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January 09, 2007
What's Apple Thinking?
Undoubtedly, the new iPhone looks very cool. Very, very cool. But just as my technolust was peaking and I was turning on some Marvin Gaye in anticipation of a stop by the Apple Store, an inconvenient fact intruded: It's exclusive to Cingular.
Why?
What benefit does Apple derive from losing the contract-captive audiences of Verizon, T-Mobile, and Sprint/Nextel? Where's the sense in that? And it's not like most of us can just switch over to Cingular -- I've got years left of indentured servitude to the Big V. Moreover, I wouldn't jump ship anyway. Unlike with mp3 players and laptops, the quality of Apple's product is not the ultimate arbiter in its usefulness here. I won't be too happy with iPhone if my godawful network -- Cingular doesn't rank first in customer satisfaction in any region of the US -- keeps dropping my calls.
So what Apple has done is ensure the majority of cell phone users can't initially buy their phone, locked themselves in with arguably the worst service provider, and created the possibility that many will switch to Cingular to buy the iPhone only to loathe Apple for luring them to an inferior network. This seems an, uh, odd strategy. Can someone enlighten me as to its merits?
January 9, 2007 | Permalink
Comments
Heh heh... that's why a weboy with a Cingular phone is giggling his ass off. :)
Posted by: weboy | Jan 9, 2007 2:39:55 PM
"Can someone enlighten me as to its merits?"
Different wireless providers operate with different technical networks. A phone that works with Cingular isn't going to work with Verizon.
And perhaps more importantly, I'd guess Cingular is paying a substantial subsidy for the privilege of exclusive service. Apple sells the iPhone to Cingular for $800 per, and Cingular picks up $300 of the tab, so the cost to the consumer is only $500.
Unlike in Europe, here in the US basically no phones are sold separately from the wireless providers.
Posted by: Petey | Jan 9, 2007 2:45:27 PM
And for the true technolust, click here.
Posted by: Petey | Jan 9, 2007 2:50:08 PM
further, while the DC market perhaps doesn't matter too much to the bottom line of apple, it's my understanding that only Verizon networks enable you to keep service while in the DC subway system.
having found this out late, i can only reliably report that cingular sure doesn't work there.
why apple wants to piggyback on a service that is clearly at a big disadvantage in a relatively big and rich market is also a little beyond me.
and, off-thread, nice post on the evil klein.
joshb
Posted by: joshb | Jan 9, 2007 2:51:07 PM
It's a quad-band GSM phone, so the same device will work with Cingular and T-Mobile in the US, almost all of the carriers in Europe, and several in Asia (eventually, given network/software issues to support some of the crazier features, like the visual voicemail). A CDMA version is probably possible, but has less worldwide appeal. So having picked GSM over CDMA, Cingular is a much bigger outfit for this kind of thing than T-Mobile is.
Posted by: Nathan Williams | Jan 9, 2007 2:53:08 PM
The thing I'm curious about is why in the US cellphones are always sold tied to a carrier, while in Europe and Asia, cellphones are always sold unconnected to a carrier...
Posted by: Petey | Jan 9, 2007 2:55:45 PM
maybe Apple was persuaded by CWA's campaign to let people know that Cingular is the only fully union cell phone provider. See http://www.cwa-union.org/cingular/
Posted by: don't forget | Jan 9, 2007 3:13:46 PM
So what Apple has done is ensure the majority of cell phone users can't initially buy their phone, locked themselves in with arguably the worst service provider, and created the possibility that many will switch to Cingular to buy the iPhone only to loathe Apple for luring them to an inferior network. This seems an, uh, odd strategy. Can someone enlighten me as to its merits?
I've never quite understood the Apple adoration in some quarters of the technosphere (for lack of a better term). I had an iPod for years, but a few months ago the battery began to fail; it just wouldn't go from fully charged to shutting itself off in 10 minutes. I paid $40 for a battery-changing kit to change the battery myself, but I didn't even manage to get the case off. I could have got with the official option of mailing the iPod off to some Apple outlet in another state, but that seemed like sending good money after bad. I decided to buy a (much more basic) model from another manufacturer for only a little more money than changing the battery would have cost. A more basic model that uses AAA batteries.
Anecdotes are not data, of course, and I'm not the average user; my iPod has been a digital voice recorder first and an MP3 player second over the past year, which is what I replaced it with. Still, though, every tech company is just one monopoly away from being the Sirius Cybernetics Corporation, and Apple is no exception.
