Apple and AT&T
There has been a lot of hype leading up to yesterday’s announcement of the iPad. I’m sure that the hype will continue right along until the release of the device and beyond. As interesting as all of the possibilities that the iPad will allow are, I wanted to talk about another subject. One that has also gotten quite a bit of attention over the past few months. And that is Apple’s relationship to AT&T.
The biggest complaint I have heard about the iPhone is that Apple has chosen AT&T as it’s exclusive partner in the United States. I have heard from friends and family who would buy an iPhone for their next phone — only if it was available on <insert favorite carrier who isn’t AT&T here>. And from people who do own iPhones, there are always stories of dropped calls or how reception isn’t available in big cities like New York or San Francisco (both of which I have personally experiences).
Obviously Apple has had to heard these complaints — it’s tough to read about the iPhone on the web without hearing something about this. But when Apple introduced the iPad yesterday, they also announced that the iPad’s 3G service will be on AT&T exclusively. Say what?
As a consumer hearing this might feel like a giant kick in the teeth by Apple — obviously, it would seem, Apple has heard our complaints and just doesn’t care. And given that Apple is very quiet on matters like this, it might seem the logical conclusion. But if you take an objective look at things, it begins to appear differently.
First and foremost — we do not have all the information that Apple and AT&T do in regards to their network performance, infrastructure planning, sales forecasts and contractual agreements. Obviously Apple likes to have options (look at the Intel transition and how long they had the backup plan in place) and if it made sense to do so, Apple would’ve announced a new partnership yesterday. But since they didn’t announce that, we have to assume that they know more than we do about this and they are basing their current decision on that information. It could be any number of things — maybe AT&T has a plan to fix the coverage issues in the next six months. Maybe things aren’t as rosy on Verizon as everyone assumes they are. Maybe Apple doesn’t want to support CDMA networks just for the US market, especially since Verizon has already said they are going to use LTE for their 4G network.
Second — we don’t know the terms of the original Apple and AT&T agreement. It is quite possible that the terms of that agreement apply to all mobile devices sold by Apple with a cellular modem in it instead of just the iPhone as originally reported. Apple may simply not be able to offer a 3G connection on any other US network until the end date on the agreement. Also it was initially reported that the agreement was a five year deal. There was some noise last year that Apple and AT&T had negotiated a one year extension, but neither side has publicly said anything. If that is the case, there is still over 2 years before we should expect to see anything other than AT&T with the iPhone here in the US.
Third — Apple is most likely getting more out of the AT&T partnership than money. Apple, despite their success with the iPhone so far, is still the newcomer to this industry. The cell networks are very complicated — you have multiple standards to implement, you have to play well with multiple devices (both end user devices and the equipment on the tower), you have government regulations to adhere to and at the same time you have to provide a good user experience. Apple has tons of experience in building software and in building mobile devices. What Apple didn’t have was experience with the phone network. My gut feeling is that AT&T gave resources to Apple to get the iPhone up and running initially - and in exchange for that, Apple has worked with them exclusively here in the US.
To wrap this up, I think that eventually we will see the iPad and iPhone both available on networks other than AT&T here in the US. But it doesn’t surprise me that it wasn’t yesterday that Apple announced a new partner.
