With news breaking that Apple is selling the iPhone at full price without requiring customers to buy a contract, some are wondering what CEO Steve Jobs has up his sleeve. Is this a thinly veiled attempt to help users unlock their iPhones and bring them to T-Mobile?
Is it a shot over AT&T's bow, saying Apple is done playing nice? Or is it a response to Google's decision to offer Nexus One smartphones online, rather than in carrier stores? While all of those scenarios are possible, it's most likely that Apple is simply trying to get rid of some of its iPhone supply before it prepares for a new version of the device later in the year.
In any case, the speculation over this move is running rampant. But perhaps it underscores something that too many people have overlooked: Apple can use the iPhone as a weapon.
Whether AT&T, Google and customers like it or not, the iPhone is an extremely important device in today's mobile market. The product has single-handedly revitalized AT&T's business, changed the mobile market and ensured that consumer desire will always in some way be determined by the products Apple puts out. That kind of power can have far-reaching effects. And it means that Apple could capitalize on its standing in the marketplace and use the iPhone to impose its will.
Let's take a look at how Apple could the iPhone as a weapon against any and all stakeholders.
1. Pressure AT&T
Apple holds the most power over AT&T. Unlike so many other carriers in the mobile market, AT&T is heavily invested in the iPhone. In fact, it's one of the key reasons why the company has been so successful attracting and maintaining customers. Apple is well aware of that. If and when the company wants to finally break free from AT&T, Apple can use the iPhone to work out just about any deal it wants. Or it might even work out a sweetheart deal that would keep the iPhone exclusive to AT&T. And unfortunately for AT&T, there's nothing it can do about it. Without the iPhone, it would be in trouble.
2. Take on developers
Apple's contentious relationship with developers could get worse if the company decides to use the iPhone as a weapon against them. The problem for developers is that Apple's installed base is huge compared with those of the makers of other touch-screen devices. So, even though developers might not like the fact that Apple's App Store policies are secretive and sometimes draconian, they don't want to push the company too far for fear of losing that key revenue stream. At the same time, Apple knows that if it really wants to control developers, it can use that fear to do so. Developers are in a bad spot.
3. App Store mania
Even though Apple has gone out of its way to limit content that it doesn't want in the App Store, there's more that can be done. If Apple really wants to, it can create specific rules for what can be allowed in its store and what cannot. Worried that they would lose App Store revenue, buttonholed developers would have no choice but to listen. Consumers would also need to live with those rules if they wanted to keep using the iPhone. The App Store is an extension of the iPhone's power. Apple would have little trouble using it to dominate.
4. Take on other carriers
Although Apple's power is most forceful against AT&T, the company can still use the iPhone to take on other carriers. Thanks to the iPhone's success, Apple can go to Verizon Wireless or T-Mobile to see what kind of deal either company would offer. If it finds something a little better than what it has at AT&T, we could see a drastic shift in the way Apple does business in the mobile market. Apple could opt to go multicarrier and give preferential treatment to, say, Verizon Wireless, and totally change how the iPhone is perceived in the market. And there would be nothing AT&T, T-Mobile or Sprint could do about it.
5. Consumer desire?
Although consumers have been calling on Apple to add new features to the iPhone, including multitasking, Jobs has done little to swiftly bring desired features to the device. Instead, he has waited until he's good and ready to update the iPhone. That's a problem. Thanks to the iPhone's success, Apple has little reason to worry about complaints from consumers. Sure, it wants to satisfy consumer desire, but the company clearly feels that it can do that whenever it wants. After all, Apple controls the iPhone and decides what's in it. What can consumers really do about it? The longer it has that control, the less Apple might listen.