Posted by: Cyrus | Jan 9, 2007 3:26:19 PM
From what I understand, a more basic level that what these folks above are talking about, I've heard that Apple doesn't want to be a service provider, they just want to create the hardware. So, they need to set up a deal to have someone run the service. I guess this is different than with other Apple products like the I-Pod where they also produced the store to buy songs.
Why they settled for one company versus many might have had something to do with this.
Posted by: Robert P. | Jan 9, 2007 3:30:18 PM
Apple will easily coast to its year one sales goals with a single provider.
Posted by: Michael Markman | Jan 9, 2007 3:30:44 PM
I think Nathan Williams' explanation is the most likely.
Posted by: nolo | Jan 9, 2007 3:33:40 PM
"So having picked GSM over CDMA,"
Paging Steven Den Beste! Call your office!
Posted by: SP | Jan 9, 2007 3:41:43 PM
Part of the reason is apparently some of the features of the phone require special features on the network. "Visual Voicemail" for example which shows you on your phone who you have voicemail from.
Yeah, the basic features of the phone would work with any GSM-network provider, like T-Mobile, but if the network doesn't sport the extensions to tell the phone who you have voicemail from, that feature won't work. There may be other features as well.
So Cingular may be crappy (I don't know, I've never used them), but apparently they have added richness to their network that allows some of the advanced features of the Apple iPhone.
I'm sure Apple will be happy to sell their product to customers of other carriers - but those carriers are going to have to make sure all the features of the phone work as Apple advertises.
Don't worry, Ezra - iPods sucked at the start, despite being awesome. They, too, had limited availability (Mac-only) and were very expensive. Eventually they became so cheap and awesome and Windows-friendly everyone has one and some people have three.
I predict the Apple iPhone will follow a similar route. Give it 5-6 years and they'll be everywhere.
Posted by: Adam | Jan 9, 2007 3:54:00 PM
In Europe they all use GSM. Here we still have some carriers using CDMA so you have to get the cell phone that works with your carrier. Why design a cutting edge phone to work with old technology (CDMA)?
Posted by: ouiski | Jan 9, 2007 3:56:02 PM
"Part of the reason is apparently some of the features of the phone require special features on the network. "Visual Voicemail" for example which shows you on your phone who you have voicemail from."
Yup.
Posted by: Petey | Jan 9, 2007 3:57:27 PM
I'm a former AT&T wireless customer who became a Cingular customer through no fault of my own, but I've been happy with Cingular so far.
Posted by: nolo | Jan 9, 2007 4:44:07 PM
GSM is a world-wide technology and is more feature-rich than CDMA. European and Asian networks are generations ahead of ours. Apple will have a global market for these devices.
Posted by: MarvyT | Jan 9, 2007 4:46:42 PM
You guys are putting too much faith in the mobile phone companies providing an open marketplace. That isn't the case. They all want to get a piece of the mobile entertainment pie, and would much rather sell you a ringtone than let you load an MP3 on your phone. That sort of functionality has generally only been available on US carrier phones at the expensive smartphone level.
This is changing, but there's no doubt that Apple's offering is aimed at consumers, not businesses, and that its goal is to make digital media available in a way that won't make the carriers any money. Smaller carriers are the ones who are going to be most interested in trading this potentially lucrative digital media revenue stream for a chance to use Apple to increase their marketshare. As a result, Apple was destined to end up with whichever of the second-tier carriers offered them the best deal.
The above was the common wisdom when the ROKR came out, anyway. I wouldn't be surprised if the iPhone's network home is a combination of the dynamic described above and the fact that Apple had an established relationship with Cingular from the ROKR.
Posted by: tom | Jan 9, 2007 4:48:04 PM
As one of those benighted T-Mobile customers (I love that with their prepaid plan, I basically get a year of service for $100, since I just don't gab that much), I can say right now: bad coverage isn't a bug, it's a feature. "You're breaking up.. let me call you right back."
Posted by: wcw | Jan 9, 2007 4:48:16 PM
So if just take the little chip out of my tmobile phone and put it in the Iphone, will it work?
Posted by: CalDem | Jan 9, 2007 4:51:45 PM
"So if just take the little chip out of my tmobile phone and put it in the Iphone, will it work?"
Only if you learn how to correctly spell words with interstitial capitals.
Posted by: Petey | Jan 9, 2007 4:53:45 PM
Am I the only person who's generally happy with T-mobile?- they had the best plan configuration for me and their customer service has been excellent for the five-plus years I've been with them. There are dead spots here, but they're in hillier suburban areas and I don't worry about them too much, given the topography.
