Verizon Implies Cingular's Giving Up Way Too Much To Carry The iPhone

from the hindsight-is-20/20 dept

Mon, Jan 29th 2007 4:38pm — Carlo Longino

The online debate about the iPhone certainly didn't subside with the device's long-awaited announcement. Rumors continue to swirl, but they've just shifted from what features the device will have to how much Cingular will pay users to buy it. Verizon Wireless has gotten in on the fun today, with one of its execs saying the company passed on the chance to carry the iPhone because of Apple's onerous financial demands -- including a cut of service revenues from iPhone users -- as well as its desire to control distribution and support. It's something of an odd statement, and its purpose seems twofold: first to unsettle Cingular a little bit with the implication that it's paying through the nose to be Apple's lackey, and second to offer some sort of explanation to investors about why it's not carrying the device. The real issue for Verizon seems to not just have been the money, but the control. To let a device manufacturer control sales and support, and essentially relegate the operator to nothing more than a bit pipe realizes the worst fears of many mobile operators, inevitable as it may be in the long run. The question hanging over Cingular now is whether or not the amount of money they're putting up to let Apple do this to them will pay off in the end.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

25 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Lawrence D'Oliveiro, 29 Jan 2007 @ 5:10pm

Point of order...
When you say "infers", do you mean "implies"?
[ link to this | view in chronology ]
- Carlo, 29 Jan 2007 @ 7:09pm
  
  Re: Point of order...
  Yeow, indeed I do. Thanks for pointing that out.
  [ link to this | view in chronology ]
Andy, 29 Jan 2007 @ 5:55pm

Area of specialty
The service provider whether it be Verizon, Cingular, Sprint or however should concentrate on providing the best network for it customers, that will keep customers loyal to that network. The harware manufacturers should concentrate on providing the best device and UI, that will keep customers loyal to that product. Service providers getting into telling hardware manufactures what they should do is a problem.
[ link to this | view in chronology ]
- richard, 29 Jan 2007 @ 6:21pm
  
  Re: Area of specialty
  It doesn't help verizon that they replace a phone's UI with their own, often causing bugs and cutting features.
  [ link to this | view in chronology ]
Cliff, 29 Jan 2007 @ 6:41pm

iPhone is already a failure!
Yes, people will buy this thing. Yes, Apple will make money selling it exclusivley to Cingiular (soon to AT&T). But it is far from an innovative product in the cell phone/portable communications device industry. It breaks no "real" new ground. It lacks some fundamental features that we have all come to want/have in our current phones. At best, we are 3-4 generations of the iPhone away from this being anything worth buying. My Samsung A900 is a better phone. see this article: http://nonsequiturs.com/posts/The_Dirty_Dozen_Why_the_iPhone_is_a_Major_Disappointment
[ link to this | view in chronology ]
benji, 29 Jan 2007 @ 8:07pm

okay
sounds like somebodies company maybe a tiddle bit jelous??
[ link to this | view in chronology ]
Norman619, 29 Jan 2007 @ 8:26pm

This is why...
This is why Apple will never become the dominant force it wishes it could be. They still don't get it. Over charging their customers for substandard products is a tradition with them.
[ link to this | view in chronology ]
i had to do it, 29 Jan 2007 @ 8:41pm

@ Lawrence D'Oliveiro
is it imply or implode
[ link to this | view in chronology ]
Jennifer L. Eisenberger, 29 Jan 2007 @ 9:07pm

iphone? Can't wait!
All this talk about all the downfalls of IPhone and how much they are charging - not gonna stop me - I saw Steve's presetnation and having been a PC user and now a MAC person (full on) will buy anything these people put on the market. The technology is mind blowing - the interface/icons beautiful and the features - worth every penny! And, I just ended my contract and switched to Cingular in anticipation!
:).
[ link to this | view in chronology ]
- Paul`, 29 Jan 2007 @ 10:54pm
  
  Re: iphone? Can't wait!
  That, my friend, is because you're an idiot.
  [ link to this | view in chronology ]
- Maximus Pryme, 29 Jan 2007 @ 11:11pm
  
  Re: iphone? Can't wait!
  Wow, I really don't know where to start on this...
  
  I'll start with the comment about how you will buy anything in these people put on the market, despite bad reviews, or cost. You know what I want out of a phone? A good quality phone that has features that I need.
  
  "Ooooh, the icons are so pretty" - You could just download icons and skins that would make your phone more customizable and "pretty". Of course though, you already knew that becuase you spent so much time researching your purchases.
  
