Cingular contract & Apple pricing
January 11, 2007The 1% goal and the iPhone price are really intriguing. There is no way that Apple can get to 10M sales with just 18 months in the US, a year in the UK, and six months in Asia, especially with that price and contract, despite “global guru” Tomi Ahonen’s views.
Here is what I think is going to happen. Apple is going to come out with an unlocked phone in the fall. The Cingular two year contract (sans discount) is a lock-in to protect attrition once the unlocked phone arrives. T-Mobile has confessed a desire to work with Apple, there is no reason for Apple to ignore that and T-Mobile’s wifi services.
How do you reconcile that with the statement by Jobs that Cingular has a multi-year exclusive on the iPhone? Apple could screw Cingular by changing the name of the product ala OS 8 and the cloners, but I don’t think that Jobs goes into this with that intention.
Admittedly, this is an area that I have little expertise in, but I am curious as to what Apple did not choose to work with Sprint/Nextel. Sprint seems to be a technologically advanced company and would welcome the iPhone. Additionally, the free incoming plans (on certain plans, ALL incoming calls are free) that they offer are just a better situation than what Cingular has. I for one will be extremely hard-pressed to switch to Cingular just because of that fact alone.
Any thoughts about why Sprint was not or could not be in the loop? Are there technological limitations involved that would eliminate Sprint/Nextel?
I would like to buy the Iphone (t) but would rather pay full price so that I can go to any service provider that I chose
I hope the IPhone is made available on all (3-G included) networks beter sales!!!!
The iPhone isn’t a 3G phone! It’s GSM and EDGE. As to the bold statement that there is “no way” Apple will sell 10 million phones in 18 months, I find the “target” a good one and Apple has alread booked orders with the parts suppliers of 6 million units this year with options for 2 million more. I expect that Apple has a little more expertise and has done their research.
Apple will not disclose whether the phone will be sold locked or unlocked. I asked a sr. Apple exec about this, and his only response was “Cingular is our partner.” I then tried a different tack, and asked “Wiil the phone work with another provider’s SIM card?” The answer this time was, “We have selected Cingular as our carrier.” Draw your own conclusions, but there are still some things about the way the phone will be sold that are not finalized.
BTW, I am sure that I was not the only person to notice that “iCal” was not demo-ed. Looks like the calendar team missed their deadline.
The phone is locked – announced afterwards but I would be stunned if that wasn’t cracked rather quickly. Yes, it’s a two year exclusive in the US so once again, you can buy in unlocked elsewhere.
I do wonder how Apple will handle that since normally, the enticement is you pay $300 for the phone but they rebate you $275 (or whatever) once you sign up within 15 days but if Apple is selling it at $599 and I can’t imagine Apple letting Cingular mar up their stores with a crappy booth – so unless they sell it for $799 with a $200 rebate – but even then it would still probably be cheaper to buy it at Apple and not get a rebate than it would be to buy it off eBay … What you would presumably is the ability to sign up for Cingular’s EDGE service and all that it offers – or texting? Would it be incompatble with how another phone comapny handles that transmission before they forward it on? The phone would work but if you couldn’t get all the advanced services? Would it still be worth it?
Now is the time to write Cingular – asking them to improve sound quality in your area.
Sprint is having some serious problems and will most likely be sold in the next year – are they compatible with TMobile – the one buyer who probably wouldn’t cause any antitrust issues … or hell, get Apple to buy them
Hi Sharing the Truth blog and readers
Thanks for mentioning my blog entry. I am not at all disagreeing with the view that Apple could fail from its target of 10 million, as I blogged, it is a challenging target for sure, and your guess is honestly as good as mine. I am curious what level of sales you think they will achieve? After all, Steve Jobs did rather emphatically commit Apple’s future to this direction, so they can be expected to pool their considerable resources to this goal.
And in all honesty, of all technology industries, the telecoms sector, and in particular its mobile side, is the biggest laggard in adopting modern marketing methods. At most mobile operators (with millions of subscribers) they question the need to have more than four segments (prepaid, postpaid, corporate and family) – imagine Ford offering four models. Oh, you sir, that sedan comes only with a gasoline engine, automatic and the colour is blue. If you want a red car its the convertible. And if you want a diesel, then there is the minivan (white). Or you can have the subcompact (in green). Exactly four models in any Ford lot. That is the mind-set of typical mobile operator marketing today, in 2007. This is what Apple is up against, so their emergence in the cellphone market will be a rude awakening for the Nokias, Motorolas etc and also for the carriers.
By the way, was there a reason you put “global guru” in quotes? You can google me or check on Amazon how many hardcover books I’ve written on 3G, or take a quick look at my bio and the references at LinkedIn, if you don’t believe my “propaganda” on my personal website?
John B – on Sprint, their network is on the CDMA technology (and their Nextel parts on another, iDen), which incompatible with GSM that Cingular is on. CDMA has just over half of American customers (with GSM constantly eating into their lead) while the rest of the world is over 80% GSM and about 15% CDMA. So I think the Cingular decision very strongly signals that Apple wants global sales for the iPhone.
And on that thought, it takes typically one quarter by the established phone makers to go from first launch technology to the second radio standard. So it would not be practical to launch the phone on two standards simultaneously (or actually it would be incredibly risky more than impractical)
On the locking part – I have seen elsewhere on other discussion panels comments that the phone is locked also to protect Cingular against VoIP usage, such as Skype, Vonage etc. So the phone does have WiFi but only “crippled” WiFi. If this is true – and the arguments Apple seems to be making in its litigation with Cisco that this phone can’t do VoIP seem to support that view – then this phone has another very serious flaw in at least the European and Asian markets. We here expect a top-end smartphone with WiFi to have it fully accessable, like on my Nokia phones today. That 500/600 dollars 4GB/8GB (or even worse, 800 dollars for a SIM free version in many markets) is awefully much to pay to find you can’t do full WiFi on the device…
My two cents, fascinating discussion here..
Tomi Ahonen
Tomi –
Thank you for your comments. Excuse the “global guru” bit – I find it funny when people emphasize their credentials, when it is just as easy to determine their expertise by considering their body of work. It would be similar to me beginning every post of mine with the title “cynical bastard”.
Anyway, based on nothing but my observation of the industry and intuition, I believe Apple will achieve sales of 2 million by early to mid-2008. After that, I the guessing game is subject what Apple does in terms of further product introductions. My sense is that Jobs should have went with a lower number and blown the doors off instead of setting such a high number and maybe falling short.
Inner Daemon – I’m enjoying this comment thread and coming from a non-tech background — am learning a lot too. As for Jobs sales forecast, by all means as the Apple King and thus leader of ultimate profitability, he should aim high or at least present that expectation for his employees/sales teams to aspire. His natural zeal for his product certainly will be contagious and further embed the customer loyalty out there as well.
100% I understand, and I agree with you.
Nice posting……. and Nice blog, I like it
very interesting, but I don’t agree with you
Idetrorce