applications compromising the beautiful iPhone. Yet I beg to differ. I think buying an iPhone will be riddled with huge compromises.

Apple users are seen as discerning customers with a good taste, people who want value for money, who cannot be fooled into restrictive contracts.

This is why I think it's just simply against the DNA of Apple and its users to sell a cellphone that only works with one provider.

When I bought my Handspring Treo 270 smartphone four years ago (a revolutionary product in its own right), it came without a subscription or a subsidy. I took the SIM card out of my old phone, and put it into my Treo. That was it, I could start making phone calls right away. For data access, I had to change a few settings. It took me five minutes.

Later I switched mobile carriers. All I needed to do was replace the SIM card, and I was good to go. When I traveled abroad, I could just buy a pre-paid SIM card and pop it in, for much better rates. And if I wanted to, I could use my Treo without any SIM card at all, as it had lots of functionalities that didn't require one.

Today, Palm (previously Handspring, previously... never mind) offers subsidized as well as "unlocked" versions of its Treo phones. I think this is how a self-respecting customer buys an expensive, revolutionary smartphone. There should be a choice.

As for the iPhone: you absolutely have to get a plan from AT&T. There's no other way to buy one.

  • If you have another plan with another carrier, you have to cancel it or keep paying both.
  • If you go abroad, you have to pay roaming fees.
  • If you just want the device for its other uses (iPod, WiFi-enabled internet device) and aren't interested in a mobile carrier plan at the moment, again, you're out of luck.
In essence: If you want this date with the sexy iPhone, you'll just have to endure its big hairy uncle AT&T joining you for a threesome.

This isn't exactly the kind of hardball Apple plays with the music industry. Sure, if you want to purchase songs from iTunes, you'll have to settle for what the labels are selling you (though Apple is there to watch out for the terms). But that's where the analogy ends. if you don't like the iTunes Store, you never have to use it. Sales of iPod might be just fine without the approval of the five record labels. And Steve Jobs does display a "take it or leave it" mentality when dealing with the labels, when refusing to increase prices, when urging them to drop DRM in open letters. He's the last chance for a crumbling industry, and he knows it. His offers aren't supposed to be turned down.

Not so with the iPhone and AT&T. It's not the Apple with the pirate flag any more. It's not the defiant Apple we know and love. Nope, it's AT&T's little obedient lapdog that we see there. AT&T may significantly help Apple reach its iPhone sales goals, but I think Apple and its clients are paying a great price for this.

While I have no sources to back me up on this one, I'm also pretty sure AT&T has a say in what can and cannot go into the iPhone. I'm sure Skype or iChat, maybe the most natural applications for the device, were vetoed by the telecom giant as they could compete with its voice services. Basically any hope that the iPhone could truly change the mobile phone industry was lost when Apple went to bed with one of its giants.

Don't get me wrong, I'm a realist. I understand that initial sales of the iPhone are the single most important data that matters in the life of this product. This is what everyone, including investors, competitors, the entire cellphone industry and the media will be looking at. Apple has to get that right in order to establish itself in this new market. This is probably why it entered into such an uncharacteristic contract.

I just hope that eventually, Apple will be able to buy back its soul, and get out of this lousy, restrictive deal that screws its customers. I want to be able to buy an iPhone without being forever tethered to some big, dumb, evil telephone company.

Also, it remains to be seen how Apple plans to pull off the iPhone launch in Europe: a much bigger, more saturated, more mature cellphone market. A similar strategy might simply crash and burn in the old continent, where the iPod (a major iPhone component/selling point) isn't as strong as in America. For example, the iPod only has 28% of the German market.

1 comment:

Ed said...

Me too.