Column

Just A Thought - On iPhone, AT&T/Cingular, Contracts, And Apple

Friday, January 26th, 2007 at 4:10 PM - by

About 6 months ago I renewed my Cingular contract for 2 years while picking up a RAZR for $20. By the time iPhone comes out I'll be 1 year into my contract and Cingular will be AT&T. I figured I was sunk because I wasn't about to pay full price for an iPhone, which means I would have to wait out my contract to get one.

I spoke with the guy who sold me the contract and he says that, while he couldn't give out details, he was told that AT&T will "work with me" to get me an iPhone when they are available.

He also said that he's been literally swamped with questions and requests for iPhones, and that he knows he could sell 100 a day if he had them now.

That got me thinking about how Cingular/AT&T will handle the iPhone and its customers. They would be silly not to take advantage of this huge opportunity to put a nice shine on the company. Forgiving contracts, creating service packages that people actually will want, and insuring the service is first rate will go a long way towards making them the top cellphone dog.

Screw up and it would take them years to recover the lost revenue and reputation. Why?


Is it June yet?

Early iPhone adopters will be very high profile folks. If they can't get a call through, or if the data service sucks they will let more than a few people know about it. Every nuance of contracts and service will be in the public eye. Muck over one semi-high profile iPhone user and it could cost them 1000+ contracts and iPhone sales.

On the other hand, handle new iPhone users with kit gloves and they'll draw new customers by the truck loads.

I also believe that Apple will press AT&T/Cingular to make sure the iPhone is in the best possible light. I would be willing to bet real Wisconsin cheese that somewhere in the agreement between AT&T/Cingular and Apple there's a clause that says something like: "If your service sucks to high heaven we reserve the right to break our exclusivity agreement and take iPhone to other vendors."

I'm sure the opposite is true as well.

So, AT&T could stand to gain. Happy iPhone users would imply that AT&T does, indeed, have good coverage, good service plans, and good customer service, and even if a new customer does not get an iPhone the implied superior service would be assumed to apply to all phones.

AT&T could lose as well. If iPhone turns out to be a dud (doubtful, but you never know), or if it becomes known that any part of their service is not up to snuff not only will they not attract new customers, but they will lose many of their current customers as well.

Of course, Apple is not above missteps, and a screw up with the iPhone could easily kill the current positive momentum they are enjoying, but I'd bet a honey-baked ham that the iPhone won't suck.

By the way; I happen to think that Steve Jobs didn't show all of his iPhone cards during that keynote in San Francisco. We've got 6 months before we see the first iPhone sold and anything can happen during that time.

We Americans have notoriously short attention spans, we tend to focus on whatever is the shiniest bauble at the moment, and I have to believe that Mr. Jobs understands this.

So, while iPhone as introduced at Macworld 2007 is cool, I don't think what we saw was all that there is. I'd be willing to bet my collection of recently minted pennies that the Apple Crew has, or is working on a bevy of peripherals to support this new toy.

Software for working with documents, chatting clients (iChat mobile?), and other apps might be waiting in the wings to be announced at strategic times over the coming months. Also expect to see hardware too. Docks, screens, keyboards, and other cool gadgets from Apple and other vendors as we approach iPhone lift-off.

Finally, expect that there will be enough iPhones to go around. Apple will have a nice long lead time and they can build the phones without FCC approval, they just can't sell them. When it looks close to being a done deal the production lines will kick into high gear.

Back to my discussion with the cellphone guy. When I told him I wanted to possibly get two iPhones (for me and my daughter) he smiled and said, "That's nothing. I had a guy in here a while ago looking to buy an iPhone for every member of his family. Not just his immediate family, EVERY family member. He didn't say how many total, but he had his wife and two teenage kids with him, so that was at least four."

Maybe there won't be enough iPhones to go around after all.

Vern Seward is a writer who currently lives in Orlando, FL. He's been a Mac fan since Atari Computers folded, but has worked with computers of nearly every type for 20 years.

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A guest said: (hide)

Fri Jan 26, 2007 5:41 pm

Vern,

Given the phone service providers are notorious for being not very customer sensitive, we'll have to see how it goes.

BTW. that should be kid gloves, not kit gloves.

