Behind the iPhone and Apple/Cingular Deal

[MacRumors]

The Wall Street Journal delves deeper (Subscription Required) into the history of the development of the Apple iPhone and touches on a number of details that had already emerged in the weeks following the iPhone announcement.

The article reinforces the impression that Apple been able to negotiate a remarkably favorable deal in a traditionally Cell Phone Carrier-slanted market. The Wall Street Journal confirms details such as a lack of Cingular branding, limited retail availability (Cingular Stores and Apple Stores only), and even Cingular sharing monthly revenue with Apple.

The deal also calls for Cingular to share with Apple a portion of the monthly revenues from subscribers, a person familiar with the matter says.

Many of these terms and conditions were previously revealed when news came out that Verizon had passed on the iPhone. The original article's claims that Apple wanted "a percentage of the monthly cellphone fees, say over how and where iPhones could be sold and control of the relationship with iPhone customers" appears to be true.

Apple's level of secrecy surrounding this project appears to have reached all time highs as previously noted. Earlier reports claimed that several fake prototypes were circulated to confound rumors of the device. This new article confirms that very few individuals had seen the full iPhone prior to launch. Even Cingular engineers were given dummy versions with very limited access. Even now, "the handful of Cingular people who have access to the sample phones at the company's headquarters were required to sign confidentiality agreements."

[DMann]

This will be big, no doubt. Verizon's loss, Cingular's gain....

[ipedro]

I still think Apple would have been better off being their own service provider.

This is perhaps what they'll do once they've entered the market and the Cingular deal expires.

[jhedges3]

Originally Posted by ipedro

I still think Apple would have been better off being their own service provider.

This is perhaps what they'll do once they've entered the market and the Cingular deal expires.

Is that even feasible?

I thought Cingular has exclusive rights for a few years.

[arn]

Originally Posted by ipedro

I still think Apple would have been better off being their own service provider.

This is perhaps what they'll do once they've entered the market and the Cingular deal expires.

The article mentions this and Jobs didn't want to do it

Early on, both sides determined it would be a bad idea for Apple to offer its own cellphone service, leasing access to Cingular's network. Even though Virgin Mobile USA and other startup cellphone operators were using that method with some success, Mr. Jobs was cautious. He viewed the cellphone business as an unforgiving one, where carriers are blamed for network problems and overwhelmed by customer complaints.

[zombitronic]

Originally Posted by DMann

This will be big, no doubt. Verizon's loss, Cingular's gain....

Agreed. I wonder if Verizon had regrets about passing after the phone was revealed. But then again, Cingular might be the one with regrets if the phone isn't as much of a money maker to them as they're hoping.

Personally, I can't wait to ditch T-Mobile for a service that actually works within my house. They've got my $600...however they split it. And it would feel good to me knowing that Apple would be putting some of my monthly bill back into their pockets. That just tells me that it's more about the phone than the service.

Anyone know if Cingular lets you bring over your number from another carrier?

[Barabas]

I played around with the iPhone last night, finally able to borrow a friends. The touch screen worked really well and I was suprized how elegant it was to hold. The colors looked great.

Then I woke up.

[bigandy]

With monthly revenue sharing, no network branding and the suchlike, I think Cingular just realised how important it could be to have Apple on your side in the marketplace.

I'm glad about the lack of branding, I can't stand network logos on phones. Yuk.

[GFLPraxis]

Originally Posted by zombitronic

Agreed. I wonder if Verizon had regrets about passing after the phone was revealed. But then again, Cingular might be the one with regrets if the phone isn't as much of a money maker to them as they're hoping.

Personally, I can't wait to ditch T-Mobile for a service that actually works within my house. They've got my $600...however they split it. And it would feel good to me knowing that Apple would be putting some of my monthly bill back into their pockets. That just tells me that it's more about the phone than the service.

Anyone know if Cingular lets you bring over your number from another carrier?

What makes you think Cingular will be significantly better? T-Mobile and Cingular are both GSM...

Over here, T-Mobile tends to be regarded as the better of the two, but I haven't seen any kind of tests.

[darwen]

Originally Posted by Macrumors

Apple's level of secrecy surrounding this project appears to have reached all time highs as previously noted. Earlier reports claimed that several fake prototypes were circulated to confound rumors of the device. This new article confirms that very few individuals had seen the full iPhone prior to launch. Even Cingular engineers were given dummy versions with very limited access. Even now, "the handful of Cingular people who have access to the sample phones at the company's headquarters were required to sign confidentiality agreements."

This is starting to sound borderline paranoid. I knew this from previous reports but how it is phrased here just sounds ridiculous.

I have never heard of another corporation as locked down as Apple. Can someone please explain why it is necessary for Apple to have confidentiality agreements on a product Steve Jobs spent 1.5 hours talking about??? How much could there be that he hasn't told us? On top of that, what is it that he could still be hiding?

