Wednesday, March 31, 2010

AT&T's Last Chance to Get It Together With the iPhone?

Tech Crunch speculates that with rumors of AT&T's exclusivity coming to an end, Apple's deal to make AT&T the initial exclusive partner on the iPad may be a going away gift:

But another way to think about this is that AT&T still has some time to get it's at together in regard to providing good service to iPhone customers. Like not lying to them about tethering, being honest about cell tower problems and not having flacks blame the hardware, not double billing for text messages, and not working night and day to force tiered pricing down customers throats. Will AT&T change it's colors? Probably not until it has no choice.

Friday, March 26, 2010

Will Apple Attack AT&T With the iPhone?

While beloved by it's customers to the point of obsession, Apple (or rather its boss Steve Jobs) has a long history of stabbing it's business partners in the back. Or, even more often, the front. The list of victims is long. Here are just a few big ones:

1. Apple Tricks Microsoft: In 1997, when Steven Jobs returned to a broken down and almost bankrupt Apple, he convinced Microsoft to make a high profile $150 million dollar investment and promise to keep supporting the Macintosh system with Office to help the company stay afloat. Microsoft, like all of Apple's eventually betrayed business partners, had it's own reasons to support Apple. Mainly, at the time Microsoft was so dominant in the tech world that it was facing business monopoly lawsuits and government investigations. A crippled Apple with a tiny market share seemed like a good thing to keep breathing with a pocket change investment. Yet a perplexed Bill Gates wondered aloud why Jobs would even bother to fight for Apple's survival. Gates famously said, "He can't win." Gates thought Microsoft's continued dominance of the tech world could never be challenged. At the time, it was assumed any market Microsoft decided to enter it would control. Unfortunately, Apple not only survived, but flourished. It's new operating system was first class, and made inroads in business and government while Microsoft has made several missteps with Vista. Apple became the dominant force in sexy new tech businesses showing Microsoft could be beat. Apple took over music with the iPod and smart phones with the iPhone. It's market share for browsers, Macs and multi-media products continues to rise. Apple's Stores are some of the most profitable retail space in the world. Apple's early partnership with Google's search engine provided comfort and support to a key Microsoft enemy at a critical time in the development of the internet. Microsoft's star has fallen greatly since it's "partnership" with Apple. Bill Gates retired not looking like a victor, but like someone who needed to get out before his company sank further. Apple looks likely to pass Microsoft in market cap this year, something that even the most wild eyed Mac enthusiast never would have dreamed of in 1997.

2. Apple Double-Crosses Intel: In 2005, Steve Jobs got big time support from Intel to switch microprocessors. Apple had been using it's own co-designed PowerPC processor but simply couldn't compete with Intel's deep pockets of R&D money to keep competitive in the processor speed race. It made more sense to let Intel make processors so Apple could focus on other key areas of it's growing business. Naturally, Intel was happy to have a new customer (even with a tiny market share) and a little less competition for processor design. But Intel went a step further. It highly publicized the partnership, it's CEO danced around an Apple stage in a costume for Jobs, and Intel provided a lot of tech support to help Apple make the critical transition to Intel processors. This gave Apple computers a lot more credibility in business and government circles. It isn't going too far to say that if Apple hadn't successfully made the shift it's entire flagship Macintosh business might have imploded. So what was Intel's big reward? Who's making the processors for Apple's hot new iPad? Apple's new processor design company. While allowing Intel to keep making processors for it's older graying desktop computer business, Apple has cut Intel out of what might be the biggest new tech sector of the next decade.

3. Apple vs. Adobe. While Apple and Adobe have long had a love/hate relationship, when Apple was on the ropes in the late 1990's, Adobe could have completely pulled the plug by cutting off updates to it's Photoshop, Illustrator and After Effects products. High end graphic design was one of the only business areas where Apple had significant market share. Adobe hung by Apple with two massive updates, first to Apple's new OS X operating system and then through Apple's shift to Intel processors. While Apple could complain about Adobe being a little slow on the updates, Adobe spent fist fulls of money to do them. Apple's response? It first came out with Final Cut Pro, which killed Adobe's own film editing market, and hurt it's After Effects business. Apple also came out with iPhoto, which cut into Photoshop and finally, Apple dug the knife in deep by actively going to war against Flash with the iPhone and the upcoming iPad. With a business partner like that, you don't need cancer.

