The Steve Jobs master plan: iPhone hacking

When Jobs and company first envisioned the iPhone, a few things surely came to mind. First, Apple wanted a phone with an appealing design and advanced functionality. In essence, the company wanted a device that was nothing like its predecessors.

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 essence, 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 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.

Steve and his gateway device. Declan McCullagh/CNET News.com

AT&T is a means to an end. Apple wanted to make a splash in the cell phone business and needed a carrier to do so. The revenue generated from plans is a bonus and was only possible because of the significant leverage Apple 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 businesses: 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: its 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 businesses and more beneficial enterprises.

Was it Steve Jobs plan all along?
Prior to its release, the iPhone was being hailed as a landmark device which, 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's 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 violation 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?

With a new unlocking procedure in place, the iPhone will become as ubiquitous overseas as it is in the U.S. In a matter of days after the best iPhone unlock is released, we will witness a flurry of sales that will create a watershed moment for Apple.

Here's my prediction: the iPhone unlock will be simple enough for both casual and hard-core users alike to use their new device anywhere. From there, those who are not yet Apple fans will realize the ease of use that comes with Apple products and they will pick up either an iPod--if the iPhone's isn't enough--or a Mac, if it is. Much like the iPod, the iPhone will prove to be a substantial long-term revenue-getter for Apple that will far exceed the lost revenue from the AT&T contract. In fact, it wouldn't surprise me if Mac notebook and desktop sales exploded in the next quarter because of this unlock.

Lest we forget, Apple is a company that thrives on hardware sales. Its main business model is to develop appealing products and release them to the public in a way that will make consumers want more Apple devices. Think of how many Apple products there are and consider how many of these products are specifically designed to complement each other. The iPhone is no different--it welcomes us all to the world of Mac OS X--albeit in a stripped-down way--and makes everyone wonder about the benefits of owning other Apple products. In essence, it puts Apple into another realm of our subconscious.

Steve Jobs is probably one of the most intelligent and forward-thinking CEOs who has ever graced the tech industry. Jobs understood that AT&T service plans were a disposable by-product of iPhone sales and realized that the iPhone was just another piece in the puzzle of Apple's complete domination of this industry.

Apple anticipated consumers' next move and did so in a way that would make any businessperson proud. The iPhone was never meant to be a standalone product, it was designed to make Apple the most complete technology company in the world. And with an unlocked iPhone, this could very well become a reality.

 

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