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Without iTunes Account, iPhone Won’t Work As Promised; AT&T Holding Back Service Details

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Apple is intent on making iTunes indispensable beyond media sales and playback. In update emails Tuesday, Apple (full text) and AT&T warned prospective users the expensive phone they lust for won’t meet expectations without an iTunes account. Translation: without a credit card on record, don’t expect much. The application is required for syncing music and video — and, of course, you need it to get an account. True, most of the first-ins probably already have iTunes and are likely to have an iTunes account. (This takes Microsoft’s Passport/Windows Live ID one step further by linking access to a credit card. It would be the equivalent of requiring a Zune or Xbox Marketplace account before activating the abilities of Windows Mobile 6 on a smartphone.) This way, Apple can have a retail relationship outside of AT&T — a vital step, especially for a company for which control is as important as the product itself. When you get to this point, iPhone is beginning to look and sound like an MVNO that isn’t labeled as such.

The email also talks about syncing address lists and the like but it skips some of the important details people usually want to know when they buy a phone including the return policy. An AT&T spokesman I talked to today wouldn’t confirm that the policy will be the same as Cingular/AT&T’s usual 30 days, saying that and most other service-related details aren’t coming before the launch. I asked whether there were plans to separate iTune customer support from other products sold by AT&T. No details. Service plans? No details. You get the picture. He did try to promise clarification about current AT&T customers who are still shy of being able to convert their current account to the required new two-year contract.

DJN: Andy Hargreaves, analyst, Pacific Crest Securities: “ITunes is their broadest distributed product, and they are trying to leverage it any way they can.”

B20: ” … from a business perspective, this is a smart move on Apple’s part. It would be bad if AT&T were the only company that had a continuing billing relationship with the customer

5 Responses to “Without iTunes Account, iPhone Won’t Work As Promised; AT&T Holding Back Service Details”

  1. Apple may just be paying AT&T a cut on all purchases made by iPhone users. Suddenly, not an end run round the carriers, just an obvious offering of all iPod functionality to iPhone customers. It's not rocket science…

  2. Staci,

    Do you use use itunes? Do you even know how it works? Well, from a person who uses a pc and started using itunes in 2004 with a second generation iPod, it doesn't take a credit card. If you want to buy from the itunes store, yes, get a gift card or something on there, but otherwise, many people use itunes for the spreadsheet like setup that it has. Rip your cd's? Ever heard of that? Be real before you write, otherwise you are no better than all the other fools on the internet that only speculate for a living…

    Oh and I am a Cingular/AT&T customer and have a little understanding of how business goes. Tell me this: Why would you have AT&T set up its own rate plan for minutes and data for the iPhone? Wouldn't that end up costing AT&T more in the end? They want to sell 10 million iPhones by the end of NEXT year, not this year, so how would the speculation that you are trying to mold into fact two weeks before the phone comes out be even close to reality? I am not a shareholder of AT&T, but have a pretty good idea that this wouldn't make sense in the way that you want to suggest. Once again, know your facts. Who do you use, Verizon? Sprint? T-Mobile? Sorry, AT&T is the only one that is easy to deal with when it comes to doing things ala cart, so before you get to your battle station, figure out who actually makes sense with their pricing.


  3. The manufacturers and network operators have had long enough to come up with a customer focused solution but they simply have not had the will to do what is right for the customer. Apple are breaking ground simply by treating the consumer in the same way as they would wish to be treated themselves. Very best of luck to them, and the rest of the industry should look and learn rather than criticise and complain!

  4. It's possible to have an iTunes account without a credit card on record. Of course, I would expect the majority of iPhone purchasers to have that too, given the self selecting nature of the first people to buy it. I doubt they'll be forcing the issue. Still, it's pretty impressive the way that they're managing to do an end run around the carrier billing infrastructure that less exalted companies have to deal with.