Apple, iPhone and the AT&T Power Struggle

Apple’s ability to open the music industry up and now the mobile phone market is amazing. Steve Jobs has more control over the iPhone than any other recent domestic equipment provider has had over their devices. In fact few people at Cingular Wireless – now AT&T Wireless even saw the device before it was announced at MacWorld.
AT&T Wireless put up with Jobs and Apple but Verizon Wireless balked at some of the terms of the agreement such as where the phones would be sold. Apparently none of the wireless carriers are happy with comments made by Steve Jobs in the past – specifically, that telecom operators as "orifices" that other companies, including phone makers, must go through to reach consumers.
Obviously AT&T has high hopes for this device to put up with these comments and to lose so much control of the device.
But there is more at play here worth mentioning. For the first time a large carrier has understood and agreed that their ability to provide their customers with a device they want is lacking. Wireless carriers in the US exert tremendous influence on devices that are sold on their networks. In addition Verizon Wireless is notorious for crippling bluetooth functionality in its devices for anything more than headset use.
So if Apple is successful with this device – and the odds are it will be, what’s next?
There is a chance service providers will begin to experiment more and more with allowing other companies to design products being sold on their network. They may realize they are better off not meddling in design and software issues and instead focusing on giving consumers what they want.
Verizon Wireless for its part has a great network and uses that fact as a marketing vehicle. At the same time it cripples it’s devices making them less useful but more lucrative to sell.
If the iPhone turns out to be a killer device that eclipses anything Verizon Wireless sells – many current customers will switch to AT&T Wireless.
The race is on to see who can come up with an iPhone competitor worthy of taking on Apple’s newest creation. Some of the contenders at the moment are the LG Prada and the Samsung F700. There are still a few more months to go and it will be very interesting to see how other mobile companies respond to the Apple/AT&T threat.
If the iPhone is a success for Apple and AT&T expect Jobs to exert even more control over the music and telecom industries. While this may be bad from a competitive standpoint at least all of our future products will look nice and have a great user interface.

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