iPhone update: The decisions are all Apple’s
By Kevin Fitchard | telephonyonline.com
Jan 10, 2007
telephonyonline.com
Though Cingular and Apple are billing their new exclusive partnership to sell the iPhone as a relationship of equals, the iPhone is clearly Apple’s baby. Cingular had clear input on some of the iPhone’s technical specifications in features, Cingular president of national distribution Glenn Lurie said at press conference at CES, but the phone is first and foremost an iPod built to Apple’s exacting standards.
“The goal of this partnership is to let Apple be Apple and Cingular be Cingular,” Lurie said. “This is Apple’s device.”
The two companies have not released details about the particular service plans that will support the device, but the services definitely favor Apple over Cingular. With the exception of the new visual voicemail feature the two companies developed jointly, all the applications from the OS to the calendar were developed in-house by Apple, and the iPhone maker won’t be allowing any third-party applications on the device, which would preclude the sales of games and other applications from Cingular’s online store. Part of the reasoning is logistics: Apple is introducing a completely new mobile operating system based on OS10 for the Mac, and has yet to form a developers’ community that can optimize the vast store of games, content and apps for the iPhone.
But Apple is also limiting how customers access the device. Its iTunes software synchs directly with the phone via a USB cable, just like a normal iPod, despite other connectivity features the iPhone sports like Bluetooth, EDGE and Wi-Fi. Lurie would not give any details about how revenue would be shared between the two companies, but considering Cingular’s lack of access to data functions of the phone, its money is likely to come almost entirely from voice and data subscriptions—not from data services or applications—as well as revenues from the phones themselves. That might explain the high-cost of the devices, which will run between $500 and $600 with a two-year contract. They will be the most expensive phones Cingular has sold, at least $100 pricier than the Treo 750 smartphone, also unveiled on the Cingular network at CES.
Lurie, however, said he does not expect the high-cost of the iPhone to deter sales. As a cellular phone, a high-end multimedia PDA and an iPod, the cost of those three separate devices totaled would be far less than the iPhone itself, Lurie said. “Am I concerned about the price,” Lurie said. “No, I’m not.”
And while Cingular had to make sacrifices to its normal distribution and service model to land the exclusive agreement, Lurie said Apple was forced to bend also. Cingular managed to secure an exclusive distribution agreement for the iPhone and future iPhone models, meaning if you want the hot new device you have to become a Cingular customer, and even if you already are a Cingular customer you have to sign a new 2-year contract—no exceptions, Lurie said.
Cingular is allowed to take steps to make sure no rogue iPhones make their way to the market. It will lock the phones and take steps to prevent the phones from being hacked. And while Cingular’s data upselling prospects on the phone may be limited today, Lurie said the companies are discussing options to open up the iTunes software and music services up to its mobile network, which could spell more data revenues for Cingular in the future.
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