OK, so I upgraded to iPhone 4. I had to do it…it was like an addiction. For some reason, the iPhone has a tremendous amount of cache to it. How do we create brands with this much power? And how do we use this for our own advantage for the longest time?
From a Strategy standpoint, we can discuss and debate a great deal about their relationship with AT&T….
From the very beginning the AT&T thing has been called out and questioned. Apple has always been about propriety…and while somethings work it is clear that others do not. I think in the Cell Phone market, this tactic is about to hurt them. By creating the exclusive arrangement with AT&T Apple created motivated competition. Verizon, whom most feel is the superior cellular network, was extremely motivated to come up with a competitive plan as was Google who was just entering the mobile market. It created a substantially sized hole for Google Droid to take advantage of.
What Apple felt was a compelling advantage with the App Store, is now just a “me too”. The Android market is coming on fast, and momentum (prior to the iPhone4) was clearly leaning to the Droid. It is also being argued that the pressure from the Droid momentum had pushed Apple to rush the iPhone 4 to market, thus causing it to make some well known missteps and product issues.
By making a conscious choice to go with the weaker carrier, it created a vacuum….and in the business world vacuums don’t last long. Verizon and Google have created a very viable competitive piece to the iPhone legacy.
With the iPhone 4 and its video functionality, it is going to need a much better network than AT&T can offer.
AT&T has already leveraged the iPhone platform to change its terms and conditions which the user community is less than thrilled with at this time. The first change was the cloaked ‘Smart Phone Cancellation Policy.’ To cancel a smart phone account, the penalty fee has now doubled.
The second main item was dropping the unlimited data plan. Users are now going to be hit with overage penalties, though AT%T claims the fees are not going to be excessive. While AT&T is offering two levels of data plans, one which allows minimal usage (200 MB per month) for $15 and the other which offers 2GBs per month for $25. The third option is for tethering but is still limited to 2GBs per month.
While I have been told the fees were primarily geared to get people to be smarter with when they were downloading, this is really a ploy to offload the supply and demand issues that AT&T is having with their cellular network. This tells me that AT&T expects their dropped call issue to either continue or perhaps get worse. When you combine this with the unprecedented demand for the data hungry iPhone 4s, I think AT&T is going to have some issues.
So how does AT&T deal with this mess, they are arguably a year behind in launching their 4G cellular network compared to Verizon.
I am sure in the end that Apple has to be less than thrilled that their cellular carrier is the weakest link in its product. It was embarrassed during the iPhone 4 launch when the demo could not find a connection (arguably not an AT&T issue), when a member of the audience responded to Steve Job’s delay in what to do with “try Verizon”.
So in the end by choosing the weaker of the cellular carriers…
1. They created a vaccum which Google Android has exploited extremely well. Apple iPhone may struggle over the next few years as the Android market continues to expand.
2. It created a faulty product due to poor service, and in some ways product and marketing snafus due to the increased competitive pressure around the iPhone 4 launch.
3. Strangely they have become what they once fought against – they are the machine (see video below).
4. If they Apple iPhone market is over taken by the Droid market in the next couple of years, it is perhaps fair to blame the relationship with AT&T. If they would have worked with all markets the Droid market would have materialized much slower.
And for even more entertainment….