Friday, September 28, 2007

The Rise of The iPhones War...

Saul Hansell has a great piece in today's New York Times where he reports on how Apple's "propensity for control" is leading it to fight a war with its own most passionate supporters.

The iPhones War can be summarized like this: Apple decided to release the iPhone to much hype and fanfare, creating a gigantic market demand well before the product ever became available for purchase. Then, once it was, customers could only use the iPhone if they signed up for a two-year cell phone agreement with AT&T, leaving all other subscribers of Verizon, Sprint, etc. in the dust. Then over the summer, a New Jersey teenager hacked the iPhone so that it could be used with those other cell phone service providers as well, and other hackers have since come up with other ways of doing this as well. Now, in retaliation, Apple has released a software patch that turns any hacked iPhone into a "brick", disabling applications and rendering the iPhone little more than an expensive piece of plastic that doesn't do anything.

Hansell makes two strong points. First, since many would-be iPhone users would prefer to keep their cell phone provider who's not AT&T, Apple should sell an unlocked iPhone for, say, $300 more than the locked version. This would still allow them collect serious money from AT&T, while at the same time also let them collect it from other providers like Verizon. Virtually everyone in the industry concedes that Apple would make much greater profits from doing this, plus they'd be expanding their market share AND keeping their own customers happy.

Second, "since the iPhone is a very sleek, capable handheld computer, people are going to want to run programs on it... It's a law of nature. And Apple might as well be fighting gravity."

As I've mentioned over and over again in this blog, in the Internet Age, the desire to create strict systems of control is not only practically impossible, but also bad business practice. As Apple wages battle with its most devoted fans, the iPhones War - still in its early stages - is sure to inevitably alienate customers, erode potential profits, and when the dust settles, will have caused enough headaches to make everyone wonder if the fighting was ever worth it. This cyber arms race is a no-win situation for Apple, and they would be wise to simply meet the market demand for their product.

What a novel concept!


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