  You mentioned that the features are amazing, despite the amazing lack of features compared to other phones on the market.
  
  On a final note, why would you switch contracts now? So you can pay full price on the iPhone? Companies will always charge you less on the phone when you sign a contract with them.
  [ link to this | view in chronology ]
  - Anonymous Coward, 29 Jan 2007 @ 11:14pm
    
    Re: Re: iphone? Can't wait!
    just watch my stock go.... :) to each his own...I like the iphone!
    [ link to this | view in chronology ]
  - Attila, 30 Jan 2007 @ 1:05am
    
    Re: Re: iphone? Can't wait!
    I stumbled upon this a few days ago. This is a link to an actual MacRumors forum thread from back in 2001 when the first-generation iPod was announced:
    
    http://forums.macrumors.com/showthread.php?t=500
    
    My favorite: "This isn't revoltionary! I still can't believe this! All this hype for something so ridiculous! Who cares about an MP3 player? I want something new! I want them to think differently! Why oh why would they do this?! It's so wrong! It's so stupid!"
    
    Yeah, I'm so glad I didn't buy AAPL in 2001 when it was trading at around $9... They sure dropped the ball on this whole MP3 player thing!
    
    :)
    [ link to this | view in chronology ]
just me, 29 Jan 2007 @ 9:24pm

iphone
I believe they are putting too many restrictions on whom can sell the phone. I was happy to hear it was coming out, but my happy thought got crushed quickly when I found out who was selling it. I use Alltel. I would never switch just to get my hands on a cell phone. My service comes first, and then the phone type. I hope they change their minds, and give more people a chance at them.

A cell phone is a cell phone, the service you purchase in order to use that cell phone is not, and should not, be downgraded in any way. If a company goes for a product and puts up too much stakes in that product plus they downgrade their own business standards in order to carry the product, they ARE asking for the worst business financial disaster to happen. They get what they pay for.

Hopefully Alltel will not fall for this BS. I would rather not purchase that cellphone, and have Alltel keep their standards intact.
[ link to this | view in chronology ]
- Blasphemy101, 29 Jan 2007 @ 10:16pm
  
  Re: iphone
  "I believe they are putting too many restrictions on whom can sell the phone. I was happy to hear it was coming out, but my happy thought got crushed quickly when I found out who was selling it. I use Alltel. I would never switch just to get my hands on a cell phone. My service comes first, and then the phone type. I hope they change their minds, and give more people a chance at them."
  
  Motorola did the same thing with the Razr. Now look, everyone and their mother has a Razr. Even Sprint now carries it. Apple will slowly open it to other carriers as soon as they agree to the same terms as Cingular. If the iphone is as popular as the Razr, carriers will be busting down the doors at Apple to carry the phone.
  [ link to this | view in chronology ]
Josh, 29 Jan 2007 @ 9:33pm

Alltell
Well, I don't know which network Alltell uses...but if it's not GSM 850/1900 it propbably won't get the iPhone anyway. you can pretty much guarantee Apple isn't going to invest more money in alternate models for a broader provider option (certainly when Verizon declined the offer to take it, it was during the contractual phase of production--when apple would determine the service inside the phone). Anyway, until it $199 or less, I have other stuff to invest my $$$ into from apple...like towards a new macbook
[ link to this | view in chronology ]
Anonomous Coward, 29 Jan 2007 @ 11:40pm

It's easy to be critical of the prom king and queen when your the one left dancing by yourself.
[ link to this | view in chronology ]
- Anonymous Coward, 29 Jan 2007 @ 11:47pm
  
  Re:
  i'm the one with a cellular device that does what it needs to do (make calls, get calls, get decent signal and battey life.) for an acceptable cost (nothing).
  [ link to this | view in chronology ]
Anon Coward, 29 Jan 2007 @ 11:59pm

Random Thouught
The first song I'll load on my iPhone will be Sarah McLachlan - Stupid (Hyper Remix)

how stupid could I be
a simpleton could see
that you're no good for me (Verizon)
but you're the only (phone) I (can) see (Movies and TV Shows on)
[ link to this | view in chronology ]
Joe, 30 Jan 2007 @ 2:23am

