Category Archives: Mobile

Blame AT&T? I don’t think so

CNet’s Don Reisinger thinks that AT&T is forcing Apple to ‘brick’ iPhones:

“What would have driven Apple to brick iPhones? Some may say that an unlocked iPhone running on a T-Mobile network means significant losses in revenue, but I think that argument is a bit flimsy.

Historically speaking, Apple is a hardware company, and it’s in the business of selling as many computers, iPods, Apple TVs and iPhones as possible. Wouldn’t an unlocked iPhone allow the company to sell more hardware? And if so, couldn’t it be said that this hardware company would benefit the most from hardware sales?

An unlocked iPhone means more hardware sales because T-Mobile customers and people from all over the world could pick one up at an Apple store, bring it home, and put it on any GSM carrier.”

There’s only one problem with this argument: it only works if you assume that AT&T’s deal is permanently exclusive, and that Apple makes more money off selling an iPhone than it does from the revenue share deals.

Neither of these is actually likely to be true. First of all, I doubt that AT&T will have the exclusive deal on iPhones for longer than a year – it it does, Apple will be the first phone seller anywhere to stick to exclusive permanently.

Second, even a cursory glance at the numbers reveals that Apple will make far more profit from its revenue sharing than from the physical iPhone. Support that the 40% revenue sharing deal which the company is rumoured to have done with O2 is the norm.

This means that, on the lowest-priced AT&T tariff, Apple makes $24, or, over the course of the 18 month contract, a whopping $432, far more than the initial price of the iPhone. And, for Apple, that’s almost all profit: I’m sure its deal with AT&T doesn’t mean it’s required to pay a portion of the cost of running the network.

If it’s serious about selling 10 million iPhones by the end of 2008, that represents a yearly profit of $2.8 billion, just from the revenue sharing. Add in the profits from the phone itself, plus ringtones, and you’re probably talking about around $3 billion profit. I very much doubt that AT&T will make anything like that amount in profit from the iPhone.

Irreparable damage… to software?

TUAW has a picture of the statement which Apple has posted at Genius Bars on how “many of the unauthorized iPhone unlocking programs cause irreparable damage to the iPhone software.”

No, wait, it’s software. It’s code. By definition, “damage” to software can be undone, which is why it’s “soft” rather than “hard”. You might end up with it having to be restored to its factory state, but that’s not “irreparable”, is it? And yes, even if it’s “firmware” it’s re-flashable. That’s why it’s “firm” – it’s held in hardware, but can be re-flashed.

Either Apple doesn’t know the difference between software and hardware, or its definition of “irreparable” simply means “we’re not going to do it for you, buster”, which isn’t exactly the dictionary definition. I can’t fix a broken window, but that doesn’t mean it’s “irreparable” and I should just sit here with a draft blowing through the house for the rest of time.

In fact, of course, Apple is just lying. It’s not irreparable. It voids your warranty, it makes you ineligible for any help from Apple, but it’s not irreparable. Apple is simply pointing out that you have been a bad person, and it will try and punish you for disobeying His Steveness.

Do you want to do business with a company which treats its customers like that?

Of course, this situation is inevitable. Apple is taking, by some estimates, as much as 40% of the revenue that the phone companies make from the iPhone. If it hits its target of selling 10 million iPhones by the end of 2008, at around $25 per customer per month (a conservative estimate), you’re talking about a $3 billion business per year, just from that revenue sharing. And, unlike actually making the things in the first place, that’s almost pure profit for Apple: the phone company absorbs all the costs of running the phone. All Apple has to do is have a few guys making “updates” which brick anyone’s phone if they’ve had the temerity to want to use it with a different network.

With that amount of profit on the table, letting you take your iPhone to another company isn’t an option, even then unlocking the iPhone is perfectly legal [PDF link]. It will be interesting to see how Apple deals with customers in countries like Holland, where you have a legal right to have your phone unlocked by your phone company after a specified period.

It’s strange that Apple thinks that it’s right that people want to own their music, but wrong that people want to own a device which they’ve paid $399 for.

As an aside, the exemption to the US DMCA which makes it legal to create or use a third-party unlock on a mobile phone runs out in 2009. What’s the betting that Apple will be lobbying very hard indeed to see that this extension isn’t renewed? And, now the precedent has been set that “hot phone” = “revenue share” for manufacturers, I bet they’re not the only one.

To make matters worse, Apple seems to be bricking phones with this update which have had no hacks applied to them at all. So the ones who seem to be causing “irreparable” damage aren’t the hackers, but Apple. Maybe Apple should hire some of the hackers. After all, they seem to know more about its software and hardware than it does.

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Is one million iPhones sold good, or not?

Dan Frommer thinks not:

“So is 1 million a good number or not? It’s not — not even by Apple’s own low-ball public sales goals. Jobs has announced plans to sell 10 million iPhones by the end of 2008 — a year and a half after launch. But a million iPhones in 74 days works out to a little less than 5 million iPhones per year — if you’re selling them at a consistent rate. Apple sold 270,000 machines in the first two frenzied days it was on sale, which means it took 72 more days to sell another 700,000 phones. That’s a 3.6 million annual run rate, which would give Jobs a total of 5.8 million by the end of 2008…”

Of course, as Frommer points out, the iPhone is only available in the US at present, and a good European launch might well see it through. But it will be interesting to see just how well the iPhone sells, and if that 10 million phone target can really be met.

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Why synching sucks (or not)

Dave Winer doesn’t like synching:

“I think synching is a bad idea, but Apple’s mobile technology is built around it. I dislike synching. I want my devices to go straight to the cloud, both ways. My podcast player should have a built-in podcatcher. And my podcast recorder should also be a publisher. 

Seems unlikely that Google’s phone will depend on synching. It will be more Dave Winer-compatible than the iPhone is.”

The thing is that it’s not an either/or. There’s no reason why you can’t have multiple machines synching local copies of cloud-based resources, allowing you to work online and off without any issues.

Think Plaxo. Think Google Gears. Yes, even think some of Apple’s technology. The iPod was a winner because synching was seamless and largely faultless.

Synching done right can be a major plus on top of cloud-based computing. Done wrong (and I’m looking at you, ActiveSync) it’s a major pain in the behind.

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Palm cancels the Folio


Picture by David Geller.

The Official Palm Blog: A Message to Palm Customers, Partners and Developers:

“I have decided to cancel the Foleo mobile companion product in its current configuration and focus all of our energies on delivering out next generation platform and the first smartphones that will bring this platform to market.”

I’ve been sat here for a couple of minutes trying to work out what to say to this, and the best I can manage is “what the hell…?”

To announce a major product, then cancel it just before launch on grounds which should have been obvious before it was originally announced makes Palm look extremely stupid. Although, arguably, not as stupid as launching Folio – a product which no one seemed keen on apart from Ed Colligan and Jeff Hawkins.

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