After my first post on the iPhone last week in which I opined that the AT&T (T) lockup was a mistake for Apple (AAPL) and that the real winner in all this was AT&T. The #1 response from readers I received (other than I was a moron)was that this “was a short term arrangement that all carriers do, within 6 months the iPhone will be available to all carriers.” Hold the phone (pun intended), it would appear that the iPhone will only be available to the 47 million AT&T subscribers for the next 5 years!
USA Today reports the supposed half-decade deal also precludes Apple from developing a CDMA handset in that time. It would also appear that the arrogance and dismissive attitude Apple took with carriers during negotiations may come back to bite them. Word is that the #2 carrier in the US, Verizon will introduce it’s own version and is claiming it will be an iPhone-killer. According to Denny Strigl, Verizon CEO, “We do have a very good response in the mill. You’ll see that from us in the late summer.”
Rather than have a market all too itself for some time buy playing nice with all carriers, the attitude Apple took has caused a rush to introduce like versions to co-inside with it’s launch. Now not only will the iPhone not be available to the other 140 million plus US cell phone users, but those folks will be able to get their own version from other carriers this summer. Anyone want to bet it will be available for far less than the $500 -$600 the iPhone will be?
Now, any Verizon offering will not have the iPod application that the iPhone will have but if my many critics are to be believed, that was not going to be a major selling point anyway so the elimination of it will really be an insignificant factor to those purchasing these phones from Verizon. What will matter? Price. If consumers are able to avoid cancellation fees, can get a similar phone at a cheaper price and already have an iPod, there is zero incentive to rush out and get the iPhone.
This also means that the 10 million units Apple plans to have sold by the end of 2008 will be done to 47 million AT&T subscribers meaning 1 in 5 will have one? Doubt it.
How long does anyone think it will be before RIMM’s (RIMM)Blackberry has a version out there that will be available through all carriers?
When entering a new business, it is not really a good idea to strut in and tell folks who have been doing it for many years how much better you are than them and why you are going to dictate what they can or cannot do. All reports out there indicate this is what Jobs did and in the process seems to have focused the efforts of the other carriers into competing against him rather than working with him. Bottom line, he needs their networks for his product, he seems to have forgotten or chose not too recognize it.
I said before that the iPhone, as things are currently configured will be nothing more than a niche product and that it will be Apple’s first stumble after a string of hits in recent years, if the USA today article is correct, the AT&T deal all but assures it.
23 replies on “iPhone: Apple (AAPL) Making All the Wrong Moves”
So lets see what wrong with this post.
1. No one said the iPhone would be on other providers in six months. The best guess was 2 years(see 2 year contract for ATT, and no you can’t just post something some crazy person emailed you).
2. You assume that Verizon will be able to match pound for pound the iphone(hint they haven’t even matched the ipod).
3. You forget Verizon cripples all its phones. You can’t sync a Verizon phone with a computer, nor can you use bluetooth with a device other then a headset. Verizon also likes to install its own OS that is really slow and useless.
4. You assume that people locked into a 2 year contract for the next 2 years. No way to know how many people are out of their contracts. Most have not renewed their contract(i wish sprint would stop sending me offers to do so). Most will ride it out.
5. You point on price is pointless, since people already know they can get phones for much less then the iphone. Even then they are still willing to pay the $500-$600.
6. 10 million units by 2008 is world wide not just ATT. (great math there).
7. RIMM already has blackberry that play videos, music, pics, google maps etc etc. Yet no one cares. If you want to go blacberry you already made the choice but don’t forget you have to pay for an extra monthly plan for blackberry email(other wise getting a blackberry is point less).
8. Apple has entered the phone business and made everyone else (Even Microsoft) look stupid. Funny how in the first try Apple was able to get it, while everyone else is still wondering. Also expect to see Apple fingerprints on new ATT technology over the next few years.
9. Apple has always been a niche company. That hasn’t stop them from making money.
ok
1- read the comments on my other post. several of them said this…
2-no i haven’t, they did and i i did say, they do not need to,i believe i said “similar”
3- i disagree
4-most “have not renewed”, what are you talking about? find me 20 people who are not locked into a cell contract. it is rule #1 in the business
5- sales will prove this comment wrong. the razor did not sell at $400 and blackberry did not become a huge hit until you could get one for under $200
6-it will not be sold worldwide until sometime in 2008..
7-blackberry has 50% of the business market and 20% of the personal one… that is a ton of folks
8-not even 1 phone sold and other look stupid? the ipod was an original, the iphone is… A phone..
