The TechSwot provides occasional analysis and commentary on the technology industry's interactions with government and society.

Friday, October 5, 2012

Remembering the "i" in Broadband

It has been fourteen years now, so the "i" has simply become a trademark, almost a cliché of itself, something to be parodied. Consequently, many have forgotten that the "i" in iMac, iTunes, iPod, iPhone, and iPad all stand for something, for the same thing — the "i" stands for "internet." It was Apple's Steve Jobs, who passed away one year ago today, who put that "i" into the world's lexicon. Along with Tim Berners Lee, creator of the World Wide Web, it was Steve Jobs who also become foremost instrumental in putting the Internet within easy reach of the common man.

With the introduction of the iMac in 1998, Apple stopped including floppy drives in its computers, because with an iMac you could take the computer out of the box, plug it in, and without having any networking experience whatsoever be connected to the Internet within minutes. With an iMac, you could email your files, rather than run them from computer-to-computer using the "sneaker net." Soon thereafter, with the introduction of iTunes for Apple's new iPod, you also stopped needing CDs because you could by then simply download your music. More significantly, you could pay a reasonable price for music rather than be forced to steal it in order to get it onto a portable music player. The iPhone took a bit longer to appear, but it was even more revolutionary. It disconnected the computer altogether and let us take our internet connection with us wherever we could pick up a cell or WiFi signal. The iPad did the same thing, but in a form factor that reinvented our entire concept of computing, using an operating system that raised the bar on our ease-of-use-expectations as much as did the original Macintosh's GUI (graphical user interface). 

Oh, certainly the Internet has been around a long time. It much proceeded Apple, but it proceeded Apple within the realm of university laboratories and military research installations. It preceded Apple on computers that were so expensive and complex that only the wealthy and the bizarrely brilliant could afford to own and operate them. Other companies had even talked of an "internet computer" before Apple, companies such as IBM and Oracle. However, it was Steve Jobs' vision that actually willed the internet computer into existence, in forms that no one had imagined, and made the internet computer both accessible and affordable for the masses. 

Steve Jobs' internet computer would not be a dumb terminal sitting on a desk, or wired to a wall as almost everyone had imagined. Jobs' internet computer would turn out to something every so much more magical: a sliver of polished metal and crystalline glass, small enough to fit in your pocket, and able to connect you to the entire world. It would turn out to be wireless, mobile, and as powerful as any computer imagined only a generation before. It would quickly become so inexpensive, that only two days before Job's death, Apple would announce that one model of iPhone would soon be available for free on contract. A year later, the iPhone no longer even requires a contract and will soon be available in 100 countries.

The technologists, politicians, the pundits… we all talk about making broadband a reality, about making the Internet as easily accessible as electricity, about making worldwide communications available to everyone, but we seem to have forgotten that prefacing letter, that "i" — the "i" that has been connecting people to the Internet for almost a decade-and-a-half already. We forget that much of what we aspire to has been accomplished, that much of what we dream of has only become fathomable because Steve Jobs already imagined the roadmap ahead of us. We forget that we are the followers, not the leaders – that we stand on the shoulders of a giant. This is humbling to acknowledge, but by recognizing where we have been, what has already has been achieved, we can better allocate our resources and priorities in charting a path forward.

Friday, June 29, 2007

People are talking...

From Microsoft Exchange expert, Jim McBee's Mostly Exchange Web Logs...

[iCarrot] makes a very good point about the hype surrounding the iPhone and the "deal" that you have to sign up for from AT&T. A story by Wired magazine's Rob Beschizza calculates the minimum you will spend over 2 years for an iPhone and contract is $1974.76. Deal, indeed! A deal for AT&T and Apple. Apple gets you by selling their phone at "full freight" and AT&T gets you for 2 years on a "not so great" monthly contract. Stephen makes the point that this may be the end of the subsidized celluar phone, but certainly not the restrictive and costly contract.

Thursday, June 28, 2007

iPhone or iCarrot?

Since the early days of the cellular industry, the justification for multi-year contracts has been handset subsidies. Since the cellular carriers subsidize the cost of the handsets, the argument goes, they need lock-in contracts to guarantee sufficient time to recover the up-front equipment costs. Holes in that story now appear with the iPhone.

Apple and AT&T have both stated that the iPhone is not being subsidized. That is the reason that the device is so awfully expensive. So cell phone consumers need to be asking themselves, “Was the contract-for-handset-subsidy argument legitimate or was it just an excuse to allow the cell companies to avoid short-term competitive pressures and quality service obligations?”

Given AT&T’s announcement that their plans for the unsubsidized iPhone will require a two-year contract, it would appear that cell phone contract requirements have indeed been about avoiding competitive pressures and service commitments.

Some might suspect that AT&T is simply trying to earn a few extra dollars from the iPhone excitement. However, AT&T may be thinking much, much bigger then that. What AT&T may be trying to do is to redefine the business model for the entire American cellular industry. They may want to set a precedent for getting rid of handset subsidies altogether. And the reason for the two-year contract with the unsubsidized iPhone is to establish that lock-in contracts remain a part of the deal.

That doesn’t have to happen. If consumers say “no” to this Friday’s launch of the unsubsidized, two-year-contract-required iPhone, then AT&T will realize that its new business model will not succeed in the American marketplace. They will have to modify the terms of the iPhone plan. If consumers instead say “yes” and buy the iPhone with the two-year contract, then it will only be a matter of time before all handset subsidies disappear and all cell phone users have to pay both the full cost of their handsets and still be locked into multiple-year contacts. Those who purchase iPhones under the current arrangement may very well be sealing that fate for all cell phone users.

Consumers should remember that AT&T is the company that, with its AT&T Wireless service, had the worst service reputation in the cellular industry. AT&T Wireless lost millions of customers in 1994, within the first few months that cell phone numbers became portable. Consequently, AT&T knows how important it is to lock in their customers, because AT&T’s previous wireless customers left in droves the moment it became possible to do so. That is why the “new AT&T” is so obsessed with preserving “the contract.”

That history, by itself, didn’t bode well for iPhone buyers. Now it turns out that the “new AT&T” is just like the old AT&T: willing to cut corners on service in search of a quick buck. Why else would AT&T be so insistent on preserving their two-year lock? It knows that it still risks short-term competitive pressures based on its service quality.

Either way, before American consumers become iPhone users, they need to consider the implications of assisting AT&T in sneaking in this new cell-industry precedent. Yes, the iPhone is an amazing device, but consumers need to understand the very expensive long-term burden they are risking if they acquiesce to AT&T's terms for this tempting electronic carrot. The decision to buy this week doesn’t just affect just them: it potentially affects every cell phone user in America.

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