How Apple Will Use The iPhone To Take Over The Wireless Industry
Steve Jobs isn't stupid. He knows that AT&T Wireless sucks. So why lock the revolutionary iPhone into a crappy network? — Because Jobs knows that everyone will buy an iPhone anyway, even if they hate the network.
Context & Ripple Effects
This piece extends the framing from USA Today's May 2007 report on AT&T eager to wield its iWeapon: the carrier bet its wireless future on iPhone exclusivity before launch day. Publishing 2.0 flips the perspective — arguing the dependence runs the other way, since Apple accepted an AT&T lock it knew was a liability because device demand would override network dissatisfaction. The same-day pickup by Bubblegeneration's Strategy Lab ('iStrategy') shows the argument already circulating among strategy analysts at launch.
The stakes are who owns the customer relationship in mobile: the carrier that owns the network or the device maker that owns the experience. Apple's confirmed position at launch — exclusivity with AT&T plus Jobs' acknowledged awareness of the network's weakness — makes this a deliberate trade of network quality for leverage over the carrier channel.
First-order effects
- Consumers who want the iPhone must accept AT&T service regardless of their existing carrier or their view of its network quality, concentrating new smartphone subscribers onto one carrier.
- AT&T secures an exclusive flagship device, but concedes that its network reputation becomes secondary to Apple's brand in the purchase decision.
Second-order effects
- Rival carriers face pressure to match exclusive handsets on Apple-like terms — ceding branding, pricing, and feature control to device makers rather than dictating specifications themselves.
- Handset economics shift: if buyers choose the phone first and tolerate the network, manufacturers gain negotiating leverage over carriers that previously controlled distribution.
Third-order effects
- If device demand keeps overriding carrier preference, the industry's power center migrates from network operators to platform owners, with carriers reduced to commodity access pipes.
- Exclusivity deals become the battleground where that transfer of power is priced — and regulators and consumer advocates may eventually scrutinize locks that force unwanted carrier bundles on buyers.
The trend: Mobile industry value is migrating from network operators to device and platform owners, with the iPhone's AT&T exclusivity as the opening data point.