9- a $100 billion niche company??? that math does not add up…
1. Fine crazy people on the internet said it.
2. “similar” has been around for years. yet no one is making money on “similar”.
3. Fair to disagree with the facts.
4. Maybe you should do a poll. IF YOU READ THIS POST AND HAVE NOT RENEWED YOUR CELL PHONE CONTRACT, leave a comment. IF YOU HAVE NOT RENEWED BECAUSE OF THE IPHONE, Leave a comment.
5. No the razor did sell at $400. The BlackBerry also sold for a higher price. YOU BECAUSE YOU SELL MORE WITH A LOW PRICE DOES NOT MEAN IT DID NOT SELL. It only means you sold more. Also how are those margins on the RAZR holding up for MOTO?
6. US- June. Europe- end of 2007
Asia- 2008. Still makes your number wrong.
7. Yup all 8 million blackberry subscribers.
8. ipod was not completely original
“No wireless. Less space than a nomad. Lame.”
http://apple.slashdot.org/article.pl?sid=01/10/23/1816257
It just did the same thing everyone else did, just a little better.
9. Yes with only less then %5 of all the computer in the world. Apple is a niche company. That is the Apple way and if you do not understand that, then you do not understand the iPhone.
looks like we eliminated 1,3&4?
2- macs did not make much money until the were “similar” to other computers and ran windows
5-read my post again. I have repeatedly said “mass acceptance”. niche products sell, just not a lot. the razor did not gain mass acceptance until they could be had for under $200
6- 2008 is too far away, i cannot include numbers when they may not even ship there. when they do, i will
7.”Lately the company has been trying to attract more mainstream customers with new handsets like the BlackBerry Pearl and the BlackBerry 8800, both of which include media players and mobile browsers for Web surfing.
The result has been a spike in subscriber growth. In the company’s latest quarter, it reported it had added 1.02 million new subscribers, taking its total to 8 million. This is a huge increase from the 2 million subscribers the company reported a year ago when it settled its patent infringement case with NTP. The company expects to add between 1.125 million and 1.15 million subscribers during the current quarter.”
Dan Taylor, managing director of the Mobile Enterprise Alliance, a nonprofit trade organization that promotes enterprise mobility. “They’ve just about quadrupled their subscriber base in the last 12 to 16 months.
what happened? prices fell to under $100. $600 phones do not sell
8- not 100% original but substantially different (80%? 90%?). the iPhone will not have that. let’s not forget the iPod did not ramp up sales until the $100 to $200 versions came out. Again, price..
9- you cannot take a segment of the company and extrapolate that out and call it a niche. they dominate the online music game and the mp3 market, clearly not a niche.
2. macs always made money for Apple. They always had “similar” components. And they always ran windows. Running on intel is just a small reason as to why they are selling more.
5. true. but mass acceptance has led to horrible margins for the RAZR. Why would Apple even want to be in that positions?
6. too bad. maybe you should stop using the 1in5 ATT thing.
7. RIMM had 5 million subscribers
last year. (2 million in 2004).
No the price drop was not the reason why 3 million people bought a blackberry. it was the product.
Did it push some units yes. Did it push all? NO.
PS. Those blackberry are being discounted by the phone company not RIMM. RIMM is still selling the phone for $300.
8. Really. cause i think the wifi, multi touch screen, and software make the iphone substantially different then other thing.
9. It’s still a company that releases a product that is aimed for a certain costumer(see iphone). It never aims it’s products to be mass accepted.
I may have to rethink point number 4, as it seems this blog doesn’t get many hits.
I have my T-mobile. My contract was ended more than a year ago. I can switch to other cellphone carrier any time I wanted.
1% of 1 billion phones, means 10 000 000 of World Market.
Even a 10 ears old child knows that in US there is not 1 billion phones.
You are just an other Apple hater!
0. Verizon is blowing smoke and you are inhaling it.
1. The killer app is the Apple operating system – OS X. Verizon does NOT have an answer to that and Microsoft couldn’t come up with one either!
2. I’ve been a Verizon customer (with 3 cell phones) for six years. I’m gone with the iPhone launch. You’re comment about Apple being limited to sell to 47 millions AT&T customers is WRONG!
3. Verizon’s Denis Strigl is also wrong. It is NOT the network. AT&T have comparable network capabilities and service. The handset User Interface and easy mult-functional features of the iPhone are what is driving interest to the iPhone. The networks are interchangeable. The iPhone is unique.