Posted by: latts | Jan 9, 2007 5:20:27 PM
Cingular is vastly superior to Sprint, at least. Most people I know would rate them as 2nd behind Verizon in service, but because they're cheaper, they're probably near the same overall value as Verizon. Just to respond to Ezra's Cingular bashing. I don't really like IPods (Creative products are a better value), and I'm tired of Apple people, so I couldn't care less about the phone.
Posted by: spike | Jan 9, 2007 5:20:51 PM
T-Mobil rocks!
I was with Sprint previously and it really sucked. Sucky suck suck sucked.
Posted by: Fred Jones | Jan 9, 2007 5:23:45 PM
As Adam points out above (Jan 9, 2007 12:54:00 PM), there are enhanced features in the iPhone that need network cooperation. This probably required some network changes, and none of the big providers - Cingular, Verizon, Sprint - would commit to that kind of thing without guaranteed revenue. I would bet there was lots of Apple/cellco negotiation with Jobs &co eventually deciding Cingular was the best bet.
Posted by: jackd | Jan 9, 2007 5:24:17 PM
1) I bet eventually (after a year?) the iPhone will be available on t-mOBiL (or however you spell it) as well. As Nathan says up above, it's a GSM phone, which rules out Sprint and Verizon.
2) Cingular is, at least on the West Coast, hugely better than T/Mobil. The latter was the last provider to build out their network, and apparently everybody else took all the good rooftops, cause t(M)s coverage blows (although getting better, I think).
Posted by: sasha | Jan 9, 2007 5:53:16 PM
I'm a former AT&T wireless customer who became a Cingular customer through no fault of my own, but I've been happy with Cingular so far.
That's really the root of Cingular's problems. They just didn't handle the merger well. Those of us that were switched were treated pretty poorly for a while.
Sprint does indeed suck. They have this huge campus in south Overland Park, millions upon millions of dollars to build. It's beautiful, with plenty of grass, trees, fountains, etc. The buildings are really nice as well.
Anyway, I couldn't get a signal with my Sprint phone on the Sprint campus. And people wonder why they just announced another 5,000 in layoffs today.
As for the iP-hone, it looks retarded, and that nice touch screen is going to get nasty in about 3 minutes of regular use.
Apple SuXX0rs!1!
Posted by: Stephen | Jan 9, 2007 6:00:36 PM
Don't forget also that Verizon is famous for putting cripple-ware onto their phones, so that you're forced to use (and pay for) Verizon's proprietary services, even if the phones themselves have the functionality (such as cameras). There's no way that this phone would come through the Verizon profit-generating crippling process with anywhere near the same functionality.
Given the fact that the features themselves are what would sell this phone, Apple would probably prefer not to deal with VZW in the first place. That and the fact that Verizon has to pay through the nose to get phone manufacturers to develop CDMA phones in the first place (anyone remember how long it took VZW to get the RAZR?).
And I say all of this as a pretty loyal Verizon customer going on 8 years. This is the first time that the thought of switching to another carrier has even crossed my mind.
Posted by: sam | Jan 9, 2007 6:02:53 PM
If we could rate comments here, Sam and Tom would get top ratings. Its all about the business!
Me? I've had a bulky Nextel for 4 years and don't plan on switching unless Sprint pries it from my cold dead hands.
Posted by: Adrock | Jan 9, 2007 6:25:05 PM
Cingular was also one of the first two companies to offer the Treo to the American public, so the fact that they are getting into bed with Apple on this should be no surprise.
I switched to Cingular when I got my Treo 180 and have been a more or less happy customer ever since. I absolutely loved my Treo and was very sad when it died and I couldn't afford a newer Treo. A convergence device like the iPhone would make me very happy.
Lucky me, my current contract runs out about the time the iPhone will come out; I will definitely be in the market for one unless some huge showstopper comes up in the meantime.
Posted by: fiat lux | Jan 9, 2007 6:32:19 PM
A few things.
First, it's a good think I am getting my own cell phone contract in late March or early April and not now, so that I can think over my options instead of possibly dropping a few hundred bucks on something that is merely a fad and something that will be obsolete faster than a computer. Ah, the power of sleeping on it.
Second, isn't the big line featured in Cingular's ad campaign that it is the network of fewest dropped calls?
Third, I'm not sure, either, but Jobs appears to know what he's doing. There has to be some good reason behind it; all we can do is speculate, unless it's out there for us to find. But anyway, after reading the comments above, there does appear to be a good reason or reasons. So that's that.
