CNN: "The Steve Jobs Master Plan: iPhone hacking"

Tinman

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Jul 16, 2007
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#1
http://news.com.com/8301-10784_3-9767325-7.html

"When Steve Jobs and company first envisaged the iPhone, a few things surely came to mind. First, Apple wanted a phone with an appealing design and advanced functionality. In essense, the company wanted a device that was nothing like its predecessors. And while it achieved this feat, Apple was still in need of a carrier. It went to Verizon and others, but it was AT&T that was able to offer it what it wanted: revenue sharing on activations and service plans. Basically, Apple was able to sell the device, make a profit, and even capitalize on the iPhone's popularity through AT&T service plans.

And while some may claim that the iPhone's real bread and butter is in the AT&T service plans, I disagree. To say that Apple has too much to lose in allowing iPhones to be hacked is a severe misconception.

The rationale for that viewpoint seems to make sense: Apple is getting a cut of every service plan and with millions of users, the revenue benefits are nothing to scoff at. But what it loses sight of is Apple's real intention.

AT&T is a means to an end. Apple wanted to make a splash in the cell phone businesss and needed a carrier to do so. The revenue generated from plans is a bonus and was only possible because of the significant leverage it wielded before the iPhone's release. The iPhone is not the be-all, end-all of Apple devices -- it's a gateway.

More than anything else, Apple is a hardware manufacturer and it relies upon the sales of its core businessses: computers, iPods and multimedia equipment. The iPhone is just another piece of the Apple domination puzzle. Much like the revenue generated from iTunes purchases, the revenue gained from AT&T service plans is a nominal amount when compared to the future benefits of iPhone (and Apple) saturation.

When Apple entered the cell phone market, it had to prove itself. But it was able to negotiate the best cell phone deal in history for one reason: it's prior success with the iPod. If there was no such thing as an iPod, would Macs be gaining market share? Would the Apple TV have ever come out? Would Apple be as popular as it is today? No. Much like the iPhone, the iPod was a gateway device that helped catapult the company into other businessses and more beneficial enterprises.

Was it Steve Jobs' plan all along?
Prior to its release, the iPhone was being hailed as a landmark device that, unlike most other GSM phones, was locked down to one carrier. After all, it made sense: Apple entered into an exclusivity deal with AT&T (albeit begrudgingly) and was forced to make the device as "unhackable" as possible. But as we all know, nothing is unhackable.

Steve Jobs did his part -- he locked the iPhone down quite well and kept saying that he was all for AT&T. He even talked up the fact that the Blackberry does quite well on AT&T service just to maintain the iPhone's significant buzz.

But Steve Jobs is not a dumb man. He knew that by making the iPhone exclusive, he was losing out on a significant market of people both home and abroad and his vision for the future of Apple included those that were left out. But alas, the exclusivity deal wasn't that hard to swallow. He, like all of us, knew that people would immediately start to hack the iPhone and unlock it for use on T-Mobile and other services abroad. And once that happened, the benefits could far outweigh the costs of such a hack.

Unlocking a cell phone is neither illegal nor in any direct voilation of laws. Apple can't stop anyone from unlocking a cell phone and to be honest, I don't think it really cares. Apple is playing this recent iPhone unlocking news perfectly. If it overreacted and stopped the hack, it could stymie its future revenue gains, but if it endorses such a maneuver, it effectively leaves AT&T out to dry. Isn't it ironic that AT&T lawyers went knocking on the doors of the hackers while Apple lawyers sipped tea at home?"


--
Mike
 

captain4004

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#2
http://news.com.com/8301-10784_3-9767325-7.html

"When Steve Jobs and company first envisaged the iPhone, a few things surely came to mind. First, Apple wanted a phone with an appealing design and advanced functionality. In essense, the company wanted a device that was nothing like its predecessors. And while it achieved this feat, Apple was still in need of a carrier. It went to Verizon and others, but it was AT&T that was able to offer it what it wanted: revenue sharing on activations and service plans. Basically, Apple was able to sell the device, make a profit, and even capitalize on the iPhone's popularity through AT&T service plans.

And while some may claim that the iPhone's real bread and butter is in the AT&T service plans, I disagree. To say that Apple has too much to lose in allowing iPhones to be hacked is a severe misconception.

