It took much longer than we expected, but there are now at least four reported solutions for unlocking an iPhone, two of them requiring softwareonly. (Apple and AT&T needn’t worry about techniques that demand a soldering iron.)
Several people have claimed that these hacks, though obviously bad for AT&T, are good for Apple, because Apple gets to sell more iPhones.
Wrong.
In return for exclusivity, Apple has negotiated a share of the monthly service revenue – up to 10% by some accounts. The iPhone starts at $499, and Apple’s margin on the initial sale may be 50%, or $250. Let’s assume the average iPhone bill is $100 per month (about twice the national average). 10% of $100 per month on a two-year contract is $240, and Apple’s margin on that revenue is near 100%. That would be enough to double Apple’s profit on the sale of the phone. And why stop at two years? How many years have you owned an iPod? (more…)
Nokia have a long-stated goal of capturing 40% of the worldwide market for cell phones. The biggest obstacle has been the US. US carriers have tight control over their market, as I may have pointed out before, and they are not about to give the farm away to some Finnish former footwear factory. In the last quarter, Nokia sold just 4 million handsets in the US, far behind Motorola, Samsung, and LG, and down 21% year-over-year.
That makes it all the more remarkable that Nokia are very close to achieving their goal of 40% of the global market. In Q2 they hit 38%; how?
If you work in the Internet industry, you are familiar with the closest thing we have in America to a pure free market: countless competitors, zero barriers to entry, easy access to capital, and prices that drop so fast that sometimes we can’t find anything to do with the capital.
Most other industries are regulated to some extent, with both good and bad results. Take agriculture. Most people favor laws that make their food safe, but only Big Food and a few midwestern States love the Farm Bill. (If reading this in Europe, think Common Agricultural Policy.)
The cell phone market is unusual because it would not exist without enlightened regulation. Very early in the history of radio, people recognized that spectrum is scarce, a shared resource that requires some kind of collective oversight. The system they chose is that the people own it and the government parcels it up and leases it to private companies for different purposes: TV, radio, mobile phone service etc. (1)
The cell phone industry wouldn’t exist if smart regulators hadn’t carved out room for it in 1974. There are more than two carriers in the US because smart regulators made room for more in 1993, and banned the incumbents from the auction. But we are almost out of spectrum suitable for mobile phones.
Next year the government is selling off the electromagnetic equivalent of beachfront property – spectrum that happens to be perfect for cell phone service. It’s available because the government is taking it back from TV broadcasters who no longer need it. Because spectrum is so scarce, this may be the last chance we’ll get for a generation to increase competition in the cell phone market and to experiment with new ways of managing spectrum.
I’m one of those who believes that the mobile phone market ought to work more like the Internet market. I don’t have to ask Verizon DSL for permission to attach a computer to their network; why do I have to ask Verizon Wireless for permission to attach a phone to theirs? In the entirely new market for mobile applications and content, I don’t think that the law should protect companies as big as Verizon Wireless from competition with companies as small as Skydeck. Therefore I support some form of open access rules for the 700 MHz auction. I was honored to be invited to testify to Congress this week on the subject. My testimony is above; the entire hearing is archived here.
Why go to Congress? Because when it comes to mobile data, we don’t get to choose between regulations and no regulations. We can campaign for the regulations that we want or we can stay away from DC and let Verizon and AT&T write regulations for us.
It’s also because the Internet has changed the rules of debate. Ideas that were once discussed only in closed rooms we now debate online. We don’t just speak through canned quotes in press releases, we write blogs. If we’re prepared to say what we think on our blogs, then we ought to be prepared to go and say it in DC. And what we say in DC can now be heard around the world, because of sites like YouTube.
People in the Internet industry never understood the old rules, the game of politics that the telcos have played so well for over a hundred years. But we understand the new rules far better than they do. We should take advantage of that.
***
Full Disclosure: Skydeck believes that every company in the wireless data market would benefit from open access rules, so we support those principles as a company. But I did not testify on Skydeck’s behalf. Nothing that we are working on requires a change in the law, and it will be at least four years before a network gets built out and application developers benefit from this auction. We also reserve the right to speak through canned quotes in press releases in the future.
(1) New technologies like software-defined radio could in theory make much more efficient use of spectrum by allowing any transmitter-receiver pair to take up any unoccupied channel. But most engineers doubt that the technology is ready, and dismantling the current system would be like seizing all the property in Manhattan and redistributing it: unlikely.
Once every radio used transistors, we stopped saying Transistor Radio. Once every TV had a color screen, we stopped saying Color TV. And now that every phone is smart, we can stop saying smartphone. In fact the sooner we stop, the better, since unlike transistor radio and color TV, the term smartphone confuses everybody.
‘Smartphone’ started off meaning a phone that could do something – anything – beyond making a phone call and sending a text message. The Nokia 9000 Communicator and the pdQ were freakishly smart, but Sprint called the NeoPoint NP1000 (left) a smartphone because it had a WAP browser and its black and white screen was larger than normal. That set the bar pretty low.
It is ten years since these phones came to market, and today almost every new phone in the world has a built-in camera, a color screen, an HTML browser, a calendar and address book that you can sync with your desktop, and can download a wide range of games and applications. Every phone is smart.