In Apple's defense, in all of these cases it did what was best for it's customers. Rarely has Apple made moves against the best interests of the people who buy Apple products. (Apple even dumped it's own technically superior Firewire for the more popular and less expensive USB.) But still, anyone who gets in business with Apple should be looking over their shoulder for sharp objects. Because if Apple sees an good opportunity, old relationships rarely get in the way.

Which brings us back to the subject of AT&T. Apple and AT&T have had a great partnership with the iPhone. Both have made a ton of money and gained huge market share quickly. Which means, if history has taught us anything, Apple is about to screw AT&T. Here's a piece on some of Apple's options:

The question is not whether Apple will turn on AT&T, the question is when. I don't know the answer to that, but my guess is over the next two years.

The other question is what AT&T is planning to do about it. The answer to that I know: nothing. AT&T has no post Apple plan. It simply sucked up as much money as fast as it could with the iPhone and has been burying it's head in the sand about what to do if Apple turns on it. It is a company lead by reactive managers. They hope something like the Google phone or a new Palm handset will provide the iPhone with some competition. They hope they can buy up enough market share to be irreplaceable to Apple. They hope… they hope…

What they should have been doing is investing. Investing iPhone profits to build cell tower infrastructure so good Apple wouldn't think to replace them and customers wouldn't dream of leaving them. They should have come out with original apps to enhance the value of iPhones and other services that would make using an iPhone without AT&T service unthinkable. They didn't and now it looks like it's too late. AT&T execs are more focused on talking about charging for data "like water," complaining about data "hogs," waging battles against net neutrality, and figuring out how to cut land lines to small towns. In other words, warring against the interests of it's own customers. So when Apple finally does turn on AT&T, the people who will be cheering the loudest will the the one's with AT&T subscriptions.

Canada Gets Free iPhone Tethering. Why Can't Americans? Oh, Because We're Stuck With AT&T.

If you don't live in American, technology is a wonderful thing. You see, in Canada, if you have an iPhone, you can tether it to your laptop for free:

Of course, if you live in America, you can't use an iPhone without having an expensive contract from AT&T. Which means not only do you not get tethering, but you have to listen to AT&T Executives lie year after year that it's coming "soon."

Unlike in Canada (and other parts of the world where people have phone companies that don't hate them), AT&T normally charges an extra $30 a month for tethering. That's a huge rip off, but at least if you have a need for tethering, you might bite the bullet. But AT&T won't even offer that crappy deal to it's iPhone customers (it's most profitable base). Why?

Well, probably because AT&T has this big pipe dream for tiered pricing, which it also says is coming "soon." But customers hate the idea and AT&T hasn't been able to convince other carriers to come aboard in forcing it down American's throats. So better to prevent customers from being able to use their products, than let them get used to the idea that things shouldn't cost extra for no reason.

When will AT&T finally come to its senses? Probably too late. Only after it has real competition, and by then it will have antagonized so much of it's most profitable customer base, it might not survive.

Thursday, March 25, 2010

Poor AT&T Signal? AT&T Offers a Solution: Pay Us More

Once again, the rocket scientists at AT&T are inventing new ways to piss off customers that are unhappy with AT&T service:

AT&T should be giving MicroCells away for free, because they basically save AT&T tons of money by channeling calls off of their cell towers. Also, providing good service (so people continue to pay monthly bills and don't switch carriers) should be more important to AT&T in the long run, than making a few bucks by selling something that shouldn't be needed in the short run. But short term thinking is what get's execs their yearly bonus, so screw customers who complain.

Like this comment at the bottom of the link:

"Classic AT&T. Having failed to provide the service subscribers pay for, their solution is to sell them another service. Their motto should be "We add insult to injury."

Uncle Bell couldn't have said it better himself. It's staggeringly greedy to charge for something people shouldn't need when they pay you each month for service "anywhere." Are customers really supposed to go: "Wow, I've been paying $60 a month and my phone doesn't work good. Now, I only have to pay $150, and maybe it will get better!"

UPDATE: Here's some more commentary on AT&T's latest efforts to insult it's customers:

I remember many years ago when satellite TV came around and cable companies laughed because it was really not nearly as convenient as cable and cost just about as much. They were then stunned when it took off very quickly. What they didn't count on was that people absolutely despised their cable companies, even though they reluctantly paid for cable.

