Apple, Verizon and the iPhone: an Epic Story of Business Blundering
This blows my mind on one hand, and doesn’t surprise me at all on the other. Stand back: this will get a little rant-y.
As a guy who has Verizon as his mobile phone and data provider, I am always looking for a reason to switch to someone else, as strange as that may sound. Verizon’s only strength is their network, and while it might be marginally superior to other networks in some respects, it’s not better to the point where other drawbacks to their service can be accepted. Drawbacks such as:
- The absolute worst handset/new phone support on the planet. Verizon never gets high-end phones first. If you see a nice new phone on another provider, you can count on a 8-12 month wait before it shows up on Verizon — if it shows up at all. Verizon claims this delay is a result of their rigorous testing practices, but it’s certainly funny how other providers manage to release reliable phones without the delay.
- Crippled functionality. Verizon’s notorious for crippling their most advanced functionality, such as Bluetooth back when the Mororola V710 was debuted. Users don’t get to decide how to use technology, Verizon does.
- Relatively bad customer service. I know this is subjective, but overall, my experience with Verizon is either great or really, really bad. Unfortunately, the bad sticks in one’s mind more than the good (and there has been more of them), and that’s what you tell your friends about.
- No GSM means no European support. If I go to Europe on business and I have
CingularAT&T, I just call them and ask for temporary overseas/European access for a small fee. With Verizon, I’m dead in the water. No voice, no data. Nothing. Increasingly, this is a problem for me.
There are more — such as Verizon’s insistence on focusing on stupid teeny-bopper picture sharing and other useless gimmicks instead of having a real high-end focus — but I’m getting off track here, and what’s wrong with Verizon really isn’t the point.
Wait. Yes it is.
The bottom line is that Apple offered Verizon exclusive rights to the iPhone first, and Verizon turned it down. Verizon execs say that the deal came with too many strings attached and that Apple and Verizon just couldn’t get a deal done.
Translation: what that means in Verizon-speak is that Verizon wanted total control of the iPhone’s technology, openness, distribution, customer service, revenue sharing, and pricing. All for the privilege of letting Jobs’ and co. use the iPhone on Verizon’s aging, non-standard CDMA network.
Jobs, on the other hand, knew he had a phone with the potential to be revolutionary, and he needed a partner who saw the iPhone as such. Verizon, typically exhibiting its complete lack of any and all progressive thought, saw the iPhone as just another phone and didn’t take the time to respect what the Apple brand coupled with a runaway hardware success could do for its own brand.
Well, given what we know now about the iPhone and its massive public reception, Verizon fucked up. Go figure.
To wit:
Verizon Communications president and chief operating officer Denny Strigl said: “The iPhone product is something we are happy we aren’t the first to market with.”
There’s a quote that Strigl will want back one day. I guarantee it. The only thing more poetic that this would be if Apple decided to screw Verizon on its share of the fun, instead letting Sprint and other CDMA carriers in on the action first (not that that would be anything new: Sprint gets the latest equipment long before Verizon anyway).
I’m a guy who would consider leaving Verizon for AT&T just to have an iPhone (provided real-world reviews are a strong as initial observations), and I personally know two others who would do the same thing. If there are more like this out there, people could defect from Verizon in considerable numbers, with the iPhone being the catalyst for all of it.
Mark my words, even though I’m a somehwat embittered Verizon customer: Verizon’s refusal to ink a deal with Apple for the iPhone will go down as one if Verizon’s biggest business blunders in the company’s history if Apple decides to hold out and make Verizon pay for that decision.
Verizon, your network is reasonably good, yes — maybe even the best by some metrics. But if you want to be competitive with the carriers who recognize the convergence that’s going on with mobile devices — who recognize what the new breed of phone will be — then you’ll need to open up and quit going to the network well so often.
Can you hear me now? Good.
Technorati Tags: apple, osx, iphone, ipod, verizon, AT&T
I sense a Microsoftesque hubris from Verizon. Probably not the best thing in the competetive wireless market. I wonder how many times he had to repeat that quote to himself before he could say it with a straight face.
As another Verizon customer, I agree 110%. It makes me doubly mad, because I’ve been drowling over the prospect of an Apple Phone– assuming it would be the worlds’ first GOOD cellphone– and it looks like it significantly exceeds my high expectations– for over a year.
Verizon is married to Microsoft, evan after Microsoft gave them the shaft on the FIOS set top box software.
As soon as Cingular gets the iphone I am there.
This might be a good subject for an online petition to Mr. Strigl.
