Apple and AT&T a marriage made in hell?

Stan Beer
Sunday, 29 July 2007 19:55

Opinion and Analysis

When Steve Jobs gave the stage at Macworld to the CEO of Cingular Stan Sigman to announce the Apple-AT&T collaboration, it seemed an unlikely marriage. Jobs easily prancing around the stage in his jeans and long sleeved black T-shirt and Sigman in his suit reading from cue cards. Are signs emerging that it was a marriage made in hell?

The unbelievable pre-launch hype of iPhone lead many analysts to predict that more than half a million units would be sold within the first two days of launch. We now know that the actual numbers moved fell way short of that mark. However, there appears to be a discrepancy in figures released by the two companies.

Apple has stated that 270,000 units were sold in the initial 30 hours after launch, while AT&T says that 146,000 were activated. As David Berlind at Zdnet asks in his blog , what happened to the other 124,000 iPhones? The most plausible explanation explanation was problems with the activation process - which  both companies deny.

Regardless of the discrepancy in numbers, a more serious appears to have arisen as described in a report on MacDailyNews . It appears that there may be a reluctance on the part of staff at some AT&T stores to sell or even show iPhones to prospective customers enquiring about the product.

Apparently some sales staff refused point blank to show iPhones to customers, while one kept a customer waiting until he left the store, and yet another said that he could sell the phone in the box but could not show one for demonstration purposes. The report even states that some sales staff were even antagonistic to prospective iPhone customers and denigrated the product.

If these reports are true, then they suggest a few things. One is that margins for AT&T and commissions for sales staff on iPhones must be thin and therefore provide incentive to push alternative products to customers. Two is that AT&T may be receiving extra incentive in the form of fatter margins from the likes of Motorola, Nokia, RIM and others to plug their products. Three is that AT&T staff come from a culture that finds this upstart from the IT space repugnant.

Of course this is all conjecture but Apple has never been known to be a company that is good at collaboration with partners. It already had one failed attempt with Motorola. About the only thing that Apple has in common with AT&T is the first letter of their name. The cultures are totally foreign to each other.

Having worked for a large carrier in my early days as a technologist, I can say that decisions made at the top of such monolothic, monopolistic organizations are not always immediately reflected at the grass roots level of the organization. Carriers like AT&T have layers of bureacracy, filled with pockets of  personal empires which act like states with their own laws.

Then there are shops that act as AT&T agents. These shops and their staff will push whatever products make them the most money. Chances are iPhone isn't one of them, based on reports of the heavy kickbacks Apple has managed to extract from AT&T on sales.

Sales staff at AT&T shops, who may be on first name terms with reps from Motorola and Nokia that they've known for years could well feel repulsed at the prospect of being forced to sell products from a new supplier that could be putting less money in their pockets.

Whether all the above is true or not, remains to be seen. However, if it is, Apple had better be prepared to face similar issues with other large carriers in Europe and Asia.