AT&T is heading for a very similar wake up call. One of these days, when iPhone customers have a choice, they're going to be surprised at how many of their customers go running. Now, maybe AT&T thinks it can worry about that when it happens, cut rates, improve service, whatever, but I suspect they will find that there are a lot of customers that will run regardless of deals, just because they're so angry at AT&T's shoddy service for so long. They might find they will lose millions of customers for life.

Tuesday, March 23, 2010

Apple Dumps AT&T!

Actually, not completely. But news just hit that Apple is selling iPhone's without a required AT&T contract.

But these phones are not unlocked, so unless you take them out of the country, they won't work. So what exactly does this mean? Apple is preparing for iPhone competition? Getting rid of old inventory by selling it to people sneaking them to Dubai? Uncle Bell doesn't know. I'll keep you informed as it develops.

Monday, March 22, 2010

How the iPad is Dangerous to AT&T's Profit Strategy

It's looking more and more like AT&T CEO Randall Stephenson's hope/delusion, that the iPad is simply a wi-fi device and customers won't be interested in AT&T wireless service is wrong and wrong headed. This is not to say that he won't be correct and a majority of iPads will be sold without 3g connectivity. But it's likely that everyone is radically underestimating how many iPad's will be sold it's first year, and AT&T will be completely unprepared for the extra traffic even a percentage of those will mean to it's network. He's also missing the larger implications of the iPad replacing the iPhone as the Apple geek's favorite mobile internet platform. Here's typical geek thinking:

Blogger Jeff Haywood voices prototypical tech geek thinking. If forced to make the choice between having a phone or an internet connection, they quickly choose the internet connection. In fact, without even thinking twice about it. This AT&T's worse nightmare. Geeks who hate talking on the phone and prefer e-mail wonder why they're paying 40 bucks to be reminded that they're too afraid to ask for a girl's phone number.

Naturally, AT&T prefers that people pay for things they don't use, it's free money. And they prefer people are forced to keep paying for things they don't use by long term contracts. The iPad threatens both of these things, which is why Stephenson is whistling in the dark when he thinks it won't impact the iPhone business.

No, the iPhone business won't go away because of the iPad. Not everyone is afraid to call girls. But iPhone growth won't continue as quickly if people who don't really need it for voice end up switching to the iPad. And people who do need voice, wonder if they aren't better served by an alternative cheap cell phone with no contract and an iPad with no contract.

AT&T needs to rethink it's policy of forcing people to pay for what they don't use if it wants to stay competitive in the iPhone business. Instead of thinking about how much money it can rip from customers pockets in the short term, it should think about how to develop long term customer loyalty. Self identified geeks, like Haywood, should have the option of not activating their voice service, or getting very low cost "emergency" voice plans. Who knows, maybe someday they'll find a girl they can talk to and get married and need a family plan. Non-geeks who want the iPhone for voice, but don't use it to connect to the internet, should have the option of not paying for data plans. Who knows, maybe someday their grandkids will teach them how to Twitter.

In the meantime, if AT&T won't provide iPhone customers with real choices, the iPad, with a contract AT&T seems to already regret, might provide it without them.

Sunday, March 21, 2010

Sprint Ad Demolishes AT&T iPhone Service

I've been warning AT&T for some time that it's monopoly on the iPhone was not something to take lightly and here's one reason why:

In reality, iPhones always work better with a wi-fi connection and what Sprint is offering here is not huge breaking news. But it's very bad press for AT&T and very good press for Sprint. It takes what AT&T relies on as a strength, it's exclusive deal with Apple, and turns it into a weakness. Sprint gets to bask in a little Apple glow, and makes AT&T look like the dumpy "I'm a PC" guy in the "I'm a Mac" commercials.