The day Jobs announced the iPhone/Cingular deal, I put in a call to Verizon tech support, asking them to let management know that they would probably be losing a customer in June. I was ‘eligible’ to upgrade my handset last June, but would not commit to another two years of Verizon’s limited selection of crippled hardware until I knew what Apple would be doing with the iPhone. The only serious hesitation I have right now is that from what we’ve seen so far, the iPhone itself is pretty crippled, Bluetooth-wise.
Believe it or not, Verizon still cannot get my voicemail to work after 2 years. iPhone here I come.
Count me among those planning to switch to Cingular the day my contract with Verizon ends. You’re exactly right: The best thing about them is the reliability of the service itself. Nothing less, nothing more.
I was surprised to learn that Apple offer Iphone to Verizon first. It’s a good thing their partnership didn’t go through. GSM rules.
Someone needs to direct someone at Verizon to this topic. And if there are other people who feel the way that I (and we) do, refer them here as well.
Not that this post will change Verizon’s mind, but you’d think they would care about how customers perceive their staunch refusal to get more progressive about handsets/hardware.
It’s interesting that you should get so ranty Jeff. Here in the UK users tend have zero loyalty to the operators and will often change when contracts end (they have got wise to this and begun to make them longer) or when a new trendy handset comes out. So if Verizon don’t want iPhone and you do; go to someone who feels as you do.
I’m just a few months away from the end of my verizon contract, and you’ve just highlighted the top reasons I’m looking elsewhere this year (particularly that I don’t want one of thirty copies of the same ugly, useless flip phone). Thanks for the encouragement!
You have my sympathy.
In terms of mobile telephony, the United States is a developing country.
Verizon is terrible whereas other carriers are not much better.
Come to Taiwan, Korea and other Asian countries to see how the mobile technology and services are advanced so far.
Man do I hear you on this rant. I was part of that V710 fiasco, fortunately I made out with a nice chunk of money, but not after suffering 19 months. While I can agree with the rants, Verizon has a market. People who DON’T care for the most part. That’s the problem. They have been able to claim the lowest dropped calls, strongest signal, etc. for so long (and have unfortunately delivered with their archaic network) that 90% of the customers are happy. Its usually the same people who enjoy the fact that all the phones have the same GUI now too. Bastards.
Problems with iPhone:
Not a true 3g product, working on At&T’s edge (100-300 kbps) when you’re used to Verizon’s or Sprint’s (400 – 800kbps) broadband net is silly. It’s not even WiFi.
No sync over network capabilities. Every time you need to sync calender, events, etc… you gotta go home. What’s the point of a PDA “phone” if you can’t take the office with you, and then at that you hafta use iTunes. What??? iTunes for scheduling??? I don’t even want to use iTunes for my iPod.
Price… with a two year contract, it’s still gonna be around 500 bucks, if not more. No thanks. Better to wait for ver 2.0, than this original watered down offering.
And for archaic technology, CDMA is proven to be a more efficient network than GSM by far, its just that the US is slow to adapt to new innovations.
Korea is one of the frontrunners in developing CDMA tech, and China is implementing a government run CDMA network.
This isn’t an issue of hubris or misjudgment but of history. The main problem with a Verizon iPhone is the archaic American mobile phone distribution model.
In the United States – unlike almost everywhere else in the world – mobile subscribers usually get their handsets directly from their wireless service provider (or a channel partner). This allows the carriers great control over both which handsets their subscribers use, and what those subscribers are able to do (and more importantly, what they are not able to do) with their phones.
In particular, Verizon (and Sprint and several others) has exclusive control over which handsets the subscribers use due to legacy technology employed in their networks. This technology dates back to 1979, when the original American analog cellular technology was under development. Verizon has had opportunities in the past to change the nature of this technology and enable subscribers to utilize any handset of their choosing, but they have specifically rejected going down that technological path. (The specific technology I’m talking about is SIM cards.)
Verizon has become addicted to the control they have over their customers via their handsets, and this is the reason that handset vendors must have a “relationship” with Verizon if they want to reach Verizon’s subscriber base. In other economies, handset vendors can reach subscribers directly, without needing a carrier as a middleman. Naturally, Apple is not accustomed to allowing a third party to mediate between themselves and their customers, so it’s a bit of an impasse.
Furthermore, the price of handsets in America has been subsidized by wireless carriers since the very early days of cellular. Americans have become addicted to this subsidy which, much to the carriers’ delight, winds up locking them into long-term service contracts, again giving the carrier great power over the subscriber.
