Why Steve Jobs Is Hyping The iPhone Patents? Because He Made A Bad Deal
from the well-that-explains-it... dept
Last week, I asked whether or not the iPhone actually needed all those patents that Steve Jobs bragged about. It kicked off a fun discussion in the comments (and among other bloggers), but Tom Evslin’s response over at his own blog is one of the most enlightening in explaining not only why Apple needed those patents, but why Steve Jobs so prominently bragged about it: Apple made a really dumb business decision in locking themselves up with Cingular, and the only way to protect them from the damages of such a lockup is to make use of the patents. It makes a ton of sense. It’s certainly not common for someone pitching a consumer product to brag about how much they patented their new device, but Apple did so to make it clear to everyone that they really are serious about the patents. The reason isn’t so much that they fear others just copying the ideas (many of which aren’t actually new), but that Apple is very, very limited in how they can offer the iPhone. They are tied to Cingular, who is offering bad terms (two year lock-in, no 3G, no additional applications, no VoIP etc…). That means people who actually want those innovations, but don’t want to accept the awful terms they’re being offered under would normally look to go elsewhere. And the competition should come along to fill that need, and provide the market what it wants. However, thanks to the combination of Apple’s exclusivity with Cingular and the patents, the market cannot be served. Once again, this is not the purpose of the patent system. It’s encouraging bad deal making. It’s encouraging limiting a market so that it cannot be fully served, even though demand is present for better solutions. Effectively, it has slowed, not improved, innovation. It may protect Apple from the bad deal they made with Cingular, but it’s certainly not good for everyone else.
Comments on “Why Steve Jobs Is Hyping The iPhone Patents? Because He Made A Bad Deal”
ouch, ya, that does make sense now. i was kinda confused when i first heard the announcement, because i couldn’t understand why the deal with Cingular, when every one and every carrier could make a fortune selling the iPhones, since it is so cool. so now Apple is really encouraging other companies to copy and bring out similar style phones.
dumb, dumb Apple.
Re: Re:
I have always supported (and will continue to support) Apple, but agree that it was a very dumb move to be exclusive to Cingular. I was ready to drop $500 the day they came out until I learned that I could only have one with Cingular. I will look elsewhere now.
Cingular must have given a TON of cash to Apple for them to agree to this.
"Lock in Exclusivity" is a farce with SIM phones
Do people just not get it? You will NOT be locked into Cingular service with this phone. You will go to Cingular, buy the phone outright, unlock it, and put it on the GSM carrier of your choice. The USPTO has declared that customers be allowed to unlock their phones. This isn’t like a Verizon lock in where a database of ESN numbers prevents you from going to other carriers. this is a GSM phone with a SIM card. Apple will let slip the unlock codes and everyone will be on their way.
Re: "Lock in Exclusivity" is a farce with SIM phon
But then you lose features like the visual voicemail, email forwarding, purchasing songs on the go…
Might as well just buy another, cheaper phone on another carrier.
Re: "Lock in Exclusivity" is a farce with SIM phon
I was told by Nextel/Sprint that they could get me the phone on their plan.
Re: Re: Re:
I was told by Nextel/Sprint that they could get me the phone on their plan.
Then you were lied to. This particular iPhone is a GSM phone, and unless Nextel/Sprint is switching their network to GSM, it can’t happen. IF Apple releases CDMA version it could happen, but this is a huge exclusive for Cingular, and I’m sure it’ll be a long time until you see it available for any other carriers.
Re: Re:
Do people just not get it? You will NOT be locked into Cingular service with this phone. You will go to Cingular, buy the phone outright, unlock it, and put it on the GSM carrier of your choice. The USPTO has declared that customers be allowed to unlock their phones. This isn’t like a Verizon lock in where a database of ESN numbers prevents you from going to other carriers. this is a GSM phone with a SIM card. Apple will let slip the unlock codes and everyone will be on their way.
Well, I guess I could do that, but there is a penalty for cancelling a contract. I asked the local Cingular seller, and he told me that they won’t sell phones without a plan. Maybe he’s new or maybe he’s lying, but it’s definitely not in Cingular’s best interest to make it easy to buy an expensive phone without a plan.
Sure I could buy the phone, unlock it, and swap out the SIM. But is the cost of the penalty worth it? Probably not, and that’s the crux of the argument against the iPhone.
Re: "Lock in Exclusivity" is a farce with SIM phon
Though from what Jobs was indicating several of the features of the phone required specialized support on the network side. The main issue will be whether other providers can and will support those features on their networks.
For my own part the Cingular requirement pretty much kills any possibility of me getting the iPhone which I would otherwise seriously be considering.
