Tuesday, July 14, 2009

The Pied Piper Stole All My Subscriber's Attention and Money!!!

...is what Verizon, T-Mobile and Sprint are thinking to themselves as they start to finally wake up to the impact that Apple and the iPhone is having on their business models. Alec Saunders has an extensive blog post today on Verizon trying to put the iPhone genie back in it's bottle.

The problem is this move by Verizon is a combination of "too little" and "too late". The iPhone has been out for over 2 years now with 2 significant upgrades to it's HW and 2 for it's firmware and with 30,000+ apps in the store;

There is also some "how to lose friends and amuse enemies" in this. RIM and other handset vendors whose devices ride on Verizon networks have already started or are starting their own app stores. They see the move by Verizon as competition to their app stores. They see Verizon in it to corner the lion's share of the profits from App sales and control what apps are allowed on their devices.

Where does this lead?

Most likely what will happen is, when the ATT and Apple exclusive contract ends next year, Verizon and Sprint will become compelled to add the iPhone to their networks on Apple's terms. The wildcard in this is the chance that ATT will negotiate with Apple to extend the exclusive contract beyond 2010. If that happens Verizon and Sprint will be in serious trouble.

In either case, if Verizon and/or Sprint commits to a specific handset maker, such as RIM, being the "store manager" for their app store, and then gives RIM control, revenue share and handset subsidies similar to what ATT gives Apple, Verizon just might develop a competitive mobile apps ecosystem as they still have 80 million subscribers.

But if they try and create their own Carrier-controlled and device-independent app store I think they are doomed to failure. Carriers are just not agile enough to pull off supporting a community of fast-moving app companies and device vendors would rather try and build their own, carrier-independent app stores that be controlled by Verizon.


  1. I'm always interested to hear your thoughts. Thanks for posting. I'm waiting for my verizon to be up so I can get an iphone.

    It seriously seems like forever. My son has an itouch and I'm amazed at what it can do. Aps are incredible.

  2. "Carriers are just not agile enough to pull off supporting a community of fast-moving app companies..." I wonder if Apple was thinking about this when they developed the iPhone. My guess is probably. Possibly not a matter of agility but core competency. Apple isn't trying to become a carrier, but it sounds like carriers are trying to become Apple? Am I interpreting this correctly?

  3. Jeff: Yes. Good analysis. I think you are correct saying "Apple isn't trying to become a carrier, but it sounds like carriers are trying to become Apple?" Carriers should partner with RIM or someone else to manage their app store but from RIM's perspective, and every other partner company who has had to deal with one of the big dinosaurs, carriers generally are a serious pain to work with. Apple had a plan to be in control from day one in working with ATT. Once Apple was "in the door" at ATT Steve Jobs strode into the lobby with his storm troopers and started barking orders on how things would be done. Now that iPhone is a rousing success he a virutual co-CEO of ATT.


Tell me what you think!