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Summary:

USA TODAY reports that Verizon turned-down the possibility of working with Apple on the iPhone. Two years ago the 2nd largest cell network decided that they couldn’t come to terms with Apple on a deal that would be mutually beneficial. I can understand Verizon’s stance on […]

USA TODAY reports that Verizon turned-down the possibility of working with Apple on the iPhone. Two years ago the 2nd largest cell network decided that they couldn’t come to terms with Apple on a deal that would be mutually beneficial.

I can understand Verizon’s stance on not wanting to give up so much control over the design and implementation process – that was a giant leap of faith on Cingular’s part – but Apple will have it’s way [it seems]. I hesitate to make the comparison, but Apple’s absolute control over how things play out is reminiscent of Wal-mart’s strong-arming of manufacturers. Verizon also cites the issue of allowing Apple to support and replace hardware themselves, rather than the cell carrier’s own customer service.

I think it’ll be interesting to see how many customers migrate away from Verizon – whether that be by terminating their contracts early or letting them run out before switching over – just for the opportunity to get an iPhone through Cingular. I wonder what the actual costs/losses will look like over the next 12-18 months.

Silly or smart decision? Despite your take on it, I admire Verizon for sticking to their guns on the way they want to do business…Hopefully they fare better than the manufacturers who did the same when Wal-mart came a knocking.

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  1. Ben Ogren | Jibba Jabba – Damn Monday, January 29, 2007

    [...] 2 years ago Verizon turned-down the possibility of working with Apple on the iPhone. Good choice guys… [...]

  2. I think the comparison to Wal-mart is a bit of a stretch. In my opinion, Verizon was guilty of strong-arming with regard to the functionality of the hardware they offered, with bluetooth limitations and basic selection, not to mention their funneling of all would-be data users in the direction of expensive monthly plans by cutting out wi-fi capability on most phones and placing big costs on minute to minute usage. Charging on a per kilobyte basis, AND burning voice minutes?

    In the words of Gob Bluth, “Come on!”

    My hat is off to Apple for not bowing down. And to Cingular for the pioneering step they are taking which is sure to attract a lot more casual users to the world of portable internet connectivity. (Without knowing what the Cingular options will look like, I can’t say they will be any better, but at least we’ll get wi-fi!) No points deducted from Verizon for sticking to their guns, of course, but that’s really all Apple was doing, too. I’m just glad they found someone to play ball. And yes, I’m a Verizon user who will be jumping ship in June after five satisfied years. I want the iPhone, and I’m glad my contract is up in April.

    Thanks for your post.

    ptc

  3. I’m not sure the WalMart/manufacturers comparison is apt. Verizon is a goliath in a field populated with goliaths. There are only a few players in the telecom market in the US, and they’re consolidating at a rapid clip. Manufacturers who deal with WalMart are at a much greater disadvantage relative to WalMart than Verizon (or any other mobile carrier) is to Apple.

    It also seems bizarre in the extreme that mobile carriers have for so long controlled consumer choice in hardware. The fact that we can’t just go out and buy any given handset is galling. Every time a new phone is announced, the big question is always, “Which carriers will support it?”

    I for one am glad that a hardware vendor is gaining some leverage. Given the way Verizon has done business thus far, I don’t admire them for sticking to their guns. They could learn a lot from Apple about how to please customers.

  4. Interesting take, Nick. I certainly agree that Verizon was right to do a cost-benefit analysis. Bending over backwards for Apple is not to be taken lightly, and Verizon puts a pretty tight leash on their customer relationships (as various lawsuits have made clear).

    I’m actually shocked to learn that Apple even approached VZW, given that a CDMA phone couldn’t have been easily ported to the global market. As a VZW customer, I just assumed that Apple would go with Cingluar, since Cingy’s GSM technology is more of a global standard. But maybe I’m overestimating the engineering challenges of porting a CDMA phone to GSM. After all, Moto does it with their RAZRs.

    That said… Verizon’s call quality and high-speed data network paired with the iPhone woulda been killer.

  5. The only way the Walmart analogy holds is if you believe the iPhone is an iPod first and phone second. Otherwise I fail to see how Apple with 0% smartphone market share could be really seen as using their market clout to dictate terms.

    Besides, Walmart may be evil and all, but they have created real innovations that have rippled through the supply chain. Apple seems more like just capitalizing on such efficiencies created by Walmart than using it to dictate onerous terms on their suppliers. (Not to say that Apple does not reap these benefits in spades when it comes to flash memory prices and the like that come from dominating 70% of the entire music player market and music download market.)

    As it is, Verizon (the vendor) is sounding more like the Walmart than Apple (the manufacturer)—of course, they aren’t since Verizon is now #2, not #1. Though history (anyone remember crippled bluetooth? the wired antenna requirement? etc.) does not call into question a whit of what they would do if they had such clout.

  6. I just renewed my contract with Verizon. A new 2 year contract. Then Apple releases iPhone. Now hearing this, I am s o l. Verizon may be the 2nd largest, but they are certainly the first. The first in ripping off people with their prices. When will cellular companies, the phones amount to a bunch of nothing if the customer can not use it as much as they want with out paying ridiculous prices? So I can’t get a iPhone…. $300 to break contract, $500 for a phone…. at least $800 in the hole now. I guess I will wait for two years.

  7. LARRY…… (will this work for you?)

    Jan
    12Get Out of Your Verizon Contract with No Fees!If you’re like me, that is, if you’re an Apple fanboy who gets his cell service from Verizon, the iPhone announcement has posed a dilemma for you.

    One one hand, in June you’ll be able to get your hands on what very well might be a revolution in mobile technology. On the other hand, paying hundreds of dollars in cancellation fees isn’t exactly a delightful prospect. So when I read the news that, because of a minor hike in text messaging rates, anyone can get out of their contract for free, I felt it was my duty to inform the masses.

    Come March 1st, the price for text messaging to people in North America rises to 15¢, up from 10¢, and because this constitutes a material change in our contracts, we can get out without any fees whatsoever. After that, you could stay on Verizon, paying month-by-month, or switch over to Cingular and do the same thing until June, when you can line up with the masses and joyfully accept your shackles from a new overlord two-year contract, eight months of which you’ll probably touch your iPhone only once, for fear of smudging it (you know you do it with your iPod).

    [Via Engadget]

    EDIT: I did a little snooping around to see if I could find anything confirming or disproving this, since many people have been skeptical, and I found a juicy little tidbit on the Verizon site.

    “Our Rights To Make Changes
    Your service is subject to our business policies, practices, and procedures, which we can change without notice. UNLESS OTHERWISE PROHIBITED BY LAW, WE CAN ALSO CHANGE PRICES AND ANY OTHER CONDITIONS IN THIS AGREEMENT AT ANY TIME BY SENDING YOU WRITTEN NOTICE PRIOR TO THE BILLING PERIOD IN WHICH THE CHANGES WOULD GO INTO EFFECT. IF YOU CHOOSE TO USE YOUR SERVICE AFTER THAT POINT, YOU’RE ACCEPTING THE CHANGES. IF THE CHANGES HAVE A MATERIAL ADVERSE EFFECT ON YOU, HOWEVER, YOU CAN END THE AFFECTED SERVICE, WITHOUT ANY EARLY TERMINATION FEE, JUST BY CALLING US WITHIN 60 DAYS AFTER WE SEND NOTICE OF THE CHANGE.”

    60 days after March 1st is April 30th, just a month before the iPhone comes out, for those considering a hitus of service as an option while in between evil entities eager to suck the very soul from your body carriers.

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