This just all seems over the top. I thought it was cool until the iPhone, Apple is just getting crazy now. Maybe if they spent less time making fake iPhones we wouldn't need to wait till June to buy them. Am I alone on this complaint?

[Chupa Chupa]

Originally Posted by darwen

This is starting to sound borderline paranoid. I knew this from previous reports but how it is phrased here just sounds ridiculous.

I have never heard of another corporation as locked down as Apple. Can someone please explain why it is necessary for Apple to have confidentiality agreements on a product Steve Jobs spent 1.5 hours talking about??? How much could there be that he hasn't told us? On top of that, what is it that he could still be hiding?

This just all seems over the top. I thought it was cool until the iPhone, Apple is just getting crazy now. Maybe if they spent less time making fake iPhones we wouldn't need to wait till June to buy them. Am I alone on this complaint?

Because no other company is copied as much as Apple. It's the old saying...just because you are paranoid doesn't mean they aren't out to get you. One leak could take away Apple's competitive edge. Go worry about something else and Apple will worry about getting its products to market just fine.

[Chaszmyr]

Originally Posted by Chupa Chupa

Because no other company is copied as much as Apple. It's the old saying...just because you are paranoid doesn't mean they aren't out to get you. One leak could take away Apple's competitive edge. Go worry about something else and Apple will worry about getting its products to market just fine.

This is sad but true. Apple really is the most copied company out there.

However, I doubt that's the only reason for the secrecy, at least before launches. Steve just likes to unveil surprises.

[Stella]

"The deal also calls for Cingular to share with Apple a portion of the monthly revenues from subscribers, a person familiar with the matter says."

Pure greed.

I find it difficult to see why Apple would want revenues from cell network subscribers who have iPhone. Once Apple have made the sale of the iPhone, thats it. Period. Just like any other phone. No wonder Verizon passed on the deal - too many demands from Apple.

Surely this is like the RIAA wanting a cut of $ from sales of iPod.

As nice as the GUI on the iPhone is, I really don't think its worth the demands. Is the iPhone always going to be exclusive - what happens out-of-exclusivity - are Apple going to want a share of any cell network revenues per iPhone subscriber?

The an Apple own cell network would never work: it would be u.s only and higher priced than any other service ( .Mac for example?). Jobs comments are well founded on the matter.

[macridah]

jobs is quite the negotiater

[crees!]

Originally Posted by Stella

"The deal also calls for Cingular to share with Apple a portion of the monthly revenues from subscribers, a person familiar with the matter says."

Pure greed.

I find it difficult to see why Apple would want revenues from cell network subscribers who have iPhone. Once Apple have made the sale of the iPhone, thats it. Period. Just like any other phone. No wonder Verizon passed on the deal - too many demands from Apple.

Surely this is like the RIAA wanting a cut of $ from sales of iPod.

As nice as the GUI on the iPhone is, I really don't think its worth the demands. Is the iPhone always going to be exclusive - what happens out-of-exclusivity - are Apple going to want a share of any cell network revenues per iPhone subscriber?

The an Apple own cell network would never work: it would be u.s only and higher priced than any other service ( .Mac for example?). Jobs comments are well founded on the matter.

Apple takes a few cents from each purchase of iTMS so what's the difference?

Originally Posted by zombitronic

Anyone know if Cingular lets you bring over your number from another carrier?

In the US, yes. There is a law in place to allow this.

Originally Posted by darwen

This is starting to sound borderline paranoid. I knew this from previous reports but how it is phrased here just sounds ridiculous.

I have never heard of another corporation as locked down as Apple. Can someone please explain why it is necessary for Apple to have confidentiality agreements on a product Steve Jobs spent 1.5 hours talking about??? How much could there be that he hasn't told us? On top of that, what is it that he could still be hiding?

This just all seems over the top. I thought it was cool until the iPhone, Apple is just getting crazy now. Maybe if they spent less time making fake iPhones we wouldn't need to wait till June to buy them. Am I alone on this complaint?

Sadly, I believe you're the only one. And you haven't seen nothing yet regarding the iPhone

[JHankwitz]

Having a cut from subscriptions would help off-set the costs of support at Apple's stores.

[Stella]

The different is:
iTMS is a store, so like any store, Apple charges the provider of the goods a small amount of money.

In this case, Apple is the provider and, strangely, Apple want money from Cingular per iPhone subscriber.

Originally Posted by crees!

Apple takes a few cents from each purchase of iTMS so what's the difference?

The cost of support should be priced into the phone, just like any other Apple / non-Apple product. Remember, its Apple who demands to support the customer, not the cell provider ( this is correct? ).

If I have a problem with my Nokia phone, I don't go to Fido, I'll contact Nokia.