The rationale for that viewpoint seems to make sense: Apple is getting a cut of every service plan and with millions of users, the revenue benefits are nothing to scoff at. But what it loses sight of is Apple's real intention.

AT&T is a means to an end. Apple wanted to make a splash in the cell phone businesss and needed a carrier to do so. The revenue generated from plans is a bonus and was only possible because of the significant leverage it wielded before the iPhone's release. The iPhone is not the be-all, end-all of Apple devices -- it's a gateway.

More than anything else, Apple is a hardware manufacturer and it relies upon the sales of its core businessses: computers, iPods and multimedia equipment. The iPhone is just another piece of the Apple domination puzzle. Much like the revenue generated from iTunes purchases, the revenue gained from AT&T service plans is a nominal amount when compared to the future benefits of iPhone (and Apple) saturation.

When Apple entered the cell phone market, it had to prove itself. But it was able to negotiate the best cell phone deal in history for one reason: it's prior success with the iPod. If there was no such thing as an iPod, would Macs be gaining market share? Would the Apple TV have ever come out? Would Apple be as popular as it is today? No. Much like the iPhone, the iPod was a gateway device that helped catapult the company into other businessses and more beneficial enterprises.

Was it Steve Jobs' plan all along?
Prior to its release, the iPhone was being hailed as a landmark device that, unlike most other GSM phones, was locked down to one carrier. After all, it made sense: Apple entered into an exclusivity deal with AT&T (albeit begrudgingly) and was forced to make the device as "unhackable" as possible. But as we all know, nothing is unhackable.

Steve Jobs did his part -- he locked the iPhone down quite well and kept saying that he was all for AT&T. He even talked up the fact that the Blackberry does quite well on AT&T service just to maintain the iPhone's significant buzz.

But Steve Jobs is not a dumb man. He knew that by making the iPhone exclusive, he was losing out on a significant market of people both home and abroad and his vision for the future of Apple included those that were left out. But alas, the exclusivity deal wasn't that hard to swallow. He, like all of us, knew that people would immediately start to hack the iPhone and unlock it for use on T-Mobile and other services abroad. And once that happened, the benefits could far outweigh the costs of such a hack.

Unlocking a cell phone is neither illegal nor in any direct voilation of laws. Apple can't stop anyone from unlocking a cell phone and to be honest, I don't think it really cares. Apple is playing this recent iPhone unlocking news perfectly. If it overreacted and stopped the hack, it could stymie its future revenue gains, but if it endorses such a maneuver, it effectively leaves AT&T out to dry. Isn't it ironic that AT&T lawyers went knocking on the doors of the hackers while Apple lawyers sipped tea at home?"


--
Mike

Fantastic point
 

Tinman

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#4
Will all the features and updates work on an unlocked iPhone?
As far as features go, all should work except visual voicemail.

As far as updates, it's hard to tell. But if the CNN article is correct then Apple isn't going to disable hacks/unlocks with updates (that's how I've always felt--why risk the negative backlash?).


--
Mike
 

kdarling

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Jun 20, 2007
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#6
Dumbest article ever. Makes up a fake point about Apple needing to stop hackers, and then argues against it.

Not only would no company rely on hackers for sales, but the number of hacked iPhones is always going to be a tiny percentage of units and users.

Still, Apple can't be happy about losing royalties.
 

Michael Baturin

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Jul 11, 2007
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#7
Wow, this is a great article. It is so true. Why would Apple take action against something which will raise sales for them? I like the part about the AT&T lawyers freaking out and Apple sipping tea, probably so true.

Only problem with all of this, is that if the iPhone becomes unlocked in a widespread manner, and an easy-to-do way, Apple could be in trouble from AT&T. You have to imagine they signed some pretty extensive contracts which assure AT&T they are Apples one and only until death does them part (or their contract runs up?)

Apple makes royalties from the AT&T service so they will have to honor their contract for as long as it is written out to be. After that, hold on to your hats. Imagine a ready to use hack out by then: maybe no longer even called a hack, and though Apple may lose royalties with a carrier, their sales do to an optional carrier choice would skyrocket.

This does leave the question of features like visual voicemail (specifically built for use with AT&T) becoming extinct. But im guessing those who do not have AT&T available or have way better plans elsewhere would be willing to switch.
 

