I don't have any inside info or rumors to share, but hear me out on this one... I'm going to paint a possible scenario for a 3G CDMA iPhone to hit in June, maybe later, and would like thoughts on whether you think this make any sense.
First, Apple is changing their tune. Last year, when the iPhone came out, everything they said was all about the "great relationship" with AT&T that allowed this to happen, made visual voicemail possible, etc. Now, they are talking differently, making comments about not being tied to carriers, etc., and there is this new deal in Italy with no exclusivity agreement (details TBD). Plus huge percentages of people are jailbreaking their phones, and it's taking a hit on their bottom line.
Second, Verizon is opening their network to all phones (CDMA only of course). That opens another door that Apple could enter if they choose.
Third, there's the AT&T Exclusivity Agreement. Has anyone ever SEEN this agreement? It seems to be top secret and all we know is what "insiders" have spilled through USA Today, etc. It's supposedly a 5 year agreement, and does not allow CDMA to be developed during that time. But that’s all we know. Now, I deal with legal contracts in my job, and I know first-hand that the DEVIL IS IN THE DETAILS. So WHAT IF Apple really didn’t want to tie themselves down that long, so they said to AT&T: “Look, we’ll enter a 5 year agreement with you, but we need an exit clause based on a high target for sales and subscriber growth. You’ll be GUARANTEED to win big during this period, but once we reach this target, the (AT&T exclusive) market will be saturated and we’ll need an out so we can maintain growth. We’ll keep the exit clause top secret until we actually exercise it, to maximize subscriber growth until that point.” Makes sense to me. Certainly seems like Steve Jobs would want his options open. And AT&T has certainly gotten an unprecedented boost from the iPhone, so they shouldn’t have any regrets.
Forth, Verizon has FAR better 3G coverage in the States than AT&T. It’s the perfect network to launch the next iPhone on. And now that they are opening their network to all devices and becoming a less draconian carrier, Steve may warm up to them.
Also, there are little things like AT&T putting the Microsoft Surface kiosks in their stores, but it won’t work with the iPhone. Makes me wonder if they are starting to put the focus on other products. But I’m not saying they won’t also carry a 3G iPhone, just perhaps not the ONLY one.
Bottom line… CDMA has a huge customer base in the US, and it’s a big market that Apple has left on the table. Some are willing to defect to AT&T for the iPhone, but many are not, me included. To win us over, Apple needs a CDMA model. If they do that, I’ll be first in line.
Thoughts? Flames? Counter points?
If they do have some sort of 5 year agreement then I doubt they would try and back out of it after one year. Apparently verizon didn't want to deal with Apple and revenue sharing. When Apple sells an iPhone that is unlocked they still make the retail cost of it but not the almost $20 bucks a month in royalties from each customer. I really doubt that they will have a cdma version even though it would be a good idea. I left cdma for gsm to get an iPhone and now I don't understand why anyone would want to be on cdma in general - but that is just my opinion. Also, we dont want the iPhone to be the next Razr. Good post btw.
Every well done agreement has an "out" clause so the Apple/AT&T agreement should be no exception. I don't know what the agreement says, but due to the clear success of the iPhone, I doubt they are anywhere close to missing their targets to be able to exercise an out clause.
Good Post...but I just do not see that happening soon due to the agreement.
I am a longtime VZW customer..and am waiting for the 3G iPhone and 2.0 to support my Exchange server and then I will be moving over to ATT and iPhone.
I have been very happy with the VZW coverage...but ATT seems to have near equal coverage in my area (Connecticut). So that is not an issue. I have carried a Treo 700w for two+ years and want to stay with a smartphone that supports exchange...and VZW's high data costs and limited new smartphones for exchange have made me want to move.
Right now, I look at the move to ATT as a 2-3 year move. Both ATT and VZW are going to be building out LTE networks during that time. My thought is that iPhone 4.0 will be LTE...by then the ATT agreement will be ending and my hope is that iPhone followons will be able to run LTE on either network and I will go to whoever has the best network (or I will be moving on to some other product by then....).
