Friday, April 9, 2010

Is iPhone OS 4.0 Another Nail in the Coffin of Apple's Relationship with AT&T?

David Braue writes for ZDNet "one can't help but wonder whether Ralph de la Vega, CEO of AT&T, used to steal Steve Jobs' lunch money in primary school…" in a piece on how the upcoming iPhone OS 4.0 further erodes AT&T's business model:

The thing is, de la Vega didn't steal Job's lunch money. He's stealing every iPhone customer's lunch money. AT&T's business model is based on charging people for things they don't use, over charging them for things they do use, and penalizing them for not being able to understand the difference (as they make it as complicated as possible). In other words, like most cell phone carriers, AT&T views it's customers as suckers to get ripped off. Meanwhile, they do everything they can (through monopolistic practices and government lobbying) to make sure customers have no choice but to suffer or go without essential services.

This has got to change, and it will. Apple is just ten years ahead of everyone else. AT&T is clinging to an old business model that simply won't survive in a new tech age.

AT&T's fear is that it will become a "dumb pipe," but there is nothing wrong with providing a key service, and doing it well. But the business of actually providing data fast and cheap, seems to bore AT&T, as it's crappy service in key markets like New York indicates. It would require investments in infrastructure that might interfere in executives yearly bonus pools. Meanwhile, offering innovative services that people will happily pay for (something AT&T is in a perfect position do do as the controller of the pipes) requires the kind of creativity and smart execution that a soul crushing bureaucracy based on simply on greed can't muster.

AT&T can change, but the first step is to stop treating customers with contempt. You can't figure out how to make customers happy while also focused on treating them like chumps. If AT&T doesn't change, somebody else will offer the dumb pipes without all the bullshit, maybe even Apple.

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