Tinman

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#9
Dumbest article ever. Makes up a fake point about Apple needing to stop hackers, and then argues against it.
I don't think it's a fake point at all. I seriously doubt Apple will do anything to stop the hacking, other than what they've already done.

And "dumbest article ever?" You don't read much, do you? :cool:


Still, Apple can't be happy about losing royalties.
That's right up there with the RIAA's logic that every song download is a lost sale.

People who can and will use AT&T will still use them. Only the people who can't, or won't ever sign with AT&T, will go for unlocking. If these people buy iPhones that's revenue Apple would not have had at all. Moreover it seeds the market with the iPhone, and fans who will likely influence others. More iPhone sales is not a bad thing.

For example, a person in Canada buying an iPhone is not going to put one penny into Apples' coffers--for royalties--anyway. But if they did buy an iPhone they just became an Apple customer. If they are then happily using their iPhone with, say Rogers, and then Apple disables it with an update it's akin to Apple declaring war on their own customers. Ain't gonna happen, IMO.


--
Mike
 

wildonrio

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#10
The only one who is mad about the unlock is AT&T. Apple is happy because it will now sell a lot more iPhones, the U.S. is happy because now T-Mobile users can have iPhones, and the world is obviously very happy too.
 

kdarling

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#11
I don't think it's a fake point at all. I seriously doubt Apple will do anything to stop the hacking, other than what they've already done.
Maybe yes, maybe no. Depends more on how many spare programming assets they have available. (Judging from the updates so far, not much.)

But the article makes it sound like, NOT stopping hackers is all part of some secret plan to sell more iPhones.

Gimme a break. :eek:

If it happens, it happens. But only children and fanatics would think it's part of a master plot.
 

Redfor

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#13
I don't think Apple is really over all concerned about the hackers. Me personally I prefer not to hack mine, but if you rememeber some of the old Nokia phones were popular because people could hack/mod them. In fact it actually made Nokia a preferred phone for a lot of people. So if you really look at it there is a good side and a bad side. Me personally If I was Apple I would make it if you did hack the phone it could not be updated.
 

Tinman

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#14
Maybe yes, maybe no. Depends more on how many spare programming assets they have available. (Judging from the updates so far, not much.)

But the article makes it sound like, NOT stopping hackers is all part of some secret plan to sell more iPhones.
Not a secret plan. Anyone with an IQ above room temperature knew it would be hacked no matter what Apple did.

But that's not what I care about. The part of the article I agree with is that it is not in Apple's best interest to lock out hacked iPhones.

It's not like a gaming platform where hacks have allowed copied games to be played. This is merely taking control of a device already owned (not hacked to allow free phone calls at AT&T's expense).

The big loser is of course AT&T. But are they? They are picking up, what appears to be, hundreds of thousands of new subscribers due to the iphone--without getting dinged by subsidies. And they will continue to pick up CDMA users, as contracts expire. Sounds like a win-win-win to me.


--
Mike
 

nippyjun

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Jul 21, 2007
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#15
2 things:

I don't think att will lose too many customers from an avialable hardware hack as most people aren not going to be interested in a phone that was hardware modified. And software hacks should be update broken, even if it's a recurrent cat/mouse game.

Apple does lose a significant amount of revenue from each phone that is not used at ATT. They lose 24 months of revenue from att.
 

GX1

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#16
None of us really knows what's going to happen, but if too many unlocked iPhones become available, 1) AT&T could sue Apple and 2) it could cause an uproar for customers who have signed the 2yr commitment. I wouldn't get to excited about unlocking the iPhone. Don't assume everything is going to work from a hacked iPhone standpoint. Remember Apple doesn't tell us anything at all really. and they may have an update at some point to block the hack. it always goes back and forth between hackers and companies. Let the wars begin.
 

kdarling

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#17
But that's not what I care about. The part of the article I agree with is that it is not in Apple's best interest to lock out hacked iPhones.
That's quite different from the article's thrust, which is that Jobs secretly planned for hackers to open up the phone to other carriers. ("Was it Steve Jobs' plan all along?")

I work for major telco's. I work with their CIOs.

I don't think it matters one way or another to them what people do. But it's definitely not in their businesss interest to publicly promote hacked phones. That'd just make stocks go down, as they lose both contract believability and royalty income.

Nor do I think Jobs is happy that people are hacking ways to add applications. He wants control, he wants sales. If he didn't care about that, he'd have gone with Verizon.
 