If they do have some sort of 5 year agreement then I doubt they would try and back out of it after one year. Apparently verizon didn't want to deal with Apple and revenue sharing. When Apple sells an iPhone that is unlocked they still make the retail cost of it but not the almost $20 bucks a month in royalties from each customer. I really doubt that they will have a cdma version even though it would be a good idea. I left cdma for gsm to get an iPhone and now I don't understand why anyone would want to be on cdma in general - but that is just my opinion. Also, we dont want the iPhone to be the next Razr. Good post btw.
In my area (central and coastal California), AT&T coverage is pretty poor compared to Verizon, especially 3G coverage. So I have a much stronger reason to stick with Verizion (Plus my wife gets a company discount on Verizon only).
What you said about the 5 year agreement and Verizon not wanting to deal with Apple is all true based on what we heard a year ago, and what the papers tell us, but my point is that times have changed (Apple is now entering non-revenue-sharing agreements with some foreign carriers, apparently), and that there's a whole lot we DON'T know about this exclusivity agreement. Steve Jobs is no dummy and I'm sure he got himself the most flexibility he could muscle out of AT&T.
With all that said, I'm still not sure how plausible a CDMA iPhone is, this year anyway, and that's where I'm looking for the most feedback/comments.
All of this assumes AT&T isn't paying a team of lawyers well versed in this specific area of contract law to do all this. Which I'm sure they did. I highly doubt AT&T left themselves open to the point where Apple could back out and collaborate with a competitor like you're describing. Consider what is at stake for AT&T as well. Jobs is an accomplished business man, but AT&T is a well established corporation as well. I'm sure they wouldn't have signed and agreed to revenue sharing if there was an exploitable/easily exploitable clause that would let them go and sell it to everyone else as well. Verizon also declined the iPhone, they had first dibs on it before AT&T.
All that aside, basically the iPhone was designed for GSM and hasn't been rolled out in CDMA markets, so I would highly doubt we'll see a CDMA iPhone (outside of a one off prototype perhaps) for years to come.
What you said about the 5 year agreement and Verizon not wanting to deal with Apple is all true based on what we heard a year ago, and what the papers tell us, but my point is that times have changed (Apple is now entering non-revenue-sharing agreements with some foreign carriers, apparently), and that there's a whole lot we DON'T know about this exclusivity agreement. Steve Jobs is no dummy and I'm sure he got himself the most flexibility he could muscle out of AT&T.
In general, that's a true statement -- everyone always tried to write contracts in their favor.
But what is a bit unique about this agreement, over other types of "exclusives" we have seen in the past, is that AT&T had to invest in new infrastructure in order for the iPhone to work. So they've actually spent a non-trivial amount of $$ just for the iPhone (Visual Voicemail) they can't recoup any way with any other phone.
So I believe it's a 5 year agreement ... and will cover all Apple communciations devices.
"When fascism comes to America, it will be wrapped in a flag and carrying a cross."
All of this assumes AT&T isn't paying a team of lawyers well versed in this specific area of contract law to do all this. Which I'm sure they did. I highly doubt AT&T left themselves open to the point where Apple could back out and collaborate with a competitor like you're describing. Consider what is at stake for AT&T as well. Jobs is an accomplished business man, but AT&T is a well established corporation as well. I'm sure they wouldn't have signed and agreed to revenue sharing if there was an exploitable/easily exploitable clause that would let them go and sell it to everyone else as well. Verizon also declined the iPhone, they had first dibs on it before AT&T.
All that aside, basically the iPhone was designed for GSM and hasn't been rolled out in CDMA markets, so I would highly doubt we'll see a CDMA iPhone (outside of a one off prototype perhaps) for years to come.
What I'm suggesting is that Apple got an exit clause that all parties were well-aware of, not something they "snuck" in. The carrot for AT&T, in this scenario, is that they'd get exclusivity for at least a year or however long it took to reach the exit milestone, and that they'd gain a lot of subscribers in the process (partly because people are led to believe that AT&T would be the only carrier for 5 years).
Also, I would assume that the revenue sharing would stop if Apple exited, under such a clause. I'd also assume AT&T has more than made their money back for the visual voicemail development by now, but that's just a guess.
