Comment by unwiredben
2 days ago
I was at Palm when the iPhone launched, and one note from this analysis summed up Apple's new power in the market and how they really changed the landscape.
"Cingular has allowed Apple to launch a device with WLAN and inbuilt services"
At that time, the carriers controlled so much of the cell phone experience. We certainly would have loved to have launched Palm Treo phones with WiFi radios, but our carrier partners wanted the only way to get data in and out of the devices to be through their monetized data plans. They also wanted to control what you did with that data so they could charge for their own email or messaging systems or web portals. The same applied to app stores. Palm OS didn't have a unified app store at that time, just sideloading and some third-party methods, and some carriers had started making their own stores where you could buy apps billed through your cell phone bill. They hated the idea of a platform owning that, and I expect that was part of the reason Apple originally released it with no app store. They needed the phone to be a massive hit in order to gain the power to also bypass that wall that the cell companies put up.
Palm did benefit from the iPhone launch -- it had us uplevel our efforts away from the post-Palm OS phones that we were in the middle of developing that were aimed at the RIM market and instead try something radical with webOS, and when the Pre launched, it actually had WiFi on board, although the Sprint-exclusive Pixi phone lacked WiFi due to carrier request. There was some momentum there for a while, but then HP bought us, hit its own set of brick walls with carriers, and ditched the hardware business shortly after Apple started launching on other carriers.
I was at RIM at that time and saw _exactly_ the same thing. When I started in 2008, in addition to WiFi and apps they were squabbling with carriers about whether or not the Blackberry needed an antenna. Carriers were micromanaging devices to an astonishing degree.
The river of money from Macs, iPods and iTunes gave Steve Jobs a completely different kind of leverage in those carrier negotiations. Device only companies like Palm and RIM couldn't have broken that carrier strangle even if they did have the technology.
Were virtual network operators (?) - VNOs - a thing back then, and could a VNO make its own rules? If so, could Apple (or Palm or RIM) launch their devices without carrier compromise by also owning a virtual network? I guess this would have required a lot of money. Maybe Nokia could have done it?
No, the carrier leverage did not come from network policy, it came from sales-channel. That is to say, in those days one way or another every device passed through a carrier's hands before reaching the customer. So carriers controlled pricing, and to a large degree, marketing. If they didn't like your device they would refuse to sell it and then you were stuck.
Unlike RIM or Palm, Apple could realistically choose not to sell their device at all, or at least not sell it for a while, and so they were able to break the carrier oligopsony. It also didn't hurt that Steve Jobs was, well, Steve Jobs. A one-of-one business negotiator.
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The Pre was absolutely rad - and to this day the only phone I miss from a UI perspective, and the only UX and hardware that I thought had a chance of "out Apple'ing Apple".
The hardware was very well done, and I could type faster on my Pre than I still can today on any screen. I was never a Blackberry person, but I expect it was a simlar experience.
Even at launch, WebOS was a pleasure to use, and the architecture of essentially easy-to-make installable web apps was revolutionary at the time. It's a damn shame it never made it further than it did.
I read that as a failure of Palm's management, notably the ones that were negotiating with phone carriers. Jobs isn't the only guy who could have negotiated that kind of deal. Apple was a second run computer company that had almost no previous phone experience. They were not exactly negotiating from a position of strength, and the fact that only one carrier took them up on the offer shows just how tough it was.
It sounds like they really needed to say "Stop. We are the ones building the phone, you are the ones providing the service. We don't tell you how to build towers, you don't tell us how to build the handset, at least not the user facing part of the handset."
> Jobs isn't the only guy who could have negotiated that kind of deal
This is a debatable claim.
> Apple was a second run computer company that had almost no previous phone experience. They were not exactly negotiating from a position of strength
The iPhone was not a mobile Mac. It was an iPod with an inbuilt cellphone. iPod was HUGE. That was their upper hand.
Apple in 2006 wasn’t a computer company, they were the iPod company.
It was huge as a consumer product. And that was the only thing that could convince a carrier to take a bet with Apple: they wanted exclusivity on the “next iPod”.
But Cingular/AT&T clearly didn’t sign a lifetime exclusivity contract with Apple?
It didn’t even last 4 years.
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I would expect that being a computer company gave Apple more leverage than the handset makers. Apple could afford to have none of the providers say yes.
Moreover, Apple had prestige. It wasn't that big but it already the high-end computer maker. And Apple had the already successful ipod which served as the basis for the original iphone. And the handset makers had been fundamentally dependent on carriers in determining what features made it to the final phones - which would have had to made them essentially weaklings.
Which is to say, I think there's reason to think Apple had strength in it's negotiation position relative to a random handset maker.
Steve Jobs could say that but as the old saying goes, you are not Steve Jobs.
By the time that the iPhone was introduced, Apple was riding high on the iPod.
The resurgence of the Mac was already well under way at that point as well. Intel Macs had launched before the iPhone. Developer buy in to the Mac was pretty big by then.
But aside from that everyone was carrying around an iPod everywhere along with a dumbphone even if you were a Windows user. We all hated using the dumbphones and loved the iPod.
> At that time, the carriers controlled so much of the cell phone experience.
In English-speaking countries, maybe. But I remember at least Windows Mobile PDAs that had both a cellular radio and wifi before the iPhone launched. At least Russian carriers never cared at all what kind of phone or other device you were using on their network. You bought it unlocked for the full price from somewhere else anyway. There were various attempts to do US-style carrier-locked phones with 2-year commitment with no or little upfront payment, but none of that really stuck. The only exception to that was SkyLink, Russia's only CDMA carrier. They sold their own branded phones but even those, iirc, were for the full price upfront.
> Palm OS didn't have a unified app store at that time, just sideloading and some third-party methods, and some carriers had started making their own stores where you could buy apps billed through your cell phone bill. They hated the idea of a platform owning that, and I expect that was part of the reason Apple originally released it with no app store. They needed the phone to be a massive hit in order to gain the power to also bypass that wall that the cell companies put up.
This might actually be a partial explanation why some of Apple’s Executives held back on trying to convince Jobs until after they shipped, but initially, Steve Jobs was truly against the idea of running third-party apps on iPhones and had to be convinced.
I love sharing this trivia with people because really, can you imagine an iPhone without apps? It’s crazy to me to even think about, and back then during that first year and for many subsequent years after until this became public knowledge, I thought the only reason there wasn’t an SDK was because the first iPhone as a minimum-viable product for Apple’s vision of a cell phone and an SDK was always in the cards from before the start. Because why wouldn’t it? They had Cocoa! And a small but enthusiastic base of indie Mac devs that knew how to use it.
Though I never used a Pre, I got to use webOS on an HP Touchpad. In many ways, I still think it’s better than what we currently have and wish it had won out instead of the iOS and Android.
The Pre and WebOS were hands down the best non iPhone experience at the time. The mistake Palm made was going exclusive instead of pushing it everywhere. I don't think the Pre ever recovered from that in the USA.
The BlackBerry Z10 was also a great device but by that point there was no way BlackBerry to deploy a competing ecosystem to iPhone and Android for it to matter.
As an outsider very interested in Palm devices, this was always my impression/suspicion. Thanks for confirming what I’ve long thought was going on.
Exactly this. Also why I bought Apple stock the day the iPhone was announced (I had never seen an iPhone and knew nothing about how cool it was, but I took notice that Jobs had been able to blast through the carrier moat concerning data service).