The only other thing that I would like to see on the iPhone is a better camera and a built in GPS to locate yourself and possibly others with that very cool Google maps feature. Maybe in the next version though.
Cingular Is Deadly
Why choose a company at the bottom of JD Power and Associates’ ratings? Cingular is the worst. Apple is a great company that may find themselves in trouble because of this ridiculous choice. There ain’t no way, no how, I would ever sign with Cingular.
Patents
It is fairly standard practice for new “desirable” phones to be locked in to a single carrier for a period of time. 6 months if fairly standard, and 1 year is not uncommon. While the “multi year” exclusivity is unusual, I think it was probably necessary for a number of reasons.
1. Apple is new to the cell phone business. They need some time to ramp up their support processes for these devices.
2. GSM is the worldwide standard (for the most part) for cell phones, so they are positioning the phone for sale worldwide. A CDMA version will most likely become available in the future, although given the proclivity for VZW to cripple their phones (although they might like the “lock down” of the iphone), that only leaves Sprint (which is loosing customers), so why go with CDMA to start with?
3. Tmobile? Their focus seems to be the cost conscious consumer, which doesn’t really fit Apple’s target market.
The 2 year contract is also fairly standard for the industry these days. As for 3g, I suspect that was done to reduce size and power consumption. Talk to anyone who has a HSDPA phone, and they will tell you it sucks power. People using 3g HTC phones even hack them to disable the 3g radio unless they need it.
Temporary "problem"
Apple wants a successful U.S. launch without having to become cell carriers themselves. In the U.S., this is how the cell phone market works. This situation was created primarily by the U.S. CARRIERS, not by the cell vendors, and especially not by Johnny-come-lately vendor Apple. The rest of the world will be getting unlocked IPhones and using them on their carrier of choice before the end of the year (but probably at a higher price point).
If you pay attention to what Apple PR and thier CEO actually say, they fully expect that the new iPhone will accelerate innovation in the smartphone market, and they actually WELCOME that, and the competition that comes with it. They don’t think they can prevent other companies from having their own good ideas. After all, that’s not what patents do. Your article sounds more like sour grapes that someone else didn’t think of feature X first and patent it before Apple!
The patents just make is harder for brainless dipshit companies to directly copy the iPhone UI and some of the features. The dipshits can still make a pretty attractive phone, just like they have made iPod copies since the beginning. And just like they made phones that looked like Nokia’s in the early days of the cell phone maret.
But the real question is who else, besides Apple, can do something truly innovative? I think there are many companies that can produce great products if given the right motivation. Nokia, Motorola, and Sony Ericsson have all created ground-breaking products before. I suspect they will come through again, and provide us with notable competitors to the iPhone in the not-too-distant future. After all, that is what happens in the technology markets. Innovation spawns more innovation. New innovation is not prevented by existing patents protecting old innovations. Like Apple, the other companies just need to think differently and come up with something new, innovative, and great. Not all the ingenious engineers work for Apple, you know. Other companies can and will answer this challenge.
And that, my friends, is why Apple’s entry into the market is a WIN for us all.
The real reason
I wonder if maybe it is a matter of control.
Jobs is all about retaining control of his (Apple’s) invention. Larger and better services want control and profits generated by services offered. Look at how Verizon limits functionality of phones they market.
Apple has the patents so they retain control of the product itself. Jobs went to Cingulair because have a reputation of being the worst carrier (AT&T could change that). In Cingulair’s attempt to turn that around, they may have been the only carrier that was willing to leave the control over functionality to Apple.
Besides, EVERYTHING Jobs touches seems to turn to gold. I don’t understand it, I just wish he would come run my company!
“Apple wants a successful U.S. launch without having to become cell carriers themselves.”
Totally irrelevant comment, none of the other major phone manufacturers of cell phone are carriers. If the phone is good enough (or more accurately in demand enough) the cell carriers will jump though hoops to put it on their service plans
“situation was created primarily by the U.S. CARRIERS, not by the cell vendors”
While the final details of the terms that created this situation were probably created by the carriers, at any time Apple could have said “stop, we are not playing it this way” and offered the phone to all carriers and in all likelyhood done better financially out the deal because this phone was always guaranteed to do well no matter what, just because it’s apple and tied in peoples minds with the “ipod”.
But if you look at apples way of operating with everything else from the mac,ipod and itunes, the sprit of these restrictions defiantly come from the heart and soul of Apple HQ
“The rest of the world will be getting unlocked IPhones and using them on their carrier of choice before the end of the year (but probably at a higher price point).”