Let me change the discussion a little and ask this question: Have the details of the AT&T Exclusivity Agreement ever become public? How much do we really know about it, other than the "5 year" and "no CDMA" bits?
Let me change the discussion a little and ask this question: Have the details of the AT&T Exclusivity Agreement ever become public? How much do we really know about it, other than the "5 year" and "no CDMA" bits?
All we know, is what was printed by USA Today (twice, months apart) that "inside sources" claim the exclusivity agreement is for 5 years. Given that they are the largest circulation newspaper in the country, you've got to assume that maybe they're right.
Apple won't make any of these details public (nor would I expect them to), as it could inhibit their ability to negotiate favorable agreements with other carriers in other countries.
To assume that an army of AT&T lawyers would overlook something like "GSM" versus "CDMA" when drafting an exclusivity agreement, is a bit naieve/optimistic in my opinion. As a matter of fact, I would guess that the agreement doesn't even call it the "iPhone", per se. Probably more vauge lawyer speak like "all cellular voice communications device(s)". Otherwise Apple could just rename it to something else (iTalk?) and release it outside of AT&T...
All we know, is what was printed by USA Today (twice, months apart) that "inside sources" claim the exclusivity agreement is for 5 years. Given that they are the largest circulation newspaper in the country, you've got to assume that maybe they're right.
I'm not saying they are wrong, only that they might not have all the details. Under the scenario I described, AT&T and Apple would agree that all they'd tell the papers (through "insider leaks", which is common for these things) is the 5 year part, not any details that might change that. I'm sure a lot of people left their previous carrier for AT&T because of the 5 year agreement that was publicised. No one's going to sit around and wait for 5 years if they really want the iPhone badly. But if they heard it might really only be a year or two, they might wait.
Originally Posted by toomer
To assume that an army of AT&T lawyers would overlook something like "GSM" versus "CDMA" when drafting an exclusivity agreement, is a bit naieve/optimistic in my opinion.
Again, that's not what I'm suggesting.
Think of it this way... perhaps the negotiations went like this:
AT&T: "We propose a 5 year exclusivity agreement"
Apple: "No, that's far too long. We need to keep our options open."
AT&T: "Well if you want to be treated differently than our other phone manufacturers, ie. you want visual voicemail developed, Fine EDGE, and you want a revenue percentage, then it needs to be 5 years"
Apple: "How about if we guarantee a minimum level of profit/subscriber growth for you, and give ourselves flexibility if things work out really well? This will more than pay you back for any investments, and will significantly increase your subscriber base. You'll get a huge head-start on any other carrier that eventually gets the iPhone.
We'll agree to 5 years, but add an exit clause that will only be triggered after you add a minimum 2 million new subscribers who purchase an iPhone. We won't disclose the exit clause to anyone prior to that milestone, which will enhance your subscriber growth because people believe they HAVE to go with AT&T to get the iPhone anytime soon."
Then they're SOL after x amount of business. Greedy corporations don't work like that, an exclusivity agreement is just that...your soul is ours for x amount of time. I'd be willing to bet money that ATT didn't get the totally raw end of this deal and we'll see an iPhone2, if not an iPhone3, on their network before another carrier gets the scraps.
Then they're SOL after x amount of business. Greedy corporations don't work like that, an exclusivity agreement is just that...your soul is ours for x amount of time. I'd be willing to bet money that ATT didn't get the totally raw end of this deal and we'll see an iPhone2, if not an iPhone3, on their network before another carrier gets the scraps.
That is certainly possible.
Just don't forget that Apple is a greedy corporation too, Steve is a master negotiator, and they've got a killer phone, which puts them in a good bargaining position. Now whether all of this is enough to get Steve the kind of deal I'm suggesting remains to be seen. But even if Apple exits the contract tomorrow, I think it's been a good ride for AT&T.
Trust me, in Northern Cal, AT&T coverage sucks pretty bad. I simply won't switch. The iPhone is slick as hell but it's no good to me if my calls drop. I'll go with a Curve if I can't get an iPhone on my network. In any case, my contract doesn't expire until November, so I have plenty of time to see what happens. I was just curious to see what people thought about this scenario.
iPhone on CDMA/Verizon? Could it happen?
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Originally Posted by ruffdeezy
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