Mike Ash (via Marco.org) makes this point following the FCC responses today:

Ignoring the question of why it’s Apple’s job to prevent their customers from breaking AT&T’s terms of service, it’s interesting to note just how much this policy is centered on the United States. The iPhone is sold in dozens of different countries and works with dozens of different cellular carriers all over the world. You can be certain that each one of those carriers has different terms of service. Why is AT&T so privileged that their terms of service, and theirs alone, are the ones that Apple looks at when deciding whether to reject or accept any given app? It’s quite likely that people all over the world are missing out on great iPhone apps that their cellular carriers would permit them to use just because AT&T does not permit Americans to use them.

This by way of saying, for example, because AT&T prohibits SlingPlayer from running over 3G, users in Canada (on Rogers), the UK (on 02), Japan (on SoftBank), etc. are also prevented from using SlingPlayer of 3G.

Apple certainly makes only specific mention of AT&T in their consideration process. However, AT&T was the first iPhone carrier signed, so perhaps there’s something in that original deal that makes it so — or is it just that Apple is headquartered in the US?

Now, presuming those other, international carriers aren’t just sighing in relief that AT&T takes the hit on this so they don’t have to (anyone think Rogers, O2, SoftBank, et al. are dying to take the network hit that comes with an uber-popular, functionality surfacing device like the iPhone doing high-bandwidth tasks like streaming TV shows and movies?

There are certainly examples enough of region-specific apps (AT&T’s own apps are just in the US), and apps that are missing from just one regional app store (Skype is not in the Canadian App Store, reportedly due to a patent dispute).

As mentioned previously, Sling has submitted a 3G-enabled version of SlingPlayer for non-US App Stores (Canada, UK, Japan, etc.), so we’ll soon see.

This is a story by the iPhone Blog. This feed is sponsored by The iPhone Blog Store.

Do Other Countries Lose Out on Apps Because of AT&T Policies?

Macworld has a great article up today about the arrival of Skype on the iPhone (and soon the BlackBerry) and what the widespread availability of VoIP (voice over IP) clients — which eschew the traditional phone lines to send talk via data instead — means for cell providers like AT&T, Verizon, O2, Rogers, etc. who’ve made tons of traditional money billing us all by the minute.

One common future seen for cell companies is that of “dumb pipes” — like DSL or cable companies that provide bandwidth but few if any premium services. Verizon shows how far (and foolish) they’ll go to avoid that fate:

“We have moved away from unlimited data plans,” Verizon Wireless President and CEO Lowell McAdam said at a question-and-answer session at CTIA. “The excitement of an over-the-top application like (Skype) in an unlimited environment means one thing to a customer. In an environment where you’re paying for every byte, that means something totally different.”

I wonder, tongue only partially in cheek, if McAdam used to work for the music or movie industry? Our own editor-in-chief, Dieter Bohn, freshly returned from CTIA shared his thoughts:

Dear Verizon: You always become what you most fear. To wit: dumb pipes. Love, the inevitable.

Sounds good to me. Let’s make a deal, carriers. You supply the bandwidth, keep the bits open and neutral, and I’ll pay for the service same way I pay for my electricity and plug in whatever gadget I want. Deal?

Ralph de la Vega, president and CEO of AT&T Mobility, the iPhone’s US carrier, seems almost on a page with that already:

“The way the world is going, it’ll just be, ‘How much data do you want to buy?’ and you do whatever you want over that data.”

Check out the complete article at Macworld for more, and let us know what future you want for your data below…

This is a story by the iPhone Blog. This feed is sponsored by The iPhone Blog Store.

iPhone, Skype, and Dumb Pipes: The Future of Cell Carriers

This past Saturday Apple posted a new support page, a simple list of all the carriers currently selling iPhone 3G’s and which ones are locked and which ones are unlocked. As all AT&T customers know, our iPhone’s are locked down tight until the Dev-Team can do something about it. I suppose if you were that desperate and crafty you could use this list of unlocked carriers to get yourself one, for a hefty fee of course… and be sure to know how to speak fluent Chinese if you want support for one purchased in Hong Kong or Taiwan.

[Via Engadget Mobile]

This is a story by the iPhone Blog. This feed is sponsored by The iPhone Blog Store.

Unlocked iPhones Around the World

So you might have heard that the iPhone 3G was going to retail for $199 from AT&T. I’ve already covered how it isn’t technically $199 for current iPhone users. And you heard Rene tell you that $199 is less than the notorious price DROP of the iPhone. Well TiPb has been wondering how Apple settled on dropping the price so dramatically.

And we settled on a story, kind of—more like a collection of reasons. We’ve analyzed the outcome back and forth, from reverse and from the beginning. And we think we have come to a conclusion (or at the very least, a conspiracy theory). In a purely speculative story, I’ll give you my opinion on how we reached $199.

