RIM to AT&T: You’re Being Screwed.

During a friendly debate between The Boy Genius and myself the other night, the oddity that was the deal between AT&T and Apple (and all of the potential power that was given to the manufacturer) was one of the major topics of conversation. It was surmised (by me) that AT&T is being treated like a little <explicative> by Cupertino-based Apple, Inc. This would pertain to, among other things, the fixed pricing of the iPhone and the inadequate stock of devices found at AT&T stores. We all heard about how many AT&T stores depleted their stock of iPhones within minutes of re-opening the stores but there was nary a report of any Apple stores selling out on iFriday, despite rumored sales numbers in the thousands per store.

Well, it doesn’t seem like I’m the only one who thinks that the deal between AT&T and Apple may signal troubled waters ahead for the consumer and corporate customers of carriers. Research In Motion Co-CEO Jim Balsillie mirrors these sentiments, albeit a bit more professionally, by stating: "It’s a tremendous amount of control. And the more control of the platform that goes out of the carrier, the more they shift into a commodity pipe."

Well Said, Jimbo.

BG and Josh’s responses below.

Boy Genius:

Not really, Jibi. He’s mad because there is no carrier branding, and you have to activate the iPhone through iTunes? Get real. Over 300M people have iTunes, and most people buying an iPhone already have iTunes installed. Is this part of some mass scheme Jobs has come up with? Maybe…..but who cares? It provides more revenue to the manufacturer (assuming they have the clout to get a piece of the wireless service fees) and the wireless carrier. It cuts down on sales people bothering the crap out of you to choose more add-on plans, etc.

Additionally,  iTunes is merely a conduit of information directly to AT&T. You don’t really think that Apple is doing credit checks, and upgrading subscriber’s accounts do you? You lost that point. He’s pissy because his monstrous company doesn’t have the power to dictate what they want to the carriers……Alas, still no Wi-Fi BlackBerry devices, yet you were the one who was so eager to point out to me that RIM has had a patent for seamless call hand-offs between GSM networks and Wi-Fi networks since mid-2005, right Jibster? Oh, ok. If RIM really gave two craps, they’d have been more insistent and consistent with what they wanted in regards to carrier implementations. What about the branding aspect? Jim is mad because the iPhone isn’t branded? Please just stop. I hate to break it to you Jimbo but, if you see an iPhone in the United States for the next couple years, I can almost 99% guarantee you that particular iPhone will be an AT&T iPhone. In fact, I think you’d be hard pressed to find anyone that knows what an iPhone is, that doesn’t know what carrier it’s on in the United States. You can’t honestly think your products look "cool" anymore though, right? That’s why you’re upset? Oh I know why…because that "consumer" market you desperately tried to grab so badly just went down the tubes. You’ve been reduced to Government, and business sales again. Wait…..now I know why you’re mad. Aw, because your #1 BlackBerry carrier in the entire world just gave you the cold shoulder. They weren’t returning your emails, because they were so occupied with launching the most hyped consumer product in history! I get it now. How about some real innovation…

The problem as I see it with RIM, and their software, is that they started out with email. They were, and still are the best in the business as an email device. They have tried hard to support modern age functionality like media, a camera, and other things, yet the issue is that their OS has to change. Looking at it from Apple’s perspective, they used an actual computer OS and took the bits and pieces they saw would fit on a wireless device. They already had the base of something great, whereas you had email. Tough luck. I know this might sound like an anti-RIM rant, but the fact is things have to, and will change up at Waterloo. Just wait till the iPhone supports full Exchange integration with push email, the boys up North will really be shaking in their mountain boots. Apple is Apple, and AT&T did AT&T. If anything, this is a huge revelation in terms of how a wireless carrier should be. They provide the service, and get the hell out. Have fun at that John Mayer concert, guys.

Josh: 

Companies are clamoring to come up with their own iPhone alternatives, releasing "hot new products" that seem to be thinly disguised attempts at integrating a bit of the Apple magic into their own newly-antiquated devices (Think HTC Touch). This is not to say that the iPhone does any one thing remarkably well, and it is missing some key features that make it next to useless for hard-core business users (Think true push email and 3G, not to mention a replaceable battery and a tactile keyboard). Nevertheless, Apple has marketed the device in such a way so as to make it look and feel like that long lost younger brother you never knew you had. Now RIM’s #1 guy has just gone on record deriding Apple for "taking advantage of AT&T." He cites the unprecedented length of exclusivity (5 years), complete lack of any AT&T branding, and proprietary non-AT&T iTunes activation process as proof of Apple’s stranglehold. Take a look at his concerns:

The lack of AT&T branding is, more or less, a moot point. Anyone that has turned on a TV or logged onto the internet during the last 6 months knows that iPhone is an AT&T device. The marketing gurus on both ends have done a pretty good job of informing us on that point. All of the marketing material, in addition to the information on both the Apple and AT&T websites clearly mark the iPhone as being an AT&T product. While the lack of physical branding is certainly unprecedented for a carrier supported phone, it by no means erases any trace of carrier association. Add to that the fact that these phones are not subsidized by AT&T, and it’s easy to understand the lack of physical branding. iTunes activation is, more than anything else, a time and energy saving measure. 300 million people have a copy of iTunes. Chances are good that your average iPhone customer is one of those 300 million. Instead of forcing prospective customers to languish in absurdly long lines (imagine how the launch and sale of 500,000 phones in a single weekend would have occurred if every customer was forced to activate in-store) to accomplish a simple task, Apple has streamlined an existing process. Nothing more, nothing less.

Balsillie contends that the launch of the iPhone represents a move away from carrier control of the wireless industry and towards the dawn of a new age in which handset companies have the upper hand. Regardless of whether there is any merit to his argument, shouldn’t this represent a positive shift for RIM’s CEO? Carrier control has led to botched launches (think Blackberry Pearl), crippled features and specs (think every Verizon handset), and more. Shouldn’t Balsillie be rejoicing at the prospect of this shift in power? However the dust settles, one thing is certain: The wireless industry has been forever changed, and no amount of complaining or finger pointing will bring back the "good old days." RIM, as well as the Motorola, Nokia, Samsung, HTC and SE, et al. best take careful note of Apple’s process, and hope like hell that they can ride the wave that Apple has initiated. Being a consumer never felt so darn good!

 

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