For the above reasons it is inconceivable that Verizon could give up the control it has had over its subscribers’ handsets since before “Verizon” even existed as a monolith. Cingular, while equally monolithic, was willing to accede to the loss of some control over the handset primarily because their network is based on a newer technology (GSM) which already permits subscribers to utilize any handset they like, and because there was an agreement between Cingular and Apple about which functionality ( e.g., Skype) would not be enabled on the iPhone.
If not for the legacy technology and, more importantly, ancient business models of American cellular carriers, Apple could have avoided a carrier partnership altogether and gone straight to the American consumer with the iPhone. You can be that’s exactly what they’ll do in Europe and Asia.
Agenda, wake up: The United States was the first country to have commercial HSDPA technology. Why? Because of competition from 1xEV-DO. Which we had because of (impending, at that time) competition from UMTS. Which we had because of competition from CDMA. The U.S. leads the world in cellular technology terms. The services aspect is different (although I don’t think anybody should be crowing about Hello Kitty downloads) but from a technology perspective, the U.S. is leading the way, primarily due to technological competition which doesn’t exist almost anywhere else.
jobnumber: CDMA might be more efficient than GSM, but CDMA is a joke compared to GSM on the topic of handsets and services. What subscriber in the world gives a crap about “efficiency”? Korea uses CDMA, true, but they are an island in a sea of GSM. The CDMA network in China is a commercial failure (it’s not run by the government, either). The problem with CDMA isn’t the radio, it’s the handsets, services, and the fact that it’s held in stranglehold by one company (Qualcomm).
Apparently GSM magically allows veuveclicquot to suck his own dick which is quite a task given its diminutive size.
You guys crack me up. Verizon does have a pretty decent network but their phone crippling is unforgiveable. I also have to correct the original author of the blog post. Sprint is fairly laissez faire with their phones, as opposed to Verizon, but they take the absolute LONGEST to get awesome new phones. Hell, they JUST got the RAZR, KRZR, and Q 2-3 months ago. Verizon has had the leg-up on hot new phone releases in terms of CDMA carriers, including the RAZR, Q, and Chocolate. However, the fact that they then cripple the phones makes this advantage worthless. These guys are such bastards. They wouldnt let their phones support 2 gig micoSD cards until they actually sold 2 gig microSD cards. You cant put on your own ringtones, you have to buy them. Ludicrious. I wish more people would switch to Sprint. Hell, Sprint is now even aligning themselves with cable companies so for all you people that get the triple play (cable tv, phone, internet) from your cable company, you can now add Sprint Wireless for a quadruple play. You can watch select cable tv channels on your phone, check your ISP email, check your wireless voicemail from home, not use any minutes from your plan when calling your mobile from home or vice versa, it’s actually pretty intriguing. If Sprint grew some balls and got the exclusives on some phones, maybe their punchy snappy commercials would actually do them some good. As of right now, I think verizon’s bigger customer base helps them get phone exclusives and this is not good for sprint. My verizon contract runs out this THURSDAY hooray! This is why I have had to actively research the benefits of both Cingular and Sprint when deciding who to switch to. And on a final note, that fire red KRZR from Verizon is just about the nicest phone I have ever seen in my life. I just have to keep reminding myself that it is crippled beyond all repair to stop the temptation because if I renew my contract, I get that bad boy for free.
And in response to veuve, yes, Americans love subsidized handsets but have you seen how grossly overpriced these goddam phones are? The ORIGINAL RAZR costs 229.99 without a contract. 229.99. Are you kidding me? The tech in that thing is old beyond belief. Freakin GPRS Class 10. Mobile phones are grossly overpriced, whether they are GSM OR CDMA. Motorola and Samsung and all these clown manufacturers are no better than Exxon-Mobil, with this ridiculous price gouging. I’m not saying give the phones away for free, Im saying, sell a freakin 2 year old phone for a hundred bucks and quit trying to pull fast ones on people.
