Analysis: How Apple Will Use The iPhone To Take Over The Wireless Industry

Authored by Scott Karp on July 1, 2007 - 7:51am.

Steve Jobs isn’t stupid. He knows that AT&T Wireless sucks. So why lock the revolutionary iPhone into a crappy network? Because Jobs knows that everyone will buy an iPhone anyway, even if they hate the network. And that, as Umair points out, shifts all the power to Apple.

Apple will significantly improve the already revolutionary iPhone in subsequent generations, and lower the price, as they did with the iPod. With each new release, more and more people will look at Verizon and Sprint, who don’t carry the iPhone, and say, WTF!?

The real battle for control is between Verizon, which has hands down the best network, and Apple, which now has hands down the best handset. The tide will

turn when die hard Verizon customers start switching in significant numbers to AT&T to get an iPhone. People like me, who stood firm on the network is more important principle, will crack under the pressure. There will come a tipping point, then, when the cost to Verizon of refusing Apple’s terms will be greater than losing customers to the iPhone.

What Apple really wants is to sell unlocked iPhones that can be used on any network — and I believe they will pull it off. Thus, Apple will do to the wireless carriers and other cell phone makers what they did to the music industry and makers of digital music players — they will completely take over.

From there, Apple will turn its attention to the last great battle — PCs. Once you own both an iPod and an iPhone, you’re going to look at your Windows PC and ask yourself — what am I thinking?

 

Scott Karp

 

Scott Karp is the Editor of Publishing 2.0, a blog about the convergence of media and technology. This piece was originally published on Publishing 2.0 and is posted on DMW with the author's permission.

DMW only publishes selected pieces from Publishing 2.0. You can subscribe to Publishing 2.0 to receive all content published daily.

 

Take our Poll: Is AT&T Wireless a Crappy Network?


Comments

Unlocked iPhones is the way to go

The whole world hopes Steve Jobs is that visionary, because unlocked iPhones will sell like hot bread in every market, just like the iPod. Precisely SIM card interchangeability is the beauty of GSM technology. All of the other critics to the iPhone are just unfair, as this is only version 1.0. Apple has raised the bar a lot. Features will evolve, it is a work in progress, that already delivers more with a simple UI. A true global, carrier independent iPhone is definitely first on my wish list.

The competition

Or another possibility is that Microsoft will release a convergance device that brings much of their XBOX Live ecosystem to a mobile device. That means games (including XNA developed conent), music and movies all coming down over a nice fat EV-DO REV B pipe. Once this happens it's anybody's game.

I couldn't agree with you more

I sure hope I can get an unlocked iPhone soon. There is a very large market for people who don't plan on staying in one place for the next two years. This just isn't fair to those people.

How Apple Will Use The iPhone To Take Over The Wireless Industry

Scott you are right on target, in the long run Apple wants to sell unlocked iPhones, but another side light to the iPhone is the fact everyone of them is a Mac in your hand because of OS X being the operating system inside.

It also pushes AT&T to improve their network

Calling AT&T's network crap is all well and good. The iPhone has caused AT&T to beef up and change their network. The reported 5 year relationship been the new "AT&T" and Apple is showing signs of promise. I think AT&T wants to be pushed to become the largest carrier with the best network and will drop the funds necessary to make this happen during this time. The control issue from the carrier to the consumer is good for all.

iphone is too easy to improve upon

The idea that the iphone will generate enough sales to make a significant dent in Verizon's business is absurd. The reason Jobs succeeded with the ipod was more a matter of no competition than anything else. I foresee the ipod being knocked off by competitors by anew genration of users who can't seee any reason to pay Apple's exorbitant profit margins and become a slave to its company store. Aplle has this bad habit, repeated in every device they sell, of trying to control all aspects of user behavior.

I hope for your sake you

I hope for your sake you haven't invested money in any of these phantom companies that will "knock off the iPod." The tech battlefield is littered with the corpses of would be 'iPod-killers.' Apple haters crack me up.

Umair finally gets it.

Umair finally gets it. After so many previous blog entries harping on about Apple's "closed" iPod+iTunes system, he finally sees that Apple's products are an end-to-end system designed to wow the consumer, and thus give Apple leverage to change an industry. First the iPod (music and even radio industry), now iPhone (cellular industry), and also AppleTV (movie/TV, and cable/TV industries). Umair is wrong on his crack about when Jobs vision started. Umair thinks it is recent. I think its clearly the day he decided to sell iPods for PCs, if not before, when he decided to build out a retain chain for his soon-to-arrive Post-PC devices. The iPod started as a unique feature/ peripheral to help sell Macs. But on that PC day, the iPod took on a new stand-on-its-own role, and iTunes would become the unique feature to help sell iPods, and change the music industry. For this strategy to succeed, Apple needs at a minimum, a dissatisfied consumer, a great product, great marketing (more than just ads), and a great retail/customer service experience. b As for leverage, the iPhone is exclusive to AT&T for 5 years (I wonder when the 5 year period started). Apple is preparing for that day five years from now, and it's even possible that cellular will not be as important anymore, overtaken by ubiquitous wi-max/wifi. Finally, I'd point out that AppleTV (the 3rd screen) is another prong, and it may arrive before the Mac seriously takes on the PC. For now, AppleTV is not wow enough to cause mega-sales, and thus Hollywood is resisting making content (and HD content) available at Apple's terms regarding pricing and other features. But Apple just pulled an end-run by using YouTube to make the AppleTV more attractive to potential purchasers. mark (I responded on Umair's site but my comment hasn't made it pass moderation.)

ATT&T has exclusive contract

It's been widely reported that AT&T has the exclusive right to iPhone on its network in the US for a long time--some say 5 years. If this is true, on what basis do you predict that their will be unlocked iPhones any time soon? Please explain.

i think that the iphone

i think that the iphone needs to change from cingular/at&t an come over to the guys at VERIZON. Cingular sucks an so does the service. I am not paying my hard earned money for an iphone when the service sucks.

Post new comment

The content of this field is kept private and will not be shown publicly.