I don’t think you appreciate the possibility that all of this may have been considered by Apple. I mean think about it, do you really believe that the factors you are discusing would not have occurred to critically thinking minds ?
anon,
thank you for reading..
i am sure the considered it. that does not mean they made the right decision though…
companies make mistakes all the time, usually because they take the data and make the wrong choice, not because they do not look at the data.
I think it was Ray Norda the guy who took Novell to the top who said: “you limit the distribution of your products”…”you limit the distribution of your products”.
The math supports you case. The question is what did AT&T pay Apple?
great quote….
and very true..
the it was originally a cingular deal so AT&T inherited it…
word is they dropped their pants and bent over…
Todd, just to reiterate what so many people apprently have told you in the past…”You are a moron.”
Maybe if you had invested a few dollars in Apple back when you started bashing it you could have retired by now.
The killer app IS OS X. It will make this device stand out from the rest. I for one will be dropping my VZ contract (in mid contract) to pick up one of these.
well said and thought provoking response… usually one must go to a bowling ally to be exposed to such wit…
you will pay $150 to $200 to cancel a verzion account and pay $600 for a phone you will be able to get for $300 in no time…
i am the moron?
worth every penny
I haven’t been under contract w/ T-mobile for 3 years now. Would switch to the iPhone today if they’d just release it already. Also, have you considered a revenue sharing agreement between Cingular & Apple in which AAPL receives a cut of the monthly service fees? Afterall, Apple is driving the most sought after customers to AT&T’s network (voice AND data users). They deserve something for that & for the exclusivity.
i am sure they are getting a great deal from AT&T, Verizon told them to stick it and is doing their own thing…
Yeah, every company is “doing their own thing.” What’s your point? We can see what AT&T & Apple are doing, yet all we have from VZ is a promise of a better product in order to stem the coming mass defection. Why should VZ be trusted when all they’ve done to this point is disable features on their phones. If I was MOT or Nokia, I’d hate VZ right now more than Apple. In fact, those other manufacturers should be thanking Apple for shifting the power back to the handset makers. I considered buying a razr many times, but never did because of what VZ did to the product.
do not need to $600 for a phone is too much
the pontiac line was a good one but you lost it with the pool thing….
i am a T-mobile customer and have not renewed my contract so that I can buy an Iphone and sign up with AT&T. I bought an Ipod when they first came out years ago, and ever since then every year someone says they are coming out with an Ipod killer. Well, no one’s done it yet. The Iphone will be a huge hit and no one else will be able to duplicate it’s success. That’s my prediction.
I also think you’re a moron.
I see you’re at it again Todd. You’ve stumbled onto a good way to generate a few web hits, haven’t you? John Dvorak would be so proud. I look forward to next week’s post – “Why the iPhone is still going to fail”.
Most authors of the financially-related blogs I read to not go to such lengths to defend themselves after a posting. It sure seems like you have a very emotional connection to this issue. iPods didn’t sell until they were $100-$200 dollars? You can’t expect anyone to take you seriously when you pepper your writings with so many inaccuracies and misspellings.
I’m pretty sure the iPhone will be a hit. A lot of people are going to defect to AT&T for it. How do I know? Because I did. Apple’s “secret sauce” is creating a user experience that is more enjoyable than the norm. The little things like being able to listen to your voicemails in any order or being able to browse full web pages and zoom in and out as you want are things that all add up to a more enjoyable, more productive experience. You strike me as one of those pc users who’s never touched an Apple product and looks at them with disdain because you can “get a pc for $400 at CompUSA.” Time to come into the 21st century, buddy.
Todd, you are a moron. Still.
As of today Merrill Lynch is saying 4M iPhones in 2007 alone. 12M by end of 2008 and I’m betting that will be conservative based on what this phone is capable of. It’s a game changer. Killer software, killer apps, full-on internet experience. Neverming the arguments about poor download speeds. Who needs it? The phone has wifi which is readily available almost anywhere you go. Oh well, it’s been only a week or so since your post and you could have already made about $10/share on apple stock. Poor Todd. Or should we call you PC Guy.
Just ran into this post. I’m a little late commenting on this but after the facts it turns out that Todd you are an idiot. The I phone is huge. The price has dropped to $400. People across the world are leaving their current carriers to get it. Also Verizon came out with their new phone to compete with it and it blows. The operating system is slow and lagging and not nearly as user friendly as the I phone.