Steve Jobs and Picking the Lesser of Two Evils

Verizon or Cingular?
Verizon or Cingular?
Verizon or Cingular?

Up until a few minutes ago I had no idea that Apple first offered the iPhone to Verizon. Many questions are running through my mind as to Verizon’s rejecting the seemingly shimmering gold offer. However, Verizon does get some brownie points for a few reasons.

One, Verizon did not give in to Apple’s demands. According to an article in USA Today by Leslie Cauley, the demands were…rather demanding for lack of a better word. Although the financial terms are not known exactly, Verizon Wireless vice president Jim Gerace makes clear that “Apple wanted a percentage of the monthly cell phone fees, say over how and where iPhones could be sold and control of the relationship with iPhone customers.” Verizon ultimately said no to these terms.

Looked at closely, some of the terms are more beneficial to Apple than it would have been for Verizon (a clear example of Apple’s way of thinking). In particular, Steve Jobs wanted direct control over distribution. According to Cauley, the Verizon and Apple stores would naturally carry the iPhone but quite not necessarily any other Verizon product carriers such as Wal-Mart and Best Buy. Basically, giving this discretion solely to Mr. Jobs could have posed a problem by hurting relationships between Verizon and their distribution partners.

What else turned this deal sour in the mouths of Verizon you ask? It is something that I and many other customers consider HUGE and very influential in purchasing behavior.

GOOD CUSTOMER SERVICE!

Anyone who has heard the horror stories of Apple customer care (i.e broken MacBooks, iPods…) and their warranty provisions would hope that the iPhone carrier would handle any customer concerns. But no. Apple wanted discretion over whether to repair or replace the phone. Being that Verizon is not my mobile service provider I can’t say that Verizon would in fact be better than Apple, but let’s just assume that they are and that Verizon holds customers high on a pedestal. In this case, Verizon would have lost control of customer care with a product they are distributing. Gerace commented on this, “They would have been stepping in between us and our customers to the point where we would have almost had to take a back seat … on hardware and service support.” Verizon did not like this. Honorable wouldn’t you say?

On the other hand, Cingular spokesman Mark Siegel stated, “I don't want to leave the impression that these (iPhone) customers are not ours. They are.” This might be tough to prove given that Apple wants a lot of the control.

So, Verizon declined a deal that could have possibly generated a new tidal eave of customers, increases in revenue, and a new “hip” brand image. On the other hand, they did not see a deal that was mutually beneficial. They passed and what do they gain (if anything)? Brownie points? Honorable mention? We won’t know until June what kind of hit Verizon will take.

If Cingular alienates the iPhone customers then good news for Verizon; however I find it difficult for Jobs to let it get that far. Oh how we shall see, we shall see!



Mac Forum-
http://forums.macrumors.com/showthread.php?t=274576

USA Today- Verizon rejected Apple iPhone deal By Leslie Cauley
http://www.usatoday.com/tech/news/2007-01-28-verizon-iphone_x.htm