Getting back to carriers, the iPhone is certainly going to be doing some amazing things, not just for the people that use it but also Cingular. Cingular has had a reputation for getting cool phones first. Now you guys can argue all you want about CDMA vs. GSM. The fact is, GSM is the GLOBAL Standard. The majority of phones that are designed in the world, are designed for a GSM market. So why Apple actually went to Verizon first, a CDMA company that is notorious for being a control freak, when Apple themselves are control freaks, is completely beyond me. If Apple had done their research, they shouldnt even have wasted a second of their time or Verizon’s. Cingular was the natural choice. Cingular gets all the cool phones and has consistently gotten them for the last few years. It wouldnt make any sense to people if Verizon actually got the iPhone first, considering the work Apple had already done with Cingular through Motorola in regards to the ROKR and RAZR V3i. Sure, Cingular was late in deploying their 3G, almost to an embarassing degree. But hey, when’s the last time you heard about Cingular crippling their phones? Ultimately, I’ve decided to go with Cingular instead of Sprint because I’m ready to adopt a global standard. It’s hard to hate on Sprint but let’s just say that when a company could be stupid enough to not get the RAZR for two years, a period of time even longer than Verizon, I have humongous doubts about how quickly they will get new appealing phones. Cingular doesnt have that problem. Even if a GSM phone comes out halfway across the world, it can still be compatible with Cingular’s network.
I think it’s kind of petty to hope that Verizon regrets not surrendering to Apple’s demands. I hope that Verizon regrets fucking crippling their phones and subsequently driving tons of people to other carriers. I hope they regret the smarminess with which they promote themselves. Their CEO claims they are number 1 by almost any metric. That is obviously complete bullshit. There’s nothing wrong with carriers. Carriers should ideally, be great for consumers. A carrier like Cingular IS and HAS been good for the consumer. We dont need to adopt the European model, where everything is decentralized. It’s great to have a bit of centralization.
The iPhone’s flaws are well documented. It’s not 3G, not open to much development, hasnt really marketed itself adequately towards business users etc. Ultimately, I hope it does well. I hope Apple doesnt turn into Motorola though, and feebly updates the iPhone, thereby milking its success. I want Apple to kick ass and take names. I want Cingular to kick ass and take names. But really, out of pity for Verizon’s customers, for all of their customers who cant get out of their contracts, I just hope Verizon changes. If they have to learn the hard way, all the better. But they need to change. Carriers should not be allowed to be as retarded as Verizon is.
I’m going to cancel my 2phone family plan, pay the early cancellation exit fee of $350, and move to AT&T so I can play with the iPhone. I would’ve waited, but my Verizon Motorola power connection is broken, and Verizion will only offer me a discounted phone with a 2 year-service contract. No thanks!!
iPhone here I come! As soon as my wife is home, so I can use her phone to call AT&T….sigh.
I haven’t used the iPhone yet but the phone crippling is complete BS. Here we are in 2007, with technology that is capable of so much yet we can do so little with it.
Who would buy a computer that they couldn’t program just so they could have internet access? I can’t remember exactly what company tried doing that but it serves them right that they got screwed when people started purchasing their devices for the hardware inside and never bothered with their service. What the cellular companies do should be illegal in my opinion.
Once wireless internet is as popular as cellular towers cellphones will be as obsolete as POTS. I honestly can not wait for this day.
I guess I can’t blame wireless networks for getting rich off of kids who want to have ringtones on their phones but I am eager for a company to realize there is a huge market in releasing a phone that users can actually program (or maybe they would lose a ton of money and I’m just pissed that I can’t have it).
I want a device that is useful as a phone, GPS, and computer. (not being able to program my GPS is a whole different rant, but of course they’re protecting their maps). I’ve seen the LCD displays that can be expanded out and compressed back in as they roll up on rollers similar to window shades- I am waiting for a device that can be expanded to a tablet-PC sized screen when needed and compressed down to a phone-sized screen for portability.
I’ve been a Verizon subscriber for years now. I had been an AT&T customer previously and absolutely HATED their customer service & support. Also, the early AT&T network left a LOT to chance. Dropped calls, widespread blackout areas, inadequate monthly service plans, etc. With that said, I know many people who’ve sworn by Cingular and their commitment to service and an above the boards customer support network. As a Mac user, who admires Apples commitment to customer satisfaction and, seeing as how they are involved in EVERY facet of their I-Phone’s marketing, planning and programming, I would be hard pressed to find a reason NOT to switch over. Plus, AT&T’s data/minute/user plans are more than reasonable considering their cost to service ratio. Finally, I’ll be more than happy to pay Verizon the $175 early termination fee and to move ahead, technologically speaking, a hundred fold! I’m looking to buy three 8GB I-Phone’s at once. Anyone know of an BULK discount rates out there??? =)
lmao with verizon they would prolly take off the itunes wi-fi store hehe
i agree 110+% i like the verizon network but im stuck with crappy phones! i hope sometime very soon verizon gets a deal with apple! the min. they do im getting the iphone! finally people who understand! thanks