[mattmaroon]

I'm not so sure Apple will fix this. I mean, why did Apple tether themselves to AT&T in the first place? AT&T was a giant turd that everyone hated 2 years ago, just like it is now. If anything it's gotten far better in that time, and the iPhone has racked up serious sales. It wouldn't surprise me if both parties are very happy with their relationship, and AT&T willing to concede even more for exclusivity.

They did it because they thought they'd make more money that way, and maybe they did, and maybe they still will. Maybe they knew they'd sell 1/2 as many phones that way, but make 3x more per phone and therefore come out ahead, and maybe that math hasn't changed. Certainly AT&T will cling to the iPhone the way the Cavaliers will to LeBron.

Verizon doesn't need Apple. They'll steamroll AT&T with turds like the Blackberry Storm if they have to because they're far and away the best network in the U.S. and everybody loves them. Apple needs Verizon far more though, which means they won't get anywhere near the deal there they will from AT&T in terms of money, control, etc.

So if I had to bet (with someone who doesn't have insider info of course) I'd say we see continued exclusivity with AT&T. I wouldn't lay odds on it, but I'd take even money.

[unalone]

They partnered with AT&T because they needed a company that would let it add things like visual voicemail to its existing system, and rolling that out with a single company would be easier. The argument against Verizon is that Verizon insists on adding branding to every Verizon phone, which Apple is against.

Neither Verizon nor Apple is stupid. If network choice really starts hurting the iPhone, which it isn't because iPhone sales are insane, then Apple will bend slightly to accommodate Verizon. If AT&T continues gaining Verizon users on virtue of the iPhone itself, then Verizon will look for a deal with Apple. The point of the ancestor post is that if your strategy to compete is "we're shittier but use a different network", then you aren't focused on the product, you're focused on making money. John Gruber is writing about product, not about market competition.

[mattmaroon]

Wrong and wronger. You can't say that because the iPhone sells very well, network choice isn't hurting it. There might be 2x as many iPhones in consumers hands in the U.S. if they were on Verizon too, and 3x if it were on the other majors on top. I'm clearly just making those numbers up, but they seem reasonable.

The exclusivity was about a lot more than visual voice mail. It had to do with sales channel and profits from ongoing contracts as well, which were probably far larger issues and ones Verizon has absolutely no reason to cave on. And my point was that it might be in both Verizon and Apple's best interest to not work together.

The network is a huge part of the product when it comes to phones. A phone that is constantly dropping calls, one of the iPhone's biggest complaints, or out of fast data range is an inferior product through no fault of its own. In the mobile industry by being on a better network you have a better product.

Nonetheless, the best and worst thing about capitalism is that inferior products win all the time when the salient point of competition isn't product "quality" as you're meaning it here. We in the tech industry love the idea of a Google or an Apple making a better mousetrap and slaying the entrenched competition, but the reality is that for every one story like that, there are 20 of a better product that died due to vendor lock-in, marketing, or some other form of differentiation. Apple's been on both sides of that equation.

[unalone]

I didn't say network choice wasn't hurting it, Matt. I said network choice wasn't hurting it enough to make a difference to Apple.

I agree that part of a product is its network. However, neither Apple nor its competitors manufacture networks. It would be incredibly lazy to hope to make money solely because you use one third-party network rather than another. In this case I agree with you, it might work, but Gruber doesn't just want a phone that makes money. He wants a phone that competes.

[stepherm]

What I think a lot of people tend to forget is that Verizon and AT&T have based their networks on differing technology (GSM vs. CDMA).

Apple seems to like keeping their product lineups relatively simple. GSM tends to be the worldwide standard. Fracturing their product lineup for (generally speaking) one market doesn't sound like the sort of thing Apple would do. I imagine if Verizon was the major GSM network in the U.S.A., we'd see Verizon + Apple instead of AT&T + Apple.