Missing the point and the features
Attila, I totally agree with you. I also wanted to buy AAPL in 96 when Jobs was hired. And all of the whining is reminiscent of Cmdr Taco's review of the iPod in '01. Apple is a vertical integrator. Since they don't have a network of their own, better to collaborate with a partner who is also willing. I'm sure Verizon didn't want to invest the capital required to upgrade their voicemail system the way apple is intending it to be. The biggest and least talked about feature is how it handles voicemail. Being able to sort, prioritize, respond, and forward the same way any email program can. This can't be done with current networks. It requires new equipment. So far, only Cisco IP phones offer anything remotely close. compared to everything else it seems archaic. And the price will come down. It's the way the market and technology work. my first iPod was $499 and look at them now. the first RAZR was 300-400 and look at them now.
[ link to this | view in chronology ]
rahrens (profile), 30 Jan 2007 @ 5:00am

agreed
Joe and Attila,

I agree with you guys. the whineys above do sound like the same whineys that dissed the iPod in the beginning.

Yeah, it does seem to be missing that oh-so-important 3G - which most providers in the US don't provide anyway. Go back and look at the keynote - Steve said very clearly that it will in the future.

As for Exchange integration - what part of CONSUMER don't you understand? Exchange is for business, and this is NOT a business phone. It is intended for the high end consumer, not the business consumer.

As for the rest (voice dialing, etc.) wait a bit - this was just a first look, and Apple often reserves the details for later, just before the product is released. We've got until June, for Pete's sake!

If they release it in June without, for instance, voice dialing, then you've got every reason to gripe, and I'll be right next to you, too.

Go back and look at the CNBC interview Steve did that Tuesday afternoon. He clearly noted that he expects the price to come down after noting something about economies of scale. It'll clearly depend on how many of these things they sell. The more they sell, the lower they can drop the price over time. Again, look at the Razr, same deal.

I would note as well a quote on another site (sorry, don't remember which one) of a Cingular sales rep that told a journalist that from inquiries he's gotten about the iPhone, he could sell 100 a day easily.

And, yes, Apple often adds features to later models. First versions often aren't the best - they're just the teaser to open the market, something that can be easily dumped if it doesn't sell well. Look at the Cube. It was a beautifully crafted machine, but was too high in price for the lack of expandability, but contained new cooling techniques that were later incorporated into the iMac line after the Cube bombed.

I'll also say this: for every one of the whineys here and elsewhere I hear complaining about a lack of features, I hear just as many like Jennifer L. Eisenberger above saying that they'll be standing in line for theirs the morning it comes out. The same Cingular sales rep quoted above also noted that one man he talked to was going to buy one for everyone in his family, including his two teenage daughters. That is four at least!

Scoff if you like at those early adopters and the ones that will buy Apple products sight unseen, but they kept Apple afloat during the lean years, and others like them now are helping them expand their market share, and create new markets.
[ link to this | view in chronology ]
ShadowSoldier, 30 Jan 2007 @ 5:12am

Support?
I would PAY not to have verizon deal with support, because A) THey Suck at it and B) It makes me want to die. Verizon has to have some of the worst customer service in the industry, whereas Apple, whether or not you like them, provides amazing customer service. I can understand not wanting to let them handle distribution, that makes sense, but since the iPhone is going to more of an Apple product than a Cell Phone it would only seem logical that they hand support and service. Personally I think Apple should have created its own cell phone company, and Jobs himself should have built the network by hand, including new towers, no matter how unessecary
[ link to this | view in chronology ]
ogman, 30 Jan 2007 @ 5:22am

Knowing Verizon...
Knowing Verizon, they passed on the iPhone because Apple wouldn't let them hobble every useful feature and cover the interface with crappy red Verizon branding. In other words, Verizon passed because Apple was making a phone that customers might actually like!
[ link to this | view in chronology ]
ted, 30 Jan 2007 @ 8:51am

like verizon can talk about restrictions
It's funny to hear this coming from verizon wireless, they cripple most of their phones, especially the bluetooth. BUT... i hate apple and their iBetterthenyou attitude. not to mention how much i *love* helping our dial-up customers figure out how to work there new and easy to use Mac. I don't use them, i wont use them, and yet somehow i can help these people over the phone. hmm... maybe its not the computers that are the issues here, maybe all the platforms are equal to equal users? or is that to much for you windows haters to handle :-)
[ link to this | view in chronology ]
John Simmons, 13 Feb 2007 @ 5:55pm

Verizon'z a Joke
Apple stated earlier that they chose to go with Cingular/AT@T because AT@T is by far the best cell phone provider.. Verizon's reception is a complete joke in Michigan compared to Cingular/AT@T...And the customer service for Verizon is rediculous compared to most cell phone providers..
[ link to this | view in chronology ]