Benlog

It’s always interesting to see who gets blamed for consumer-unfriendliness. Take the launch of the latest iPhone “3G”. Brendan Ballou over at Jonathan Zittrain’s blog makes a compelling case about how Apple is monetizing iPhone applications and benefits from locking users into the AT&T network. There’s some truth to that, I think, but I don’t think the dynamics are driven by Apple. I suspect what’s going on is that AT&T is pursuing a strong network-lock-in strategy, and Apple is pivoting off of this strategy for its own benefit.

Consider my experience acquiring an iPhone 3G today. I say “acquiring” rather than “buying” because it felt a lot like selling my soul to the devil in exchange for an iPhone, rather than actually purchasing a product. The original iPhone felt like purchasing a product: I walked in, put down my credit card, walked out with an iPhone, and eventually signed up for AT&T. Okay, so I could only sign up with AT&T, but if I’d wanted to hack my iPhone to work with TMobile, I could have. But this time… this was some twisted, convoluted experience only a network carrier could love. Given the care that Apple usually takes to make the user experience so pleasant (even when downloading a DRM’ed song), I strongly suspect the Apple User Experience folks are having night sweats about how much this iPhone 3G insanity stains the Apple brand.

Some tell-tale snippets of my experience today:

• Because I was buying this phone for my wife, I had to call AT&T ahead of time and change her account to be in my name with my social security number. I promised my dad an iPhone for his birthday, but now I’m stuck figuring out the logistics of having him and me show up at the Apple Store at the same time. Because why on earth would anyone want to buy an iPhone for someone else, right?
• I waited in line for 40 minutes with 15 people ahead of me. Not bad, until you walk in and realize there are TWENTY Apple employees in the store dedicated to selling iPhones.
• While in line, I was asked all sorts of questions about my AT&T account and whether I had any corporate discounts, because that would screw up the whole process. What impact could my corporate network-contract discount possibly have on my buying a new device?
• I was asked “would you like to read the AT&T terms of service?”, I answered “no, what difference can it possibly make?” and I was told “yeah, no one wants to read them, but I have to ask every time.”
• Since I was buying this phone for my wife, I was asked if she had an iTunes account. When I said “why don’t I just activate this at home with her there?” I was told that they were not allowed to let me walk out with a sealed iPhone box, so at the very least they would have to crack it open. I relented and let them activate the phone for me, which required me to create an iTunes account for my wife using one of the display laptops… this security wienie really loves typing in passwords on somebody else’s laptop, let me tell you!
• On my way out, I told the dedicated iPhone Activation Person “I hope for the next model you can figure out how to simplify this process,” which he answered “tell me about it, you should write a letter to AT&T to let them know, because this sure as heck isn’t our preferred approach.”

So, does Apple benefit from lock-in? Absolutely. Just like they transformed the RIAA’s broken strategy of forced-incompatibility-by-DRM into the iPod device lock-in phenomenon. But if you’re wondering who’s got whom by the balls in the cell phone market, I think the answer is clear: the network carriers run the show.

And I do feel sorry for those Apple User Experience folks.

Oh, and if you’ve read this far, here’s a little gift from me to you. If you transfer an AT&T account from one person to another, it’ll cost you $18. However, it will also magically grant you “equipment upgrade eligibility”, which means that if you got an AT&T phone recently and the iPhone 3G would have cost you the higher price of $399, changing account holders (without changing phone numbers) will drop the iPhone 3G price back to its advertised $199. Not bad for $18. And I guess you can always switch it back for another $18. AT&T’s rules have become so complicated, there now exist loopholes to their core lock-in strategy!