But the real message here is even more troubling for AT&T. What Sprint is doing is setting the stage for it to be the 4G wireless carrier for the iPad, something AT&T should be having night-sweats about. Stupidly, AT&T exec's have tried to downplay AT&T's wireless service for the iPad, apparently because they do fear competition. They have actually gone on the record saying iPads will work better wi-fi connections. (Like Sprint's 4g wireless modem?) AT&T prefers it's iPhone customers who are tied to long term expensive monthly deals. They seem unhappy with their own announced low cost no contract iPad deal. But how many die hard Apple nuts are going to wonder if they can live without an iPhone and simply Skype phone calls on their iPad with a 4G Sprint wireless modem? Enough to make a difference in AT&T's profits? But surely those people are still going to need a iPhone, right? Well, why not an iPad and a cheap throw away cell phone? Why carry around an iPhone and an iPad? Which one are you going to pull out when you need to access the internet or check a map? And what more do you need from a phone than phone service if you have an iPad and a Sprint 4g modem in your backpack?

AT&T made a calculated bet not to invest in a 4G network (until at least 2011), and it is already looking like that it going to be a huge mistake. While it is true that improvements to it's existing 3G networks are more important than starting up a 4G network, who doesn't think 4G sounds better than 3G? It's a strong marketing tool Sprint will have to club AT&T with in television commercials. AT&T should have fixed it's 3G network long ago, and been ready to complete for faster speeds needed by customers.

And where does AT&T's desire for tiered pricing fit into all this? Hmm? They keep saying it must be coming soon, but how exactly is it going to explain that customers need to pay tiered pricing for a "second grade network"?

Finally, tying this into my other pet peeve, by not allowing iPhone users the option of tethering their iPhone, they also play into Sprint's 4G hand. Since you can't save money by using your iPhone wireless connection on your laptop, why not get a Sprint 4G modem? It not only helps your laptop, but also speeds up your iPhone. Oh, and now I have an iPad with Skype… why do I need that $100 monthly AT&T bill again? So I can surf the internet on that tiny iPhone screen? Hmm…

Monday, March 15, 2010

Why Does AT&T Continue to Piss Off It's Most Important Customers?

So here's a piece talking about how dependent AT&T's profit (that is, whatever is left of it after Randall Stephenson's pay package) is on it's exclusive monopoly on the iPhone:

So the question is, why do they keep on pissing off their best customers by lying about tethering, the most wanted missing feature for the iPhone?

UPDATE 3/6/10: Another piece on why AT&T needs the iPhone:

Sunday, March 14, 2010

iPhones Work at SXSW

Whether AT&T actually got it's iPhone act together in Texas or it's PR Flacks spun a story in the right direction, this is a very good piece on AT&T's iPhone network:

AT&T Critic really does want to be impartial, so when the cell boy's occasionally do something right, we want to point it out. Good job! These high profile conventions are important to the tech world, so if you need to send out some mobile trucks to handle the traffic, do it! It will pay off in good press if things go smoothly.

UPDATE 3/15/10: Of course, the question quickly arrises, if iPhone's can work in Texas (oh, it's not a design flaw?) then why can't they work everywhere. Like San Francisco.

Friday, March 12, 2010

AT&T Doesn't Know Why It Needs Tiered Pricing, But It's Urgent

AT&T CEO Randall Stephenson, as fitting the leader of a high tech company, is a visionary. His vision? Customer's pay more for less and he personally pockets more and more money as customer complaints rise.

At the Executive's Club of Chicago he outlined a key detail of his vision; tiered pricing. (Now called "variable pricing.") Despite record AT&T profits, all-you-can-eat data pricing has to go away. Soon. Why? Well, he has no answer to that. Because there is no reason. He also doesn't know when variable pricing will begin, because he can't really do it on his own, he'll need the collusion of other cellular carriers to force it down customers throats. So for now, all he can do is say, "It's coming." Hopefully when the government isn't looking.

Thursday, March 11, 2010

AT&T Decides Not to Invest in 4G. 3G is just fine!

People are still scratching their heads about AT&T chief executive Randall Stephenson's odd comments that the iPad won't be popular on cellular networks. (AT&T currently being the exclusive cellular service for the upcoming iPad.) One possible explanation is that AT&T doesn't want to make an investment in upgrading it's 3G network to compete with Verizon's coming 4G Long Term Evolution (LTM) and WiMax.

You see, if people don't use iPads out of range of their home WiFi networks (some of which AT&T provides) then AT&T doesn't have to worry about keeping up with the demand for faster cellular networks capable of providing lots of data. Obviously, they already can't support their current customer base of iPhone's properly, so if millions of iPad customers sign up, there will be even more complaints.