Posted by: Brian | Jan 9, 2007 6:52:19 PM
One hidden issue with Cingular vs T-Mobile and other services is the cost of internet access. My Treo costs $20/m on T-M while Cingular costs $50+/m for pretty much the same thing. Otherwise, I would've switched. Oddly enough when I travel I often find my service is through Cingular. Go figure.
Would I switch to Cingular for an iPhone? Probably not even though I'm in the market later this year for a new PDA phone. My guess is Apple's counting on fashionistas to carry them the first year or two, the first few product cycles, the people whose self-esteem is highly dependent on having the latest and greatest stuff.
I'd love to have an Apple but still don't see reasons to pay a premium price for sexy.
Posted by: Fred | Jan 9, 2007 7:17:29 PM
"I'd love to have an Apple but still don't see reasons to pay a premium price for sexy."
You don't pay the premium for teh sexy. You pay the premium for a computing experience that is more elegant and works better.
The equation is that you blow a couple of hundred extra bucks up front for many extra hours of your life that isn't spend wrestling with clumsy interfaces. If your time is cheap, the equation may not work for you.
Posted by: Petey | Jan 9, 2007 9:57:31 PM
You can only get it with a 2-year contract. Some of the cost of the phone is subsidized by that contract. I'm guessing Cingular's the only GSM provider in the US that thought this scheme was worth going along with.
Posted by: digamma | Jan 9, 2007 10:02:40 PM
Someone said Cingular's internet rates are expensive. Well, I'm a T-Mobile customer but a quick visit to Cingular's website found that they have a standard unlimited data plan for $20/month. That's really good!
Someone else said this phone would get dirty really quickly with people's fingers touching it all the time. Well, I have a regular (non-touchscreen) phone where the screen is ALWAYS up against my ear and it doesn't get that dirty. My ear is generally greasier than my fingers. Still, even if it gets dirty, what's what shirts are for! Rub rub rub...
Posted by: Adam Piontek | Jan 9, 2007 10:20:34 PM
It's not that complicated.
Apple just wants to make one phone and sell it worldwide. That has to be a GSM phone, which is either Cingular or T-Mobile in this country. So they gave Cingular an exclusive deal in exchange for lots of benefits and support for the prestige of being the exclusive carrier of the iPhone.
By contrast, look at how complicated it is for Palm which has to make a zillion different versions of the Treo to keep up with all the carriers and their different technologies and operating systems.
Posted by: rosswords | Jan 9, 2007 10:48:12 PM
As Adam points out above (Jan 9, 2007 12:54:00 PM), there are enhanced features in the iPhone that need network cooperation. This probably required some network changes
I think you guys are overestimating this factor. I used to get voicemail alerts on my T-mobile Sidekick via specially-formatted SMS -- with that kind of system in place, you could have the phone match up contacts and alerts pretty easily.
By alternate way of comparison, we run an Asterisk PBX at work, and even with my non-expert knowledge of that platform, writing the code for a web service to send the caller IDs of my waiting VMs to an internet device would take less than a day. Doing this for a cell network in a production-quality manner would probably take a couple of engineers and a few servers, but it wouldn't be a colossal, architecture-changing undertaking.
Posted by: tom | Jan 9, 2007 11:12:33 PM
Do you think Apple will come out with an iPhone without the phone? Cingular doesn't even try to provide service out here on the Olympic Peninsula, so there is no point in considering it, but I wouldn't mind having a hybrid device to replace my aging Handspring Visor and G1 iPod. If it could browse the web and support email on WiFi networks, that would be a super plus.
Posted by: Kaleberg | Jan 10, 2007 12:16:49 AM
Call me stupid, but I have used phones from most of the big carriers (including Qwest, which is rather novel), and have never had dropped calls. I live in Seattle, but travel to Eastern Washington a lot (family). So...there is a big dead zone in between for all carriers, and I am sure some are better than others at extending the zone of goodness, but I don't really talk during that stretch...I drive.
I currently use T-mobile, and as the comment above alluded to, I'm often on a different network (Cingular) in different places, but I don't get charged for it, so I don't care.
In any event, I know that Cingular's customer service is insanely bad by most surveys, but isn't it the case that their phones actually work most of the time, at least for those of us in urban areas? Just asking. I have never experienced the constant "dropped call" situation that so many others complain about.
Cheers.