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A guest said: (hide)

Fri Jan 26, 2007 5:52 pm

There's an interesting opportunity for ATT/Apple to take market share (for residential landlines) from Verizon and Qwest with iChat. If iChat is enhanced with a Skype-Out and -In type of capability, it can become a replacement for landlines. Apple could ship iPhones with an iChat client that automatically detects WiFi (or could use Bluetooth and a Bluetooth access point peripheral that connects to a broadband circuit) and registers the phone for use via the Internet using iChat. In partnership with ATT, the telephone numbering issues could be worked out and a service that automatically hands off between cellular and iChat offered (this is standard fare in the IP Multimedia Subsystem, or IMS, standards that've been circulating in the mobile industry for several years). This would be a potential killer app for ATT in its landline competitors' territories. Even in its own territories, it could be bundled with DSL, or with DSL and a standard POTS line, to create a very tightly integrated "one-number" solution. I suspect this may be part of strategy they're pursuing.

Oh, and by the way, "...handle new iPhone users with kit gloves..." - think you mean "kid gloves", named thus because they're made from the skin of a juvenile goat and are quite soft.

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A guest said: (hide)

Fri Jan 26, 2007 5:57 pm

Actually kit gloves is also true as:

Kit is: A tiny, narrow violin used by dancing masters in the 17th and 18th centuries. It was handled with special gloves, 'kit gloves', and the saying means to handle delicately.

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A guest said: (hide)

Fri Jan 26, 2007 6:25 pm

Re: "kit gloves"

Please check your sources. The expression "to treat with kid gloves" dates from the early 1800's and there has never, other than when the word mispronounced (which is common), existed an expression "to treat with kit gloves." If you can provide any documentation of this, I will be happy to offer my humblest apologies.

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A guest said: (hide)

Fri Jan 26, 2007 6:32 pm

I'm not so sure there will be any substantial new "features" to the iPhone, as the one demo'd at MacWorld was still not 100% operational as it is. That has to be solved first.

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A guest said: (hide)

Fri Jan 26, 2007 7:07 pm

We (my wife and I) have gotten several free or discounted phones through cingular/att even though our contracts haven't been up. They just redo the 2 year period to start from that date. Not sure why this wouldn't be any different...plus they will pull alot of normal phones users into a new contract that includes data.

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A guest said: (hide)

Fri Jan 26, 2007 7:08 pm

C'mon, you guys are all up in arms about "kit gloves"? What about Vern's sneak attack into Ihnatko territory with all that betting he was doing:

"I would be willing to bet real Wisconsin cheese..."

"I'd bet a honey-baked ham..."

"...bet my collection of recently minted pennies..."

And please, not the FCC thing again. Getting FCC testing done takes a day for an unintentional radiator and maybe a week for a transmitter. The test labs may take an additional week to issue the FCC ID but then you're done. No, they are spending their time fixing bugs, finalizing the bill of materials, getting sample production parts and ramping up production etc. etc. All the things Apple normally does for any new product they haven't told you about. (Which all have to pass FCC muster by the way!)

So Vern, aside from betting, your article was interesting because this is the first I've heard from the Cingular sales people.

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A guest said: (hide)

Fri Jan 26, 2007 8:49 pm

As has been said above, you can renew your contract for 2 years at any time and get a phone - there is no penalty for breaking your old contract if you are with the same carrier.

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A guest said: (hide)

Fri Jan 26, 2007 8:53 pm

I was in a Cingular store in San Francisco 2 days ago. I asked if I would be able to get the iPhone without paying to get out of my current contract. The sales rep got onto his terminal and pulled up a PDF (presumably from their intranet). The PDF described a lot of details about the iPhone.

Near the details about the price the document included the phrase "the iPhone will be available to new and existing Cingular customers." The rep claims that this means that it will be available to everyone () at the listed price--because there will be no discounts, period.

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A guest said: (hide)

Sat Jan 27, 2007 12:18 am

Vern,

As you and I have spoken privately . . . "Just give me a good phone that connects with no camera, a set of "professional" features (no gimmicks or toys), Bluetooth & Wi-Fi!"

On that note, any word of Voice Dialing? No good without it.

. . . fb

P.S.

Since the announcement I have yet to hear anything good about Cingular (matter of fact the negative banter has increased) nor that anyone that has them, my entire family (I have TMobile), that likes Cingular or gets good service in any manner. They'll have to go a good looooooong way to make it right. Good Luck.