While this might be wishful thinking (maybe iPad users can just hang out at McDonald's and use AT&T service for free), it would seem it's just typical short sighted AT&T quick profits over long term investment strategy that appears to be Stephenson's policy. Keep profits high, don't invest, push the stock up and…

Escape with a golden parachute? Pocket big bonuses? Whatever Stephenson's plan is, presumably he has an exit strategy before it turns out the iPad is a very mobile device and people aren't going to be willing to accept 3G on it.

Meanwhile, us iPhone users are waiting for our own exit strategy, from AT&T. 4G and WiMax look promising.

Wednesday, March 10, 2010

AT&T Exec Randall Stephenson Doesn't Get the iPad

So last week AT&T chief executive Randall Stephenson got tech blogs buzzing with an uncharacteristically upbeat and insightful discussion about the future of the iPad. "Apple's iPad is a total game changer and AT&T is determined to be leader in providing services for it. Not just fast and trouble free low cost data access, but we also plan to offer some very exciting must have apps. I can't tell you everything we're working right now, but we see this as a very important enterprise tool and plan to be at the forefront of offering business services that can be delivered on the iPad." Smiling brightly, he continued, "We're also talking to some content providers about special deals for AT&T customers and we're going to offer some free apps that are pretty exciting. We know customers will have a choice between using the iPad on wifi systems or our cellular network and we want to make sure it's worth the extra money for them to buy the more expensive product and sign up for mobile access."

In fact, the speech was so uncharacteristic that he didn't actually say it. I just made all that up. I repeat, he didn't say anything upbeat, optimistic or insightful. He didn't uses words like exciting or "free." He didn't talk about trying to make customers happy or valued. He didn't smile. In fact, he just kind of pissed on the idea that anyone would bother to buy an iPad that could use AT&T. His exact quote was "My expectation is that there's not going to be a lot of people out there looking for another subscription." And then he changed the subject to tiered pricing. Here's Reuter's take on his speech to investors:

Of course, this did get the web buzzing, but not in a good way, more in a "what the fuck is he talking about" kind of way.

What's so stupid about his speech is that even if Mr. Stephenson believes what he says, why the hell say it? Why try to cool expectations of a hot new product that AT&T gets to charge a monthly fee for? And after all the bad press AT&T has gotten lately, how could anyone not wonder if he isn't big on the iPad because AT&T isn't capable of servicing it? Obviously, Mr. Stephenson is focused on cramming tiered pricing down the throats of an unwilling customer base, but can't he take a moment off of that pipe dream to try to pretend to be upbeat about AT&T's newest service? And is it smart to point out that people are already pissed off about how high their iPhone bills are?

It seems more likely Stephenson knows the iPad is going to be big, and that customers are going to be pissed off when they find out that AT&T service is slow and costly. So apparently he wants to cool expectations so he can later blame the public for being stupid enough to sign up for AT&T service. Or perhaps he knows that AT&T's offer of cheap unlimited data with no contract for the iPad completely contradicts his claims that there is a desperate need for tiered pricing, so he wants to try to claim he didn't expect people to actually use the iPad. And apparently he doesn't care much if he's later proven to be wrong, because, after all, he has no problem lying about providing tethering "soon." Oh, and of course, if people actually use the iPad for lots of data access, then why can't iPhone customers have tethering?

Whatever it is, let's take a moment to imagine a fantasy world where the exclusive provider of iPhone and iPad service said something like the stuff I made up at the top of this post. Wouldn't that be nice? Wouldn't it be nice to have an AT&T run by someone who at least pretended to care about his customers? Who could talk about the future without mentioning that he plans to raise rates as soon as the public is "educated" to accept them? That could talk about innovation without saying the government needed to provide financial incentives? Oh, well, we can only dream.

Saturday, March 6, 2010

Class Action Lawsuit Against AT&T Over Tethering?

I've been complaining for some time about AT&T's lies that it would offer iPhone tethering "soon." (Soon taking over two years.) Now, MacDaily, which has generally been a defender of AT&T's shaky service, is finally joining the chorus and suggesting it's time for a class action lawsuit:

This is something AT&T needs to take seriously. It really isn't good policy to have your executives go around publicly lying to customers about offering critical services on products they hold questionable monopolies on. You could get away with that back in the 1970's (the era AT&T suits seem to long for) but you can't today when your lies can be Googled. AT&T enjoys the benefits of a heavily regulated business that discourages free competition thanks to helpful government policies. But that can quickly work against them when the public gets fed up.

