In a recent feature by the Toronto Star, RIM’s Co-CEO Jim Balsillie offered commentary on Apple’s relationship with AT&T regarding the iPhone. His comments have sparked some debate across the Internets, most notably on the Boy Genius Report, where several staff members (including the BG himself, of course) have taken different stances on what Jim Dog’s words mean.
The quote in question refers to the surprising (to some) amount of control Apple featured over the iPhone’s launch: for example, a lack of AT&T branding on the device, and activation via iTunes rather than through AT&T. Here’s what Balsillie had to say:
“It’s a dangerous strategy,” says Balsillie. “It’s a tremendous amount of control. And the more control of the platform that goes out of the carrier, the more they shift into a commodity pipe.”
Our good friend the Boy Genius argues that Balsillie’s comments come from jealousy over the fact that Apple has the power to command such control while RIM can’t — hence, the reason why there are no Wi-Fi BlackBerrys in North America (yet). One of his fellow writers wonders why RIM wouldn’t welcome this shift in power from the carrier to the manufacturer, especially considering how poorly AT&T handled their BlackBerry Pearl launch. However, I think this extends beyond simple jealousy, and reflects the divergent philosophies of RIM and Apple.
It is important to note that Balsillie never stated that the relationship between Apple and AT&T was
bad, merely that AT&T’s concession to relinquish control in order to be the sole supplier of the iPhone was a dangerous one for the company. I’m sure Balsillie would love more control in his negotiations with carriers, but the issue here isn’t about control, it’s about how RIM and Apple both deliver their products.
Jim Balsillie personally told me that RIM serves three masters: the carrier, the end user and the CIO. They are, in effect, the three different customers that RIM has to sell a device on in order to be successful. Why do carriers rate as highly as the end users in RIM’s mind? Because carriers such as AT&T provide them with great help to get devices out the door. While RIM may go end-to-end when it comes to the back-end technology required for the BlackBerry network, they are very much hands off when it comes to the promotion and sale of their devices (although this is slowly starting to change): it is the carriers who offer promotional deals and subsidize device cost (it is worth noting that the lack of AT&T branding upon the iPhone is likely due to the fact that they don’t subsidize the device). The reason for this is that RIM isn’t primarily a hardware manufacturer — they’re a service provider (BES/email) that uses BlackBerry devices as the medium for their service. That’s why top RIM brass refers to BlackBerrys as a platform, not a product.
The iPhone, of course, is a product. Not only that, it’s a product that Apple — as with all other products they offer, be they hardware or software — wants to control from conception to completion. Apple also does not consider carriers to be their customers; their customers are the evangelistic, tech-loving nerds that embrace the Apple iZeitgeist of design. I’m sure Apple considers their relationship with AT&T to be similar to the one they share with Wal-Mart in selling their iPods.
This is the danger that Balsillie is identifying: AT&T is jeopardizing becoming the Wal-Mart of telecommunications (i.e. a simple product vendor) in order to cash-in on iPhone sales. RIM might not want AT&T or other carriers to lose that control, because it would force them to play a greater role in BlackBerry product launches and marketing (diverting their attention from design and iteration), and because RIM doesn’t want to get into a straight product war with Apple (which they would lose). Regardless of what you think of Jim Dog’s motives, I believe his analysis is correct, although it may take some time before other hardware manufacturers demand the control that Apple does, simply because their products are not ready to stand on their own. Whether or not AT&T has opened Pandora’s box remains to be seen, but post a comment and let us know what you think the future holds.