Saturday, February 17, 2007

Who Closed the iPhone, Part IV

On the whole open-closed spectrum of IT strategies, the most interesting thus far in 2007 (as well as the most successful vaporware) has to go to the iPhone. (I was clearly naïve when I thought I could limit iPhone-related posts to 10%.)

The question of “who closed the iPhone” may not rank with “who lost China,” but it’s an interesting one nonetheless. The saga to date:

The latest installment in the saga came on the front page of today’s Wall Street Journal, in a story entitled “How Steve Jobs Played Hardball in iPhone Birth.” The relevant quotes:
Apple bucked the rules of the cellphone industry by wresting control away from the normally powerful wireless carriers. These service providers usually hold enormous sway over how phones are developed and marketed — controlling every detail from processing power to the various features that come with the phone.

Not so with Apple and Cingular. Only three executives at the carrier, which is now the wireless unit of AT&T Inc., got to see the iPhone before it was announced. Cingular agreed to leave its brand off the body of the phone. Upsetting some Cingular insiders, it also abandoned its usual insistence that phone makers carry its software for Web surfing, ringtones and other services. The deal also calls for Cingular to share with Apple a portion of the monthly revenues from subscribers…
Why would Cingular do this?
Cingular executives were willing to cede control to Mr. Jobs and tolerate his digs at cellphone carriers, all for the privilege of being the exclusive U.S. provider of one of the most highly anticipated consumer electronics devices in years — and to deny rivals a chance to do the same, according to people with knowledge of the situation.
So the question “who closed the iPhone?” is almost as easy as “who built the ark?” As predicted, it took two partners to do the deed: Apple gave Cingular the exclusive in exchange for control over things it most cares about.

We’ll see if consumers will crave the iPhone features enough to put up with the double-dose-of-closedness, or whether they’ll favor rivals like the LG Prada or Samsung F700. (The choice will be easy outside the U.S., where the iPhone can’t be had for love nor money in 2007.)

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