Fool! You Fell Victim to One of the Classic Blunders! Never Negotiate with Steve Jobs…
Apple is doing to the wireless industry what it did to the recording industry beginning back in 2001: Stealing its customer relationships.
That’s the gist of an argument put forth this week by Bernstein analyst Craig Moffett, who believes that with the iPhone and App Store, Apple (AAPL) has upended the wireless market in much the same way it upended the music industry with the iPod and iTunes.
“It wasn’t that long ago that AT&T’s exclusive agreement with Apple’s iconic iPhone looked like a customer relations masterstroke for the carrier,” Moffett wrote in a note to clients. “AT&T Mobility, a brand that had once been cingular-ly stodgy and tired, was suddenly, well, relevant again. Apple’s iPhone meant that AT&T was the place for cool handsets. Better, it was the place for wireless data….Somewhere along the way, however, Apple has stolen the march, and in the process has recast AT&T from hero to villain.”
AT&T, says Moffett, was roundly jeered at every mention at Apple’s last Worldwide Developer Conference. And, as someone who attended that event, I can attest that this was indeed the case. Certainly the revelation that AT&T (T) wasn’t yet supporting iPhone features like MMS and tethering did not go over well with the WWDC audience, which was already abuzz with criticisms of the carrier’s slow data connections.
With the iPhone, Apple made AT&T Mobility relevant again. It brought the company millions of new subscribers. But in the process, Apple also realigned the strategic playing field in its favor. Radically. Writes Moffett: “Remarkably, Apple has so thoroughly stolen the customer relationship–who would argue that Apple iPhone customers’ first affinity is to the device rather than to the network–that the network is not only irrelevant, it is rather a source of derision.”
As NBC Universal Chief Executive Jeff Zucker said back in 2007, “Apple has destroyed the music business and if we don’t take control, they’ll do the same thing on the video side.”
Or, perhaps, to the wireless business.