July 11, 2008

Open and closed, Part I(a)—iPocalypse

I can't move on to Part II without saying something about today's disastrous rollout of the 3G iPhone. Apple is normally very good at providing an excellent customer experience, but today provided a cautionary lesson to Apple in what _not_ to do.

For starters, it's been said, fairly in my opinion, that the Achilles heel of the iPhone is the linkup with AT&T. When we're talking about AT&T in this context, we're really talking about what used to be Cingular. The old AT&T Wireless was absorbed by Cingular a few years ago, and since then the former AT&T network has been obliterated in favor of the ex-Cingular GSM network, which was definitely not ready for prime time, at least not in my area—and their customer service was singularly (Cingularly?) bad.

For example, when I complained of bad reception, I was told that my office, which lays directly next to one of the two major highways between Los Angeles and San Francisco, and is in a city of over 100,000 people within a broad valley, was in a "tough area." Gee, thanks.

Anyway, it looks like today's problems were caused not by AT&T, but by Apple itself. There are conflicting stories out there, but it appears that Apple's iTunes activation servers went downat a _very_ inconvenient time. Imagine standing in line for several hours, finally purchasing the phone, having your number ported over, and then not being able to activate the thing. Nice. The basic problem here is something that has served Apple very well up until now: Apple's insistence on controlling every aspect of the user experience. While this has allowed Apple to craft a consistent look and feel across multiple computing platforms, in this case it worked against them in a big way.

Most of the time, when you buy a GSM phone, it's a simple matter of taking the SIM card out of the old phone and putting it in the new one (or, in the case of a new customer, activating a new SIM card). In this case, an extra step was inserted into the process, because Apple does not want you to use the phone in ways that Uncle Steve disapproves of—and, apparently, because of concerns over unauthorized unlocking of the phone. Because the price of the iPhone is being subsidized by AT&T, AT&T wants to make sure you activate the phone on the AT&T network, and there is doubtless a contractual obligation on Apple's part to help ensure that this happens, and that iPhones are used only on AT&T's network. This, of course, is a losing battle.

There's an interesting corollary to the music industry here. The record companies would love it if everyone bought the same music over and over again. This is why they initially pushed so hard for digital-rights management (DRM). This led to Apple selling music files through the iTunes Music Store that were hobbled by DRM and were consequently unable to be played on anything but an approved iPod by the person who originally bought the music. Predictably, various methods were found to strip out the DRM from tracks purchased through the iTunes store, and ultimately the record companies were forced by consumer pressure to offer DRM-free tracks through other merchants. Like the record companies with their music, Apple and AT&T are following an outdated business model. Instead of locking down the iPhone six ways from Sunday, what Apple should do is fairly obvious, at least to me:

  1. Sell the iPhone as an unlocked and unsubsidized GSM phone. The initial iPhone proved that people were willing to spend large sums of money for an Apple-branded phone that just worked. Why not let them?
  2. Permit its use on any GSM network.
  3. Either sell it exclusively through Apple Stores, or offer it through multiple providers.
  4. Develop and market a CDMAversion of the iPhone that can be sold via Sprint and Verizon. In many areas of the USA, those are the most complete and reliable networks; why not take advantage of them? Palm and Blackberry manage to do both GSM and CDMA versions; why can't Apple?

Of course, for those who just can't wait for this eventuality to take place, there is an option. But then, if you read Part I, you already know that.