Fool! You Fell Victim to One of the Classic Blunders! Never Negotiate with Steve Jobs…
by John Paczkowski
Posted on July 14, 2009 at 3:36 AM PT
Apple is doing to the wireless industry what it did to the recording industry beginning back in 2001: Stealing its customer relationships.
That’s the gist of an argument put forth this week by Bernstein analyst Craig Moffett, who believes that with the iPhone and App Store, Apple (AAPL) has upended the wireless market in much the same way it upended the music industry with the iPod and iTunes.
“It wasn’t that long ago that AT&T’s exclusive agreement with Apple’s iconic iPhone looked like a customer relations masterstroke for the carrier,” Moffett wrote in a note to clients. “AT&T Mobility, a brand that had once been cingular-ly stodgy and tired, was suddenly, well, relevant again. Apple’s iPhone meant that AT&T was the place for cool handsets. Better, it was the place for wireless data….Somewhere along the way, however, Apple has stolen the march, and in the process has recast AT&T from hero to villain.”
AT&T, says Moffett, was roundly jeered at every mention at Apple’s last Worldwide Developer Conference. And, as someone who attended that event, I can attest that this was indeed the case. Certainly the revelation that AT&T (T) wasn’t yet supporting iPhone features like MMS and tethering did not go over well with the WWDC audience, which was already abuzz with criticisms of the carrier’s slow data connections.
With the iPhone, Apple made AT&T Mobility relevant again. It brought the company millions of new subscribers. But in the process, Apple also realigned the strategic playing field in its favor. Radically. Writes Moffett: “Remarkably, Apple has so thoroughly stolen the customer relationship–who would argue that Apple iPhone customers’ first affinity is to the device rather than to the network–that the network is not only irrelevant, it is rather a source of derision.”
As NBC Universal Chief Executive Jeff Zucker said back in 2007, “Apple has destroyed the music business and if we don’t take control, they’ll do the same thing on the video side.”
Or, perhaps, to the wireless business.
Comments
Moffett is saying Apple’s exclusive partnership with a company that can’t offer key features and delivers slow speeds is somehow helping Apple build strong customer relationships.
Sounds like we have a new Jim Goldman here.
Posted by Bill Bucy at July 14th, 2009 at 9:00 amFrom day one of the iPhone potential users were concerned about the single carrier limitation. This has been a bone in the throat of all but those few who were previously delighted with AT&T wireless.
As usual, Apple is the villain for exercising anal retentive control over the product, but the other party gets the blame.
Fortunately the coming availability of multiple phones with technology similar to the iPhone will end this exclusivity in ways that don’t benefit Apple.
Google, Palm and Microsoft should send Apple a thank-you note.
Posted by Mac Beach at July 14th, 2009 at 9:33 amI think AT&T made a smart move. Customers that wanted the iPhone had to convert their service to AT&T. The increased revenue has allowed AT&T to invest in its 3G network and define text messaging and tethering as separate from phone data service.
Some of the new customers may enjoy AT&T and continue their service. Others have learned to hate AT&T and will jump ship at the first chance for another iPhone service provider.
Posted by Michael Critz at July 14th, 2009 at 11:12 amI have always disliked AT&T’s service, and left them as soon as they bought Cingular. I wanted to get an I Phone but was one of the few who couldn’t bear the dropped calls and bad service.
Posted by Karen Smithson at July 14th, 2009 at 3:23 pmGood to see they are picking things up with their 3G network but I don’t blame Apple for stealing the customers. It was Apple who had the customers to begin with and AT&T would have been left in the dust a long time ago.
Karen
Honestly, I spend more money on music than I otherwise would if iTunes were not around. iTunes has not killed the music industry; if anyone is to blame it’s the labels for failing to convert Napster into a profitable enterprise when they had the chance. The average consumer does not want to buy an album to get a single song. People who love the music will always buy a good album, but surely a big part of this problem is ‘filler music’; mediocre songs used to top up the track count on a CD to sell at top dollar? And as far as AT&T goes, they’ve dropped the ball. Why is it that here in Australia where the iPhone is available on 5 different carriers, pre or post paid, they are competing and they all support MMS, and they all allow tethering? Because they want to give the customer what the customer wants. AT&T simply doesn’t understand their new found customers. Make them happy, make them want to stay on the network. Admit there has been teething problems due to the popularity of certain handsets, but improve the network and roll with it.
Posted by Rowan Pope at July 21st, 2009 at 4:29 pm