Read on for Apple’s Path to $199

Apple Wanted to Revolutionize the Phone Industry

They were hoping that the iPhone was going to be ridiculously popular (it was) and that foreign carriers would see such popularity and ask for it on their network as well. Therefore in that case, Apple could then leverage the iPhone’s popularity into folding the carriers into having the same relationship with Apple as AT&T ‘enjoys’. Essentially making the carrier powerless to Apple’s demands and eventually change the way carriers work.

Do you guys remember the uniqueness of the original iPhone? This was a phone that toyed with AT&T, basically ignoring everything that the Death Star Company wanted. When AT&T asked for prototypes pre-iPhone launch, Apple reportedly created fake models to placate them. Apple created a new iPhone-specific data plan that AT&T had to abide by—$20 for unlimited data and 200 SMS. Apple created a new activation process that essentially cut AT&T out of the loop. You activate via iTunes, not with AT&T. Apple created a new business model for the iPhone that included revenue sharing—AT&T is paying Apple for users using AT&T’s service, just simply brilliant business. Phone Carriers don’t typically get thrown around like this.

It almost worked

With the gray market in full affect, Apple lost their leverage. Foreign Carriers had no desire to bend to Apple’s unprecedented demands because anyone who really wanted an iPhone could easily get an iPhone through the gray market. And those using unlocked iPhone on a foreign carrier’s network would HAVE to work with the current data plans in play. Therefore we have iPhone users across the world using the iPhone on network’s aimed to rip every dollar from the consumer.

What could Apple offer the carriers now? From the carrier’s standpoint, the money gained by having unlocked iPhones on their pricey data network was worth more than agreeing to revenue sharing models and affordable data plans. Not to mention the fact that when a foreign carrier introduced the iPhone to their country’s market per ‘exclusivity contract’ it would only give unlockers a chance to use OTHER networks in the same country. So much for exclusivity, right. The money spent paying Apple for ‘exclusive’ rights was better not spent at all.

Apple still needed to increase marketshare

Back then, the idea was that foreign carriers would see the benefits of having an exclusive relationship with Apple and that would offset the costs that they would have to pay in a revenue sharing model. But with the gray market, all the foreign carriers had to do was stand pat and wait for Apple to come around because everyone knew they NEEDED to sell 10 million units in 2008. And that meant expanding to more countries.

So when the clock started ticking and Apple realized they had little to no leverage, they folded to the carriers demands. The carriers were too entrenched in their markets, they had too much power and Apple’s only leverage was lost. Nothing about the carriers was going to change.

AT&T demanded change

So the revenue sharing disappeared. So did the activation process. So did the iPhone-specific plan. AT&T isn’t going to do it Apple’s way anymore because Apple folded to the demands of foreign carriers, thus giving AT&T a loophole to subsidize, raise data prices, and basically conform the iPhone to any phone in AT&T’s lineup.

So Apple needed to re-strategize

So how else could Apple revolutionize the cell phone industry? By aiming their attack at the other party. Cell phone makers. A $199 price point for the iPhone 3G will force people to notice and overhaul the system from the device end. In fact, the Samsung Instinct dropped to $199 after the Apple announcement. I’m sure RIM and other companies will have to follow suit. How could a company justify charging so much for such feature-strapped phones?

So Why $199?

But to be bold enough to declare it at $199. That’s a direct challenge to RIM, to Palm, to HTC, to Sony. $199 is the price point you have to hit and if you don’t, consumers are going to wonder why is a phone that’s not as full featured as the iPhone cost more than the iPhone? They are forcing cell phone makers to change their strategies and not simply rely on the carriers doing all the work for them.

A $199 price point can realistically put the iPhone in the hands of a lot of potential customers. They’re attacking the situation in reverse of what they originally intended. Putting it in the hands of the most customers possible and gaining market share to create change. With a larger install base, the App Store and iTunes Wi-Fi store become instant money makers. With users falling in love with the iPhone’s usability, Apple gets their leverage back. Apple believes that when people finally get to own the iPhone, they’ll always own an iPhone. Cell phone makers, you’re going to have to catch up fast. Cell phone carriers, Apple is still going to come after you.

This plan actually makes more sense than Apple’s original business model, when people fall in love with the iPhone, Apple would have a dedicated user base ready to follow Apple and the iPhone wherever they go, to whomever carrier it happens to be.

What does the future hold then?

And what about expanding the iPhone platform, which is a natural progression in creating cell phones. What will an iPhone nano retail at? $99? Can Apple deal with the PR-nightmare it would have if they were to raise prices in the next editions?

Or could Apple simply put the iPhone in the most hands possible and then prep themselves to go completely unlocked? Could they manage to offer a $199 price point without carrier subsidies?