Correct except probably for the last part, cell phones (and services) in the US I find generally to more expensive (and way more restrictive) than Europe and told they are also more expensive (and restrictive) than most of south east Asia
“The patents just make is harder for brainless dipshit companies to directly copy the iPhone UI and some of the features.”
Actually if you study the iphone there is not actually that much that is actually new to the industry with the exception of the touch screen and even that is not exactly revolutionary more evolutionary
” Nokia, Motorola, and Sony Ericsson have all created ground-breaking products before. I suspect they will come through again, and provide us with notable competitors to the iPhone in the not-too-distant future”
This I fully agree with, actually I will go one further and say anyone who buys the iphone is a fool, because when the normal cell phone makers start to hit the market with their new stuff they will be as good apple’s…no actually better because they will be without all the artificial limitations apple have imposed on their own system.
The whole iphone is just proof Apple learned absolutely NOTHING from the Mac and it’s reduction to niche market for years because of artificially imposed limitations on the system
Cingular is the Worst Carrier???
Don’t know about that. Sounds kind of subjective Cingular is the largest carrier. Perhaps that is why they get more bad press?
I think network quality is the key thing, and it mostly depends on where you live. In my neck of the woods, the worst experience was with Verizon.
Hyping the I Phone
The press just has to keep “bashing” Apple, they just can’t stand that Apple has the best/coolest products. Yes they may cost more but you get what you pay for. Until one actually uses the products objectively and sees the differences, you just won’t get it!!!!
Every article you see in the media bashes apple relentlessly, Hmmm! wonder why.
James
Hyping the I Phone
The press just has to keep “bashing” Apple, they just can’t stand that Apple has the best/coolest products. Yes they may cost more but you get what you pay for. Until one actually uses the products objectively and sees the differences, you just won’t get it!!!!
Every article you see in the media bashes apple relentlessly, Hmmm! wonder why.
James
Re: Hyping the I Phone
James,
This is not an Apple “bash.”
I do not have a GSM carrier. Could I change to Cingular/AT&T? Sure. Could I wait six months until this thing comes out? Sure. Could I pay six times more than I usually pay for a phone? Sure. These are all barriers to me buying the phone. I want the phone, I can’t buy the phone.
The iPhone offers some great features, but without allowing third party software and having to switch carriers, Why bother?
Re: Hyping the I Phone
Are you kidding? Apple bashing??? If anything the media over hypes apple and bashes MS. The media has their heads straight up Apple’s @ss. Get real….
And, as a Cingular customer, I find their service to be top notch since the merger with AT&T. I’ve heard Verizon is better but I don’t have the luxury of paying a higher price for them.
I don't get it...
A combination phone, camera, mp3 player, what’s new about this?
Is it combining this stuff with IPOD functionality? I don’t find MAC’s that “intuitive,” just expensive and limiting.
I don’t own an IPOD (not a big music buff), so there must be something I’m missing…
Cingular is not the dumbest thing they did
I think they made a bad decision in naming it the iPhone. Not because of the Cisco thing (well, that too) but because everyone thinks of it now only as a phone and compares it to other phone. The iPod, web browser, email, camera, (email!), widgets aspects seem to be forgotten more and more.
KILLER APP for Apple's Phone
What Apple’s forthcoming wireless portable phone needs for success, in view of its obvious disadvantages (high price, limitation to Cingular, small memory for music/video) is a KILLER APP.
For this, that app could well be DICTATION SOFTWARE (since a microphone is already present, and a stripped down OS X) . . . that would let a user dictate an outgoing Email, or a bit of text that could go into a rudimentary word processor (like TEXTEDIT), and thence to a memory file or, by any one of several means, to a printer if desired.
Then the device possibly could be renamed, trademark issues permitting, the POCKET MAC !
Re: KILLER APP for Apple's Phone
That’s your idea of a “killer app”? Voice-to-text? It didn’t take off on the desktop, and I really, really doubt it’ll be of any use on a phone. Instead of dictating an email to the phone, why wouldn’t the user just make a CALL? Makes sense since it’s a PHONE.
Let’s think before we post dumb shit.
iPhone
Let go of the left-mouse button James;) Apple is alive after years of ‘experts’ announcing their demise. The market hates the manner in which Apple keeps it’s control over it’s creations, but in the same breath rips their competition for not being more simplified, unified, and usable. Can’t have it both ways, folks. Either you like living in the gated community, or you don’t mind living next to the guy with five broken down cars in his front yard. Both have advantages and disadvantages, but in a market like cell phones where standardization and cross-vendor compatibility are seen as curse words, I personally welcome Apple bringing a little order to it all. Even if it is a small enclave of order.