But surely some phones are smarter than others? This is where it starts to get confusing. One phone may be more powerful or capable than another, but it could be on any of a dozen different measures: my phone may have a 3.2 MP camera, but yours may be better for instant messaging.
Perhaps the only real news from Steve Jobs’ appearance at the D conference: the iPhone will be open after all.
Q: All indications appear that the iPhone is closed, we’d love to develop apps…
This is an important tradeoff between security and openness. We want both. We’re working through a way… we’ll find a way to let 3rd parties write apps and still preserve security on the iPhone. But until we find that way we can’t compromise the security of the phone.
I’ve used 3rd party apps… the more you add, the more your phone crashes. No one’s perfect, and we’d sure like our phone not to crash once a day. If you can just be a little more patient with us I think everyone can get what they want.
UPDATE: Aaaargh. He didn’t mean an SDK. He didn’t even mean widgets, as Matthew suggested in the comments. He meant that we are all free to host web sites. I can’t believe how many journalists dutifully reported this as an opening up of the platform. At launch, the iPhone will be the most locked-down device on the US market.
It’s not complicated, it’s not expensive, and there’s an obvious market for it. So why doesn’t the xPhone exist?
Imagine a mobile phone that worked across every network in the US: a phone that allowed you to make a call from anywhere in America, so long as you could get a signal from at least one carrier. Let’s call it the xPhone.
It’s not hard to build an xPhone. Most new handsets support multiple wireless standards and frequency bands: 2G and 3G versions of GSM or CDMA, Wi-Fi, Bluetooth, GPS, FM radio, soon TV. Now that the old analog and TDMA networks have been decommissioned, to deliver the widest possible voice coverage the xPhone would only need to support the GSM and CDMA bands, and maybe iDEN. It would be quite cheap.
Who would buy the xPhone? Anyone who cares about coverage above all else. That means salespeople and executives and truck drivers and other people who travel a lot on business, but more importantly it means first responders: doctors, firefighters, law enforcement. The xPhone could save lives.
Earlier this month, Sprint threatened Mobile GMaps over its use of restricted network-assisted GPS functionality. Mobile GMaps ran into trouble by working around these restrictions to offer an automatic positioning feature. While Sprint simply acted to enforce its policy, the result is unfortunate for everyone – Sprint included – since restricting the capabilities of applications just causes consumer demand to go unmet.
Under its current policy, Sprint must have a business relationship with a vendor before it can release applications that use the network’s GPS services. Sprint has otherwise generally been open to third-party applications without such requirements, but obtaining a subscriber’s location comes with some legitimate concerns. Two examples, which trouble nearly all carriers, are how to protect individual privacy and how to price location services. These can be addressed, however, and still allow for more open policies. Restricting access to network features does not benefit consumer or carrier, and often winds up being futile.
Michael Mace has written an insightful post about Nokia’s ambitions to become a mobile computing company. We’ve heard a lot about this too. When asked about the iPhone at a recent presentation we attended, a representative of Nokia said that if a computer company can rethink the phone, a phone company can re-invent the computer.
When Motorola announced their 2007 device collection this week, some people were disappointed. Three of the phones debuted in February at 3GSM and the fourth is yet another version of the Razr. In the year of the iPhone, the Prada phone, the Nokia N95, and even the Helio Ocean, Motorola looks weak.
But in one very important respect, Motorola is ahead of all these competitors. Every phone in their 2007 collection is based on an open development platform: Symbian, Windows Mobile, or Motorola’s new home-brew version of Linux, which they call Linux/Java. The iPhone, the Prada phone, and the Helio Ocean are all closed devices. (more…)
Carriers like to tell Congress and the FCC that the wireless market is so fiercely competitive that consumers are perfectly served and no regulatory changes are necessary – apart from changes that the carriers want, of course. Most people in the tech community disagree, but recoil at the idea of going to Washington and engaging in a political process that looks like the opposite of entrepreneurship. The telcos smile at our idealism, hire more lawyers than engineers, and roll all over us.
I went to see FCC Chairman Kevin Martin speak at a meeting of the Churchill Club in Mountain View this morning. In conversation with George Anders from the WSJ, he spoke about the 700 MHz auction, how consumers will be affected by the end of analog broadcasts, leveling the playing field for set-top boxes in the cable industry, the proposed merger between Sirius and XM, sex and violence in the media, E911, and the Skype petition. That tells you how much impact the FCC has on the technology industry. (more…)
It took much longer than we expected, but there are now at least four reported solutions for unlocking an iPhone, two of them requiring software only. (Apple and AT&T needn’t worry about techniques that demand a soldering iron.)
Once every radio used transistors, we stopped saying Transistor Radio. Once every TV had a color screen, we stopped saying Color TV. And now that every phone is smart, we can stop saying smartphone. In fact the sooner we stop, the better, since unlike transistor radio and color TV, the term smartphone confuses everybody.
Earlier this month, 
Carriers like to tell Congress and the FCC that the wireless market is so fiercely competitive that consumers are perfectly served and no regulatory changes are necessary – apart from changes that the carriers want, of course. Most people in the tech community disagree, but recoil at the idea of going to Washington and engaging in a political process that looks like the opposite of entrepreneurship. The telcos smile at our idealism, hire more lawyers than engineers, and roll all over us.