Conan

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#18
http://news.com.com/8301-10784_3-9767325-7.html

"When Steve Jobs and company first envisaged the iPhone, a few things surely came to mind. First, Apple wanted a phone with an appealing design and advanced functionality. In essense, the company wanted a device that was nothing like its predecessors. And while it achieved this feat, Apple was still in need of a carrier. It went to Verizon and others, but it was AT&T that was able to offer it what it wanted: revenue sharing on activations and service plans. Basically, Apple was able to sell the device, make a profit, and even capitalize on the iPhone's popularity through AT&T service plans.

And while some may claim that the iPhone's real bread and butter is in the AT&T service plans, I disagree. To say that Apple has too much to lose in allowing iPhones to be hacked is a severe misconception.

The rationale for that viewpoint seems to make sense: Apple is getting a cut of every service plan and with millions of users, the revenue benefits are nothing to scoff at. But what it loses sight of is Apple's real intention.

AT&T is a means to an end. Apple wanted to make a splash in the cell phone businesss and needed a carrier to do so. The revenue generated from plans is a bonus and was only possible because of the significant leverage it wielded before the iPhone's release. The iPhone is not the be-all, end-all of Apple devices -- it's a gateway.

More than anything else, Apple is a hardware manufacturer and it relies upon the sales of its core businessses: computers, iPods and multimedia equipment. The iPhone is just another piece of the Apple domination puzzle. Much like the revenue generated from iTunes purchases, the revenue gained from AT&T service plans is a nominal amount when compared to the future benefits of iPhone (and Apple) saturation.

When Apple entered the cell phone market, it had to prove itself. But it was able to negotiate the best cell phone deal in history for one reason: it's prior success with the iPod. If there was no such thing as an iPod, would Macs be gaining market share? Would the Apple TV have ever come out? Would Apple be as popular as it is today? No. Much like the iPhone, the iPod was a gateway device that helped catapult the company into other businessses and more beneficial enterprises.

Was it Steve Jobs' plan all along?
Prior to its release, the iPhone was being hailed as a landmark device that, unlike most other GSM phones, was locked down to one carrier. After all, it made sense: Apple entered into an exclusivity deal with AT&T (albeit begrudgingly) and was forced to make the device as "unhackable" as possible. But as we all know, nothing is unhackable.

Steve Jobs did his part -- he locked the iPhone down quite well and kept saying that he was all for AT&T. He even talked up the fact that the Blackberry does quite well on AT&T service just to maintain the iPhone's significant buzz.

But Steve Jobs is not a dumb man. He knew that by making the iPhone exclusive, he was losing out on a significant market of people both home and abroad and his vision for the future of Apple included those that were left out. But alas, the exclusivity deal wasn't that hard to swallow. He, like all of us, knew that people would immediately start to hack the iPhone and unlock it for use on T-Mobile and other services abroad. And once that happened, the benefits could far outweigh the costs of such a hack.

Unlocking a cell phone is neither illegal nor in any direct voilation of laws. Apple can't stop anyone from unlocking a cell phone and to be honest, I don't think it really cares. Apple is playing this recent iPhone unlocking news perfectly. If it overreacted and stopped the hack, it could stymie its future revenue gains, but if it endorses such a maneuver, it effectively leaves AT&T out to dry. Isn't it ironic that AT&T lawyers went knocking on the doors of the hackers while Apple lawyers sipped tea at home?"


--
Mike
very nice read, if this is true then the hackers don't have to worry about Apple on their backs...that Steve Jobs..sneaky man..sneaky and smart!
 

Tinman

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#19
That's quite different from the article's thrust, which is that Jobs secretly planned for hackers to open up the phone to other carriers. ("Was it Steve Jobs' plan all along?")

I work for major telco's. I work with their CIOs.

I don't think it matters one way or another to them what people do. But it's definitely not in their businesss interest to publicly promote hacked phones. That'd just make stocks go down, as they lose both contract believability and royalty income.
No one has suggested that carriers should promote hacked phones.

Nor do I think Jobs is happy that people are hacking ways to add applications. He wants control, he wants sales. If he didn't care about that, he'd have gone with Verizon.
I am afraid I fail to see how sales and control somehow equate to Verizon.

--
Mike