Yes except your not in a gated community, it’s more like a controlled mobile park. Cingulars technology is 3rd rate compared to the competition. When 3G came out on Verizon, using a phone for the intenet made it viable. Anything slower is throwing your time away (and your money). I guess there might be a market for that, but it’s definitely 3rd rate. Apple should have aimed higher.
iphone
so your basis is that to serve the marketplace apple should spend money out the wazoo and not protect themselves?
revolutionary, evolutionary, schmevolutionary
someone said: “…if you study the iphone there is not actually that much that is actually new to the industry with the exception of the touch screen and even that is not exactly revolutionary more evolutionary”
yes, people are using “revolutionary” loosely. who cares? the word evolutionary doesnt do it justice. apple takes a poor product w/ a good concept…throws the product away and starts new. something that can change the technology/research that goes into all future touch screens IS revolutionary!
google definition: markedly new or introducing radical change; “a revolutionary discovery”
yes, cingular may suck now. i am hoping they use the flood of income this summer to improve their service. im hoping they dont jack their plan prices UP in june. im looking forward to saying FU! to t-mobile.
look at the iPod! there were several crappy mp3 players like the Rio that were on the market LONG before the iPod. remember napster? i thought the mp3 market would sink completely. why would the iPod come out after the napster SMACKDOWN?
steve always is a step ahead. we know little about the iPhone and it’s future.
Re: revolutionary, evolutionary, schmevolutionary
You calling the Rio crappy tells me you’re an idiot and never used it. The iPod was not technically superior, it was just marketed a whole lot better.
Sorry but with phones it’ll be significantly different. The common person is not going to want that complex a device. Everyday consumers bought iPod for its ease over the other brands, not it’s technological prowess…
I’m sorry but this market is a lot more unforgiving and you won’t see an iPod like run in the market.
People who believe that are delusional.
Re: Re: revolutionary, evolutionary, schmevolution
I had a Rio and I bought an early iPod – the reason to buy the iPod was the large storage capacity coupled with the small size. The first iPods were bigger than my Rio 500, but not by much (mostly just in thickness), but they had enough storage to store my whole record collection. With Rio, I had to sync it every day and I’d be tired of whatever music was loaded onto it before I got home. It was a nice player, but what a pain.
Umm, I happen to know Cingular supports 3g just and FYI
Apple-Mac-Cingular
Cingular informed me that its WiFi laptop service is incompatible with the MacBook Pro I just bought. Why, indeed, make a deal with this company.
Re:
Retard.
Please go put on a helmet and bang your head against a wall.
…oh wait; don’t bother with the helmet.
Exclusivity will not hurt the iPhone (lotta of bad
The Razr was exclusive to Cingular for a couple of years and it’s one of the most popular phones on the market. High-end phones are often exclusive when they come out. Also, Apple already said a 3G version would be out soon after the GSM/Edge version. It isn’t going to be 2G when it rolls in Europe folks. It’ll be 3G.
Also, it’s only exclusive to Cingular in the US. Worldwide I’m sure it will be exclusive with carriers in other markets, but that doesn’t limit Apple to 56 million customers. Jobs says he wants to sell 10 Million worldwide in 2008. That is very doable. Actually, that goal is probably going to be met and exceeded.
Why only one carrier - control!
Apple being apple, they could have easily sold unlocked iPhones, without subsidies (like they do in Europe), made their fortune, and gone on their merry way. But the point is, that if Apple hadn’t learned anything from the iPod, they at least learned that to ensure consumer confidence and retain customer satisfaction they need to control all aspects of the experience down to the smallest detail. That’s one of the reasons why they went with EDGE – wider availability and more consistency.
Imagine if you called up Apple for support with your iPhone and they had to a) start to look at which carrier you had, what networks were available, etc.
That being said, why Cingular? Well they wanted to go with GSM/EDGE for one, for world consistency as 3G services aren’t as widely available. (And, the gap between EDGE and GPRS is probably less considerable than the gap between HSDPA/UMTS and EDGE in the event of lower-end coverage). In addition, I am sure that T-Mobile (and Verizon, since its part-owned by Vodafone) were (or would) ask for concessions to their international divisions. This way, by working with Cingular, Apple could negotiate independently with other carriers in Europe and Asia without being locked into a global deal.
Truthfully, I have been with all 4 of the US’ major carriers in the last decade:
AT&T (2x), T-Mobile (2x), and Sprint (1x), as well as been co-opted into Cingular the second time around when it took over AT&T. Truthfully, short of an incident here or there, I honestly don’t feel that one carrier is any better or worse than the other.
iphone is the new sidekick
i wanted a danger hiptop/sidekick for the longest time but couldn’t stomach BOTH the high pricetag AND the crappy carrier. so, i did without.
with the iPhone it will be the same story.