Plus, TMobile just bought billions in frequencies (more than all the rest of the carriers) that this phone will need. What does AT&T have? That old tired "original" digital network that they shut down and reactivated as . . . something else? I'm willing to bet that some mistakes have been made that will be obvious or attempted to be hidden that will be rectified by the official release. OR some major surprises and if they do that, we'll all be better for it.

Fingers crossed.

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A guest said: (hide)

Sat Jan 27, 2007 12:21 am

To all the kiddie grammar purists caught up in a mitten war...

Maybe someone can let me know if it will be State Farm "INSURING the service is first rate..."

I do not expect, though, that this post will be ENsuring the improvement of Mr. Seward's proofreading skills...

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A guest said: (hide)

Sat Jan 27, 2007 12:33 am

I have said this all along. It does not take anyone six months to get FCC approval. Moreover, Apple likely could have used a shell company to get the approval to keep the matter a secret.

My feeling is that Apple announced early because its stock would have taken a huge tumble if it did not announce the iPhone. The media before the announcement treated the iPhone as a done deal. Also, the dispute with Cisco may have played into the decision. If so, it was probably because Apple wanted the six months to clear the matter up in courts, and Apple couldn't keep that secret. Apple, of course, is not going to give that as a reason. Detracting from the whole options things might also have been a consideration.

Finally, you are correct. Apple is using the six months to finish the device. People like Pogue have commented that Apple is still working on the device. I suspect Leopard will include iPhone features.

Guest wrote:
C'mon, you guys are all up in arms about "kit gloves"? What about Vern's sneak attack into Ihnatko territory with all that betting he was doing:

"I would be willing to bet real Wisconsin cheese..."

"I'd bet a honey-baked ham..."

"...bet my collection of recently minted pennies..."

And please, not the FCC thing again. Getting FCC testing done takes a day for an unintentional radiator and maybe a week for a transmitter. The test labs may take an additional week to issue the FCC ID but then you're done. No, they are spending their time fixing bugs, finalizing the bill of materials, getting sample production parts and ramping up production etc. etc. All the things Apple normally does for any new product they haven't told you about. (Which all have to pass FCC muster by the way!)

So Vern, aside from betting, your article was interesting because this is the first I've heard from the Cingular sales people.

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A guest said: (hide)

Sat Jan 27, 2007 10:53 am

I strongly suspect that the iPhone will at least be able to view and edit Word/Pages documents and possibly Excel/Numbers as well, but they are saving that announcement for the debut of the new version of iWork and its much-rumored spreadsheet.

I can imagine Steve running through the iWork features and suddenly picking up an iPhone and showing that iWork documents, not to mention Word and Excel ones, are readable on it thanks to the new iWork. A single license for iWork would let you download it to a single iPhone as well.

Sure, the device is in prototype, but this development was done by an entirely different team and so I don't see a problem in having it all come together for the launch.

I'm not sure about ichat support. It's on a lot of competing phones so it might be necessary to add no matter what Cingular thinks ...

D

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A guest said: (hide)

Sat Jan 27, 2007 11:42 am

you sound hungry, have you eaten?

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nealg said:

member since 22 Mar 2006 with 120 posts, unranked, send him a message or view his profile

Sat Jan 27, 2007 2:48 pm

Vern,

Nice piece. First I have heard about a cingular rep talking about demand for the phone.

It was also nice to see a piece that lists the speculation as speculation.So many pieces talk about speculation as if it were fact, on the positive as well as negative.

If the phone part works well and you get a nice iPod experience, the phone will sell well in my opinion. The data part will be pure gravy on top of that. Then it comes down to cost of being on the network. It will be interesting to see what feature set the iphone gets as well as the monthly costs.

Neal

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A guest said: (hide)

Sat Jan 27, 2007 5:07 pm

I have been a Cingular customer since they were BellSouth Mobility. They were one of the first to allow roaming between states for no charge. In the amost 20 years I have been with them, I hve never had a bad experience. I have had sales reps in their stores replace batteries for free, I have had then replace phones at the store rather than wait for one to come in the mail under warranty, generally a great customer service experience. The manager at the local Cingular store called me to ask if I wanted to be on the list for the iPhone when it came out! I said yes of course. My family and I have used our Cingular phones all over the US and in Europe without ever having any problems. I know the old adage about a man compaining about a bad haircut and never commenting on a good one, and I suspect that all the complaints we are hearing about Cingular is just that. They could not have become the largest carrier in the US if their service was nearly as bad as some people claim. I look forward to getting an iPhone come June!