The danger of a class action suit is that once it gets started, it could go a lot farther than tethering and really look at all the anti-trust implications of AT&T's war against it's own customers desire for free technology. And unfortunately for AT&T, all it's government lobbyists and PR flacks aren't very helpful in a US court of law.

Wednesday, March 3, 2010

AT&T's Latest Brainstorm: Make Customers Pay DVD Late Fees

Hard hitting reporters at the Kansas City Dot Com just broke this amazing story from Fierce Wireless. AT&T execs, and Verizon execs, would like to implement tiered pricing!

Tireless AT&T Flacks are still out there spinning this non-news news. AT&T wants tiered pricing, but won't say how or when. This has been "reported" for over a year. So what's the story here? Who are these execs talking to?

Well, each other, of course. How do you spell "collusion?" How do you spell "price fixing?" It's wonderful the internet not only provides a tool for bored teenagers to talk about their sex lives, but also for executives of giant conglomerates to social chat about how to manipulate prices nationally through fake news stories.

So let's see, AT&T already has a cap of 5 gigs of data for it's "unlimited" data plans. (As does all other US cell carriers, hmm… no collusion there.) The average iPhone user tops out at a mere 270 megs a month. Which is a few hours of surfing and streaming a month. So what's all this about heavy data users paying for other users? The fact is, most users are paying for a ton of data they aren't using. Why should "heavy" (over 270 megs and less that 5 gigs) pay more? Oh, because these telecoms are so greedy they don't see a good thing when they have it.

I suggest AT&T execs take a look at another big corporation that worked against customers for so long, they created competition that is slowly killing them. Take the example of Blockbuster:

You remember Blockbuster. It was a giant company that basically took over the entire DVD rental industry by buying up competition, out building and advertising, and wiped out Ma and Pop stories. Kind of like how AT&T has built it's market share by buying up competition.

Like AT&T, Blockbuster never offered any new innovations, it simply got bigger than anyone else and wiped out the little guy. But, like Mom and Pop stores, it's primary source of income was not making customers happy (that's was beside the point) it was in charging late fees (money for nothing) that customers hated. But for a long time, they had no choice because there was a Blockbuster on every corner. Even more fun for Blockbuster was pushing around the big Hollywood studios who had no choice but to cut them great deals. (Something AT&T has wet dreams about once they control data access in America.)

But you can't keep a business running by pissing off your customers, even if you control market share. Because Netflix came along, with no late fees, and then Red Box with much cheaper late fees, and easier access to customers (through grocery stores, etc.). So Blockbuster has been slowly dying, unable to innovate and compete. They dried dumping late fees, but their business model was dependent on them and they had to reinstall them.

The Blockbuster model that the rocket scientists running AT&T want to follow. Gain control of the market through size, and then charge people for "data" overages. It won't work, and it will doom AT&T. It will create competitors from where they least expect it. But maybe current AT&T execs aren't worried about long term growth. They're more interested in short term profits. And charging people for air might give them that.

I humbly suggest that AT&T execs turn away from the dark side before it is too late. Concentrate on offering Americans cheap, fast, unlimited data and build new exciting business models around that. If you continue to simply crunch numbers and try to figure out how to charge people more for less, you make not even survive long enough to jump out with a your golden parachute.

Take a look at this amazing quote from AT&T CEO Randall Stephenson about Congress' desire that America compete globally with fast data access: "If the objectives are 100-megabits capability to every home in the United States, that is going to require a lot of investment. To drive that kind of investment will require a redirecting of subsidies that exist today."

This is the head of one of American's major telecoms? We can't give people fast access without government subsidies? This after AT&T has an amazingly profitable year based on it's monopoly on the iPhone? Excuse me, if AT&T can't do it, I suspect Google will.

If AT&T is not capable of being the leader in providing America with high speed data access, maybe it's time for it to get out of the business and try something new. How about DVD rental? Blockbuster is going bankrupt. Maybe there's an opening there. Perhaps you can charge double late fees.