If you are one of the minority of people that use a Mac, you may be extremely excited about the launch of the iPhone.  If you are a devotee of the iPod, you may be looking to trade in your iPod and cancel your current cell plan paying the $100-$200 cancellation fee, in order to then pay $500 up front for a new iPhone.

The commercials look sexy, the gadget looks like a sexy gadget, its Apple and for the last 10 years(maybe a little less) Apple has been cool again.  Apple has a problem with the iPhone and it has been under reported.  People have been crazed over a product that has been hyped for almost 2 years and is only finally coming to market (while other cell makers have already rushed out devices that do the same thing and look the same but without the Apple name).

Apple’s problem is that they are working with AT&T and have given the mobile service provider an exclusive deal for 5 years.  Mobile phone models, even iPods do not last five years.  The product life cycle doesn’t last five years.  Five years for an untested mobile product with an untested mobile phone maker was a stupid deal for At&t to make, if they want to sell iPhones. 

Another possible hindrance for Apple is the nature of its agreement with AT&T, he said. AT&T gave Apple an unprecedented amount of say in how the iPhone will be sold and what the phone will feature; Motorola and other carriers, accustomed to obeying carrier dictates, would likely be envious.
But Apple has also given AT&T a five-year exclusive deal to sell the phone, analysts say. Exclusive deals rarely run more than one year. Phonemakers want to build market share by selling through multiple carriers. “AT&T gave a lot, but so did Apple,” Hazelton said.

Source: Apple’s iPhone casts big shadow on cell industry | Chicago Tribune

I’m sure they do but they win regardless of whether any iPhones sell.  If they don’t sell, then Apple will have to pay the bill when AT&T returns the product or chops the price down to something normal like $99(A $200 - $300 per phone charge that Apple will have to pay.)  At&t will win because they will be bringing foot traffic into their stores and their websites.  If people can’t afford the ridiculous price of the iPhone, At&t can convince them to pick up another product.

The thing is though that At&t is a dud.  Under the Cingular brand Bell South/ SBC did quite a bit to revamp a wireless business and then they brought in the albatross that was a mostly failing At&t. They then made the stupid decision of going with the At&t brand name because it is recognized.  That is normally smart marketing, when the brand has no positive connotations, but At&t has a long and recent history of bad service, Bad quality, Bad customer service, Bad prices, Bad billing capabilities, and more. 

Apple has a good image in most of those areas if you discount the crappy batteries and the iPod sudden death syndrome and ignore those monstrous junky Apple Box things with the jello colors from several years back (the ones that couldn’t be upgraded and got stuck in a bunch of colleges where they rapidly rotted away or became outdated).

So Apple has given an exclusive deal to a company with a brand name that is a dud in the wireless world.  What is going to happen to all those Apple devotee types that get suckered into setting up 2 year plans with At&t and end up getting bad service with their cool looking phones?

1. Most of them will get very mad at At&t
2. A few will get mad at Apple
3. The ones that get mad at At&t will take their vengeance out on At&t vocally, and At&t will drop the iPhone as a stop gap measure.
4. At&t will pass along any pain and expense back to Apple and Apple will do what it always does when it makes a mistake, they’ll fight it in court.

But none of this is going to be good for the consumer and especially not for Apple fans.  The iPhone may have the potential to fly, but its not going to fly well with an At&t albatross.

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The Wall Street Journal is reporting this morning that Microsoft submitted a filing to the Federal Communications Commission. The filing suggests that the company might add some version of phone service to its ‘hand-held media players’ known as the Zune.

Microsoft will submit a prototype to the agency. The Zune already has WiFi capability and a new Phone + Zune combo Ph + une = Phune could provide a device to compete on some levels with the iPhone. It might also be an opening salvo in Microsoft’s never ending race to continually play catch up with other companies that have tested the waters first.

The filing indicates that the new device will utilize OFDM, which is a routing technology capable of moving TV and voice calls between devices. Maybe Zune will abandon the Phune concept all together and focus on the potential to virally transmit Microsoft Soapbox videos on its Zune.

That would at least spare everyone another silly sounding gadget name.

Technorati tags: Zune, Microsoft, Microsoft Phune, fcc, bad gadget names like Zune iPhone and Phune

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Cisco and Apple revealed this week that they have reached a type of cease fire in their trademark battle over the term iPhone, which Cisco owns.

Cisco launched a product called the iPhone in December and wants to come to terms with Apple on an agreement that would allow the Cisco iPhone to ‘ interoperate ‘ with the Apple iPhone in some form or fashion. Apparently the companies continued negotiations on the topic right up until the night before MacWorld at which point Apple walked out on the talks, launched their iPhone at MacWorld hoping that Cisco was bluffing only to learn that Cisco wasn’t bluffing when they filed a lawsuit against Apple.

Now they are back at the tables trying to work things out. Many companies would jump at a chance to avoid a Trademark lawsuit, but Apple is not a company to be troubled by someone else’s trademark. Plus, they are not normally known for opening up their proprietary systems to allow interoperability with other platforms.

Therefore, they may be talking but they may have a long way to go before a settlement is presented. Even then it looks likely that both companies will exact a pound of iPhone flesh from the other.

Technorati tags: Cisco, Apple, iPhone, Trademark litigation, ineroperable iPhones, proprietary systems

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Here is a five minute video of the NYTimes coverage of the iPhone including Steve Jobs keynote speach.  The video does not include any coverage of the lawsuit that followed the launch of the device shortly there after.

The iPhone may or may not be a success, but this keynote is definitely a great example of the right way to launch a product and demo it to a crowd that already expects the device.

It is almost unfortunate that Apple was not able to put aside some of their other regulatory and legal trademark issues that are now detracting from the launch.  Funny how LG, didn’t have the same problem nor the same buzz for its very similar device that doesn’t hold a name trademarked by a different company.

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Apple has proved to be a marketing genius of a company over the years, but they have also made some rather silly and sometimes juvenile mistakes, like taunting The Beatles into litigation by naming their music software with a name that sounds like “Sue Me.”

This week they may have made another juvenile mistake with the launch of their iPhone.  It appears that they failed at least to get all of their ducks in a row.  According to reports from Cisco, Apple and Cisco had been in talks concerning Apple’s use of the iPhone trademark owned by Cisco, who recently released a VOIP phone with the same name.

It would appear that the parties were close to a deal.  However, close is not typically considered good enough for most corporate lawyers and so when Apple rushed to launch their iPhone at MacWorld without first signing a release from Cisco, Cisco seemed to have little if any other choice than to sue Apple to protect their trademark or risk defaulting on it all together.

Apple responded with indications that they thought Cisco was being silly and that they were the first to offer a cellular phone with the name of iPhone as opposed to the wireless phone that Cisco had offered with the same name.

Let’s hope that Bill Clinton doesn’t represent one of these companies in a battle over the definition of what “is wireless” and what “is cellular.”  The technologies are obviously distinct, but this would raise other questions of products that are similar, like a sandwich shop that offered a Whopper of a Submarine sandwich.  Could they argue that a submarine sandwich named the whopper is nothing like a Burger King Whopper that is a grilled cheese burger?  What if the whopper comes with Lettuce?

Regardless Apple seems to have embroiled if not invited itself into litigation that is frittering away shareholder value.  As such it would seem that they may have been in a rush to launch this product and may have phoned in the iPhone like they phoned in the iRokr.

Maybe Apple just isn’t ready to play in the phone market?

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