Posted by: abjectfunk | Jan 10, 2007 1:08:40 AM
According to the big article in TIME, the iPhone required quite a bit of network cooperation to implement its features. As the article points out, it usually works the other way around---the network tells phone makers what they can have. Apple needed a much more two-way street, so they had to pick one company they could work with. In short, it was going to be exclusive to someone, because no one would be willing to step out of standard practice without a serious bonus to themselves. As to why that someone was Cingular---I dunno, probably something to do with golf or something.
Posted by: That Fuzzy Bastard | Jan 10, 2007 1:10:13 AM
I have never before been so glad to be locked into Cingular.
Posted by: dr | Jan 10, 2007 1:41:47 AM
Petey's comment is exactly why I love Apple products by hate the Apple community of users.
Posted by: Ben | Jan 10, 2007 9:20:34 AM
Because Cingular said "yes" when Jobs came calling on this idea 2 years ago? The Cingular dude signed deals with Jobs without even seeing the phone. He took a chance.
Maybe the other companies were too busy building their networks and improving customer service to be bothered with creating Steve Jobs wet dream phone.
Personally, as someone who doesn't use her cell phone very often, I'd only consider buying this combo dream if they up the storage space for all my music. If you're gonna build an all in one device, it better be able to store 60 g of tunes.
Flipping and scrolling through album covers to select your tunes is pretty damn awesome, though. That touchscreen tech alone is out of this world.
Posted by: san antone rose | Jan 10, 2007 2:16:21 PM
Cingular gave up some pretty wild concessions: they let the phone switch to WiFi when in range (giving up a large part of their data transmission income), run email for free (would Nextel have given Apple that one?), and PC/Mac -> phone syncing for contacts, photos, and music (which Verizon is adamantly against, see the Verizon RAZR's limitations compared to the default model).
Posted by: matty wags | Jan 10, 2007 4:34:47 PM
I'm guessing that buying a Mac is no longer the smart move and users are betting off getting a Gateway laptop and installing Linux.
Why? Because I just bought a MacBook Pro, my first Apple product ever, and out of curiousity I drop by the local Apple-approved atelier. There's some poor girl getting her MacPro fixed. She says she bought it in Sept and it's a new model so there are bugs. Of course mine is a new model too. The guy behind the counter tells me half of Apple's customers last year were new customers, that a new model always has problems, any computer buyer knows that, etc, etc.
So it looks like my extra $600 buys me a product that's about as reliable as all the other products, plus I have the right to be lectured by a dipshit with a screwdriver.
Posted by: Kyle | Jan 10, 2007 5:33:18 PM
What other people have said here -
GSM, GSM, GSM, GSM, GSM.
When you ask why, Ezra, THAT'S why.
GSM GSM GSM GSM
Posted by: JC | Jan 11, 2007 2:09:40 PM
If you have Verizon try punching in pound door (#3667) and listen to the interesting menu, including warrant services :)
Not sure if it works in DC, but it was working in New York last night.
Posted by: Guy Montag | Jan 11, 2007 4:06:07 PM
I'm no expert either, but some of the comments here re GSM and CDMA have been inaccurate. It is true that GSM is much more widespread than CDMA, but it is false that CDMA is "old technology," as one poster stated above.
The term CDMA actually refers to a method of multiplexing, or the combination of multiple signals onto one channel, rather than to a specific standard. It has certain advantages and disadvantages over TDMA, the multiplexing method used by GSM networks. See
http://en.wikipedia.org/wiki/Comparison_of_mobile_phone_standards
and many other wikipedia articles for details.
The fact that Jobs said that the phone wasn't even 3G suggests that the technologies behind Cingular's network are not vastly superior than those behind Verizon's. So as some have said, the decision probably came down to the economic factors others have mentioned: Who gave the best deal in terms of subsidies/willingness to modify their network to deal with the iPhone's special features, and the fact that if you make a GSM phone you can sell it throughout the world, whereas a CDMA phone would be limited to the much smaller CDMA market.
Posted by: John O'Leary | Jan 13, 2007 3:08:03 PM
Why Cingular? Because 1) they are the largest carrier and growing faster than anyone else, and 2) the carrier had to agree to network changes to realize Jobs vision of what needs to change in the future. Cingular at the very least had the wherewithall to believe in Jobs and his vision. I think everyone will be amazed at the new services when they are rolled out. And how many YEARS behind will everyone else be at that point?
I have to laugh at the rumor-jockeys out there that can't connect the dots of what's been publicly said and figure out what's going on.
Posted by: Curt | Jan 27, 2007 6:07:19 PM