Final Thoughts

Or maybe I’m just a conspiracy theorist. Remember this is all speculation and opinion. Apple simply just could have realized they couldn’t keep pace with the hype of the iPhone 3G and determined the best way to have conversation was to significantly drop the price. Shock and awe. Or maybe not.

What do you think? Why do you think Apple priced it at $199 and do you think the iPhone will ever go completely unlocked? Comment on this Wait-a-Thon post for a chance to win a $100 iTunes Gift Card!

This is a story by the iPhone Blog. This feed is sponsored by The iPhone Blog Store.

Apple’s Path to $199 (Wait-a-Thon)

[Updated following Phone Different Podcast #19, see below!]

Way back in February, Apple’s Chief Operating Officer, Tim Cook said:

“We’re not married to any business model.”

At the time — and it’s scary how long ago it seems already — the iPhone was only available in the US, UK, Germany, and France, with rumors of Ireland and Austria waiting in the wings. What’s more, these were all exclusive deals, with Apple doing their best to lock the iPhone down to single carriers in each territory in exchange for lucrative — and unprecedented — revenue-sharing deals that some have estimated could be netting Apple up to $15 per month, per subscriber.

So, with a potential billion dollars on the table, while they weren’t married to it, they no doubt felt more than a little lusty.

But in true Apple fashion, invoking perhaps the pirate mantra of old, and embracing the same mindset that has them run iTunes as a near-loss leader, price-cut the iPhone a scant few months in, and offer cheap family upgrade options on their OS and iApps, it looks like Tim Cook was serious.

Read on to find out just how serious he was…

Late April brought rumblings of carrier “discounts” in Europe. Apple claimed carriers could charge what they wanted. Pundits on various sides pointed to clearing stock in the face impending 3G, or desperation to nudge thus-far-disappointing sales.

Then the floodgates opened. Literally. What had been a scant 5 countries with official first generation iPhone deals, became a torrent of announcements, week after week, of dozens upon dozens more. Canada. Australasia. Africa. Latin America. The Middle East. Scandinavia and the Baltics. And more. Double, triple, quadruple, the numbers became near-exponential.

The strange part? Multiple carriers began announcing iPhone deals in the same countries or territories. Vodafone and Telecom Italia both claimed Italy in early May.

Carrier exclusivity was gone.

No doubt at Apple’s behest, press releases were short to the point of single sentences at times, all with the promise of more details to follow, but Orange did let slip that there would now be non-exclusive deals (where no carrier had the sole rights to the iPhone and any GSM provider could theoretically support it), and co-exclusivity (where two or more carriers had sole rights and only they could officially support it).

Orange didn’t stop there either. Rumor has it they are now calling up existing iPhone customers and offering them €50 upgrade paths to the next generation iPhone 3G. Talk about a subsidy!

So why, with so much money at stake — and let’s face it, cachet — are Tim Cook’s words suddenly ringing so loudly?

Steve Jobs has said that one of Apple’s greatest failings during his absence was that other leadership chose to grab for money rather than grow market share. And Steve Jobs is known to think about products and positioning years into the future.

Our own Dieter Bohn has teased some of his thoughts on this, and promises to follow up on the next Phone Different Podcast. Don’t miss it.

UPDATE: Dieter, having brainstormed with another one of our writers, Chad Garrett, is offering the following: Given the massive amount of carriers now announced for the iPhone 3G, managing activation via iTunes may get a lot tricker… unless Apple offers the iPhone unlocked, and iTunes simply provides a way to connect to one of the established carriers in exchange for a subsidy, or — dream of all dreams — lets you keep running unlocked if you’re willing to forgo said subsidy. How’s that for a new business model?

For my part, I’ll mention this again:

Apple is alone among modern technology companies in enjoying near spherical integration. They make the iPhone hardware. They develop its software. They provide .Mac services. They market pro-level content creation tools. They own the high-end computer market that runs those — and the developer — tools. They sell content via the #1 music retailer in the US, iTunes. They have a toe in the accessory business with a headset, docks, cables, etc. They license 3rd party accessories. They get revenue sharing on subscriptions from current carriers. They are about to launch an App Store, getting a cut of commercial sales in exchange for putting product in front of every single iPhone user on the planet. They have an international online store, and their growing chain of retail Apple Stores make more per square foot than Tiffany’s.

So, unlike many others who have to survive on platform licenses, hardware margins, service contracts, or any other single or small number of profit streams, Apple can choose to take hits in multiple streams (like revenue sharing) and still earn money hand over fist in many, many others.

In short, Apple isn’t married to any specific business model because they can afford not to be. And come WWDC in June, and the long expected iPhone 3G announcement with it, Apple’s plans may just result in a windfall for consumers as well…

This is a story by the iPhone Blog. This feed is sponsored by The iPhone Blog Store.

Apple’s New iPhone Business Models