Originally Posted by JHankwitz

Having a cut from subscriptions would help off-set the costs of support at Apple's stores.

EDIT: Oh God its so early on Saturday and my grammar has gone to hell. Too many mistakes to fix!

[Punkwaffle]

FYI everyone, the exclusivity of Cingular having the iPhone is multi-year. Exactly how many years you ask- 5 YEAR EXCLUSIVE!
i spoke with our data team specialist (i work at Cingular) and this is legit.

[ltcol266845]

T-Mobile has BY FAR the best smartphone plan. (granted, 3G is not quite off the ground yet) $60 a month gets one unlimited internet, unlimited text messages, 1000 minutes a month with unlimited nights and weekends!! haven't seen ANYONE with a plan to match!

This deal with AT&T sounds really strange... Be interesting to see how it progresses

EDIT:: Here is a link. I know it says it is for BlackBerrys, but it is compatible with their other smartphones too.
http://www.t-mobile.com/shop/plans/d...7-3ec0885e2004

[Digital Skunk]

Originally Posted by Punkwaffle

FYI everyone, the exclusivity of Cingular having the iPhone is multi-year. Exactly how many years you ask- 5 YEAR EXCLUSIVE!
i spoke with our data team specialist (i work at Cingular) and this is legit.

Sounds like one of those inside source rumors you get on these sites now a days...

Seriously though that is true from what everyone else is saying. My new Sprint iPhone will be sweet when I get it. It will have been five years improved over the current one. Can't wait for that.

2012 here I come.

[clevin]

ugly business deals, looking at both side, u can only see one thing which is greedy. lol

[Digital Skunk]

Originally Posted by ltcol266845

T-Mobile has BY FAR the best smartphone plan. (granted, 3G is not quite off the ground yet) $60 a month gets one unlimited internet, unlimited text messages, 1000 minutes a month with unlimited nights and weekends!! haven't seen ANYONE with a plan to match!

This deal with AT&T sounds really strange... Be interesting to see how it progresses

EDIT:: Here is a link. I know it says it is for BlackBerrys, but it is compatible with their other smartphones too.
http://www.t-mobile.com/shop/plans/d...7-3ec0885e2004

This is exactly why I cried a bit when Jobs said it was with Cingular only and not at least with the big three (Cingular, Sprint, Verizon) and that you couldn't get the phone unlocked and just use it as a $600 widescreen iPod/PDA. I am not made of money and I am not switching service providers to get an iPhone... thought about it... but don't have the cash

So I am just going to pick up Treo 700p with that ugly UI to replace my two year old LG. Grab a cheap 2GB SD card and Pocket Tunes to play my AAC files and I am good to go.

[clevin]

Originally Posted by Digital Skunk

This is exactly why I cried a bit when Jobs said it was with Cingular only and not at least with the big three (Cingular, Sprint, Verizon) and that you couldn't get the phone unlocked and just use it as a $600 widescreen iPod/PDA. I am not made of money and I am not switching service providers to get an iPhone... thought about it... but don't have the cash

So I am just going to pick up Treo 700p with that ugly UI to replace my two year old LG. Grab a cheap 2GB SD card and Pocket Tunes to play my AAC files and I am good to go.

so ur hate for cingular+palm surpassed ur love for iPhone? sorry, its just a calculation apple need to think when they made the deal, and trust me, apple got as much as they can from this deal.

Think about it, If you can't buy iPhone for whatever reason, Im sure then you actually belong to the part of users apple already planed to give up.

[Lepton]

Originally Posted by ipedro

I still think Apple would have been better off being their own service provider.

That's what I was convinced they would do. It is the only way to have complete control over the data plans and services they could provide, and I'm sure they want to allow downloading of songs from iTunes, good syncing, all you can eat high speed data, and so on.

But I guess I can understand. Billing, logistics, it's quite a burden, and doing it worldwide would be a nightmare, so I guess they decided to go with getting the best deals they could with individual companies in various world markets. And Apple does have leverage, because people with brains know Apple will do phones up right and be successful as heck at it. People with brains are few and far between at the phone companies though, but I guess they found a few.

[reallynotnick]

Originally Posted by Stella

"The deal also calls for Cingular to share with Apple a portion of the monthly revenues from subscribers, a person familiar with the matter says."

Pure greed.

I find it difficult to see why Apple would want revenues from cell network subscribers who have iPhone. Once Apple have made the sale of the iPhone, thats it. Period. Just like any other phone. No wonder Verizon passed on the deal - too many demands from Apple.

Surely this is like the RIAA wanting a cut of $ from sales of iPod.

The reason it is fesable is because they are going exclusive with Cingular. If they really just wanted to sell phones it would be unlocked. So personally I think it is all fair if Cingular wants the best phone ever to be exclusive to them.