Carrier dynamics
There’s an interesting dynamic between the U.S. cellular carriers, Apple, and Palm if you pay attention and read between the lines a bit.
Sprint has been teetering on the brink of death for years. But they managed to get the Palm Pre exclusive, seemingly for at least 8 months.
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Think of how different the Pre’s launch and first year would have been as a Verizon exclusive, especially now that iPhone users are increasingly feeling the limits of the strained AT&T network. It would have been a very strong competitor to the iPhone and the cause of a great deal of worry for Apple. But with Sprint, it’s much more tame, and it’s not really causing a significant disruption.
So why didn’t Verizon get the Pre exclusive?
I can think of two explanations:
- Sprint paid Palm a lot of money or made other extremely significant concessions in Palm’s favor. But I don’t think Sprint could pay Palm enough to make up for the value of a Verizon exclusive.
- Verizon refused.
The latter is a much more interesting possibility, and I think it’s more likely. Verizon is notoriously difficult to work with, and has exhibited a consistent delusion in the past that they don’t need specific blockbuster devices and can make their own knockoffs that are just as good. But I don’t think that’s what happened this time. Verizon has lost enough customers specifically to the iPhone that I think they finally noticed at a very high level and are taking steps to fight back.
I don’t think Verizon would have outright refused, to be honest. Instead, I think Verizon would have placed constraints upon Palm, and they would probably opt to limit the functionality of the phone, as they have done in the past with dumb phones and smartphones alike. Back when I was a regular visitor to HowardForums, the complaints about crippled Verizon phones were very frequent. I don’t know if they continue to cripple their phones today (as I am a surprisingly happy Sprint customer), but if they do, I can see why Palm signed with Sprint instead. No one wants a smartphone with crippled Bluetooth and disabled GPS hardware.
I think Apple gave Verizon an incentive to turn Palm away.
The public assumption so far is that Apple will never make a CDMA iPhone, waiting instead until the big move to LTE — but that’s still many years away from practicality. I’m betting that Apple will release a CDMA iPhone next year. They’ll face a few inconvenient issues by making a CDMA version in parallel with a GSM version, but the massive Verizon customer base makes the cost well worth it.
If I’m correct in my previous assumption (and it is very much an assumption), would Verizon agree not to cripple the iPhone in any way, and would that be enough for Apple to invest in producing a CDMA version?
Remember the rumors a few months back that Apple had been meeting with Verizon? I think this was why, not the “iPhone mini” that rumor sites assumed.
I think Apple offered Verizon the iPhone — not some other device, and not a cut-down version, but the real iPhone — for 2010, and part of the negotiation was that Verizon wouldn’t take the Pre exclusive. Apple needs to be on Verizon before the Pre gets there, and they’ll do anything to make that happen. Similarly, Verizon needs the iPhone, having potentially lost 5 million subscribers to it so far.
I can’t think of any other explanation that makes sense. And this one makes a lot of sense for every party involved.
It does make a lot of sense, but if the business world were always based upon logic, I think the world as a whole would look quite a bit different today…