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A guest said: (hide)

Sat Jan 27, 2007 8:48 pm

Guest wrote:
Vern,

As you and I have spoken privately . . . "Just give me a good phone that connects with no camera, a set of "professional" features (no gimmicks or toys), Bluetooth & Wi-Fi!"

On that note, any word of Voice Dialing? No good without it.

. . . fb

P.S.

Since the announcement I have yet to hear anything good about Cingular (matter of fact the negative banter has increased) nor that anyone that has them, my entire family (I have TMobile), that likes Cingular or gets good service in any manner. They'll have to go a good looooooong way to make it right. Good Luck.

Plus, TMobile just bought billions in frequencies (more than all the rest of the carriers) that this phone will need. What does AT&T have? That old tired "original" digital network that they shut down and reactivated as . . . something else? I'm willing to bet that some mistakes have been made that will be obvious or attempted to be hidden that will be rectified by the official release. OR some major surprises and if they do that, we'll all be better for it.

Fingers crossed.

at&t has the old digital network as well as 2G, 2.5G, and 3G. i know this because i worked for them before, during, and after the acquisition of cingular. beyond that, tmobile has never been competition for at&t and they never will be. not once since the conception of tmobile have their sales come anywhere close to at&t, and they never will. at&t has the cutting edge, superior technology, and working with apple will only enhance their superiority. i think it was pure genius, personally.

and people, this is not grammar school. who cares if he said "kit" or "kid"?

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A guest said: (hide)

Sat Jan 27, 2007 11:14 pm

"handle new iPhone users with kit gloves"

Not to be offensive but the idiom is "kid gloves." It is intended to mean something is approached cautiously or with tact. Some say it means you have kid (young goat) skin gloves on which are very soft and easily marked or scarred.

I really don't mean to offend. I want to know if I am misspeaking as it's important to me how I'm perceived (outside salesman.)

On another topic entirely: Because it's important how I am perceived, I will own the iPhone! (Actually, in the iPhone's case, it's more important that I have the coolest Apple toys if I can afford them.) I also hope that in June Apple launches the iPod based on the iPhone chassis. the touch screen is wicked.

Take care.

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A guest said: (hide)

Sun Jan 28, 2007 11:13 am

Re: the comment on Cingular service being bad and TMobile being superior. I've used both services and Cingular crushes TMobile. TMobile has good coverage only in dense urban areas, but that becomes problemmatic for them because their spectrum capacity is limited relative to the other mobile operators (this is changing due to their recent purchase of new spectrum, but it will take time). Travel 10-15 miles out of an urban/suburban core and TMobile becomes virtually nonexistant.

In reality, TMobile US is a patchwork of legacy mobile operators that were aggregated and sold to the Germans and have not yet been fully integrated. By comparison, Cingular/ATT is much better integrated and has far more investment in its network than does TMobile (remember, the Germans are operating mobile networks throughout Europe as well as the US, which causes their capital to be far more diffuse). Apple made the maximally optimal choice in going with Cingular/ATT for the US -- a very strong financial partner, dominant network operator and a global standard (Verizon clings to CDMA, which is used very little outside the US and those other countries' networks are incompatible). Don't get me wrong, I don't "like" Cingular/ATT any better than any other mobile operator -- they're just the best of a bunch of bad choices. The upside in all this is that the tight integration with Apple demanded by the partnership could have a positive impact on Cingular/ATT (let's hope it's not the opposite effect, dragging down Apple).

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A guest said: (hide)

Sun Jan 28, 2007 11:37 pm

If Apple were smart, they'd offer the iPhone to all phone company carriers. I have heard Cingular was terrible in my area, (Connecticut), though Sprint is not that great either. I liked Verizon. I would go back to them, I think.

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A guest said: (hide)

Sat Feb 03, 2007 1:53 am

cingular does suck in ct, i've been a cingular customer since 2004 from ct, moved to ma where cingular is way better. verizon is good in ct.

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