What a silly little article
The real reason for the mention of all the patents
Seems pretty obvious to me:
Apple and everyone else is tired of being sued by failed companies that are trying to get some money out of their too generic, highly obvious patents.
Jobs was just poking fun and basically saying that they are trying to be prepared for the inevitable patent suits.
memory loss
Apple got screwed over patents with new products in the past, no suprise Jobs mentions it. The last one was microsoft trying to patent a feature of the the ipod interface, after the ipod was out. Thats just a slap in the face, no wonder they slap back. You don’t forget when someone trys to screw you.
Cingular was a bad choice…for me. But in the long run it probably means they will succeed in penetrating the cell market. “Go for it” I say.
SIM
Who said you can pull the sim out of the iPhone? They’ve already stated you can’t replace the batter. It stands to reason that you can’t replace the sim either.
Re: SIM
There is a SIM slot. It is removable replaceable without even opening it up.
If Apple were smart, they would have gone “carrier free” in the USA, and that would have truly revolutionized the whole thing. It would mean it would work via pay as you go, or any carrier who uses SIM cards. It would not require contracts.
As for Email and such, Apple could have worked it via their own .Mac and other protocols. Just as mail.app does on the desktop, the mail app could check for new mail, etc. The voicemail viewer feature might not work, but I’d gladly forgo that and deal with regular voice mail to not have to lock into a 2 year contract with one carrier.
Who said you can pull the sim out of the iPhone? They’ve already stated you can’t replace the batter. It stands to reason that you can’t replace the sim either
Can’t replace the battery? Is this similar logic to the “unreplaceable” battery in the iPod? OMG! I have to use a butter knife! I don’t have a butter knife! Clearly it’s a big conspiracy, Apple is colluding with the butter knife industry.
Furthermore, I’ve barely glanced at the iPhone specs, and even I know that the SIM is connected via a dedicated slot at the top of the phone.
I can understand it.
While Apple’s choice of exclusive carrier could have been better I think I see why they did it that way. This allows them time to prep for the future expansion of going into other carriers. Given that this is Apple’s first (I expect to see many different simultaneous models in the future) phone they obviously don’t have a full spread cell phone division on par with Motorola, Nokia, LG…etc. Trying to jump into too many carriers at once could leave the company overwhelmed.
Agree..Apple only got it half right on this deal
There was so many of us apple lovers, who just wanted basically a palmtop mac osX with wifi and ipod features, forget the phone part!
Basically everyone I talk to says they wanted a new iPOD! not the phone.
looks at iPods demographics, mostly younger people who can’t afford the contract, but perhaps could afford the item it self.
So my dream machine would be, iphone, minus the phone part, add removable battery with more hours use, add 100GB hard drive, add ability to add programs to hard drive features, and especially add ability to buy it with out a contract!! Basically an Apple palm top.
Re: Agree..Apple only got it half right on this de
Jesus… iPods are not discontinued.. You’ll most likely seen what you just described on the next rev.. relax..
cingular: no 3G?
correction… Cingular offers 3G in many metropolitan cities and is expanding its coverage.
Name could change
Don’t worry about the name iPhone being used by Cisco. Don’t forget, this could change. The iTV was changed to AppleTV. By the time it is available, the iPhone could be renamed to ApplePhone. Why not?
Cingular offers bad terms?
Ha! Their latest move – new contract language to attempt to block class action lawsuits.
Combining iPod with Cell Phone not a good idea.
I love my iPod. It gives me the freedom to listen to music I like anywhere, anytime. I don’t have to deal with crappy radio, or the monopolistic record companies that feed them.
I hate my cell phone. It connects me to the monopolistic phone companies.
So, it is better for me to keep the two separate. Otherwise, I may start to hate my iPod also.
Shortsighted Critics - As Usual
I laugh at people who underestimate Steve Jobs. The author believes Jobs made a bad decision to go with Cingular. I disagree. I don’t know what the exact details of the deal with Cingular are, but I know – I KNOW- that Steve Jobs does not let himself get screwed. I also know that he doesn’t inform reporters of every little detail of his plans. So this author can’t figure out why Steve did what he’s done and concludes Jobs made a mistake. We’ll see. I’m willing to bet that there are some damn good reasons for the choices he’s made, and we’ll see what they are in due course
BTW, I’m going to buy an iPhone on the day it’s released. I’ve been with Cingular for 4 years so obviously I am happy with his choice of carrier. 😉