Divide and Conquer

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Belkin TuneCast Auto for iPhone 3G

The news that Apple has extended its exclusive iPhone distribution deal with AT&T until 2010 closes the loop on the subsidized price of the 3G upgrade. It seems most observers think Steve Jobs has compounded a mistake he made in limiting the market for the revolutionary device to those early adopters hungry for the advanced Web experience and elegant design.

Forget that Apple has tightened its noose around a major carrier’s neck, forcing AT&T to continue to put the majority of its marketing muscle behind the disruptive platform and its integrated use of WiFi, enhanced corporate services, and above all, the viral App Store and its reach directly past AT&T’s traditional grasp on its customers’ wallets.

You only have to watch the gyrations of the record cartel as they try and wiggle their way out of the bearhug of iTunes to know the power of this Gordian knot. Already we’re starting to see media players and social media services vie for the top of the new App Hit Parade. The New York Times app, dog-slow on release, was the first of several to quickly update with a more responsive version. The Push Notification toolkit was released to developers, auguring for a wave of social feed streaming apps in the near future.

It’s the stream of apps targeted at the disruptive platform that keep Apple out front for the next two years. What some saw as a sign of weakness – the lack of any 3rd party development platform and the apparent bandaiding of a browser app dev strategy when the phone shipped – in fact leveraged the investment in porting Safari to both Windows and the iPhone and the shifting of internal resources to those efforts at the cost of a promised OS/10 release.

Instead of an iterative OS release on a version that was under no pressure whatsoever from the catastrophic Vista trainwreck, Apple moved at least two years ahead of Android, Blackberry, Treo, and Windows Mobile with a Web experience that crossed the line from geek to usable. Now, a year later, 3G catches up in speed for Web apps while creating rich extensions behind the scenes to drive the improvement of cloud-based rich media services.

Much is made of the lack of Flash support and the inability to route around AT&T’s blocking of VoIP and other cash cows. Just today a tool for bootstrapping the iPhone’s 3G data service from a laptop was removed for good from the Appstore. But Steve Jobs realizes that Apple’s lead in the Web experience will actually force the other phone manufacturers to accelerate their adoption of WiFi, video streaming, and push notification technology, which in turn will put pressure on the other carriers to do what Apple has forced AT&T to do.

Once that occurs, it will be easy for Jobs to unleash all of the features that he’s felt constrained to provide: direct downloading of media to the device rather than through the iTunes synchronization model, WiFi as an equal partner in all services including VoIP, and access to the full range of rich media services across the whole device without the artificial partitioning of the iPod parts of the device.

In effect, by locking AT&T in to another 2-year deal, he’s given market forces enough time to eliminate the rationale for forcing a carrier into compliance with the new architecture – perhaps within the first year of the extended deal. Then the next wave of innovation will be in opening the doors on AT&T’s dime to the new paradigm, the full flowering of the device that Jobs created to divide and conquer the market.

  • http://www.vm.com Michael Pinto

    Your dead on with this article: I think that G3 subsidy is going to keep them ahead of the pack. Although on a personal note I wish there was something like HyperCard for iPhone development – something to allow non-programmers to create apps. Having Flash would help in that dept. although I’d have to agree with you that it hasn’t held back the iPhone one tiny bit.

  • http://bjorn.tipling.com Bjorn Tipling

    Wow great article. I should maybe start subscribing to this blog on Bloglines. :P

  • http://bjorn.tipling.com Bjorn Tipling

    This is actually the best article on the iphone I have read yet.

  • http://www.drumsnwhistles.com/ Karoli

    You are so good at seeing through the smoke and past the mirrors that it scares me sometimes. This all makes perfect sense in a weird, Web 2.0 kind of way.

  • http://www.cleverzebra.com/people/nick Nick W

    Steve, I so appreciate these Saturday morning (for me) essays! Thanks so much.

    It’s amazing how when Jobs puts a “stranglehold” on an industry we all applaud it. I do applaud it, and I hope he really does force the mobile web to be all it promises to be without this awful carrier mess we have now.

    For the record, I’ve never even experienced true mobile web, living out in the country in Denmark, but I’m moving back to the UK in 3 weeks and a brand new iPhone has been prioritized above food and clean drinking water….

  • http://blog.stealthmode.com Francine hardaway

    If you flip this, you can say that Jobs also saved AT&T’s ass by dragging it into the 21st century and giving it a reason to roll out 3G. AT&T was known as a crummy network until Apple forced it to get better. The area I live in has better AT&T reception than it had just a year ago. Can you hear me now?

  • http://andyabramson.blogs.com/voipwatch/ Andy Abramson


    The iPhone works fine with outbound VoIP. Truphone’s quality and mimicking of the interface for calling makes it easy to use. For transparency purposes we are Truphone’s agency.

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