ON THE iPHONE CINGULAR DEAL, PART II

ARE WE THERE YET?

(Update 1.29.07:  Interesting USA Today article outlining how Verizon Wireless passed on the iPhone deal, before Cingular got a shot at it).

Well, it didn't take long for the emotional pendulum on Apple's iPhone to start swinging the other way.  There's a vigorous discussion underway on Techmeme focusing on how locked in the new device is, especially in terms of it's multi-year exclusive availability on the Cingular network.

As I outlined in a post a few days ago, this decision by Apple merely acknowledges the reality of the oligopolistic power of the wireless carriers, bolstered by regulatory authorities in most national markets.

It's very tough for a start-up or an incumbent to work around these oligopolistic walled gardens.

A good case in point here would be this PC Magazine article titled "Skype:  No cell phone version expected".  It makes the following point:

"EBay Inc's Skype believes the cell phone world is not ready for a version of its Internet telephone service that can be downloaded on any mobile phone, because of high carrier charges, the company's hardware and software business development chief said on Wednesday.

Skype uses a broadband Internet connection to place a voice call, cutting out the telephony network for which telecoms operators charge by the minute. Skype calls to other broadband-connected Skype users are free, and Skype calls to normal phones are inexpensive.

If a cell phone customer had an inexpensive data connection, then using Skype to make long distance calls, especially, could be at substantial savings—but so far there are few such cheap data plans."

The piece goes on to make the point that cheap data plans may only be available as 3G networks are rolled out various wireless carriers, but that it may take a bit more time to make a real difference on mainstream markets.

If a global internet telephony leader like Skype is having a difficult time finding ways to work around the carrier networks, it gives credence to Apple's approach of working WITH the industry rather than against it for now.

We need to keep in mind that revolutions are often evolutionary in nature, and that a little bit of patience may be the wiser course of action.

Comments

[gopapi.com]

My Client uses skype on his windows based phone. iphone has wifi so you can use skype on it

[p-air]

"We need to keep in mind that revolutions are often evolutionary in nature, and that a little bit of patience may be the wiser course of action."

Agreed w/this conclusion Michael, but it doesn't mean we have to like it nor buy into it. The reality is that a lot of the hostility to the iPhone comes fm the tone of Jobs' grandiose presentation claims. He set-up the minefield, not those who tripping the bombs ;)

[Jeff]

I will never use iPhone until they open up the phone to other wireless providers.

Cingular has the worst wireless service in the United States (see Consumer Reports' recent article on wireless service) and the acquisition by AT&T means that they will continue to listen in on all phone calls as they have their long distance users and provide it directly to the government without court order.

Who in their right mind would EVER purchase this? What is Apple thinking?