Why the iPhone will iPhail

Although an overpaid computer engineer by trade, I’ve had bad times where I had to keep my landlord happy by selling wireless serivces. SprintPCS, T-Mobile, AT&T Wireless, US Cellular, NexTel, DirecTV and Dish Network were all part of the “sell this and make commission” plan. But, my experience lead me to great distaste for the industries. To this date, I refuse to purchase any similar service from anyone other than an official company store. Read the fine print. There may be a $150 cancellation fee from Verizon, but Universal Wireless Cell Company tags on their own similar fee to double get you. Buying “direct” prevents that and, as the iPhone has shown, there’s always the possibility for something just over the horizon that will make you glad you can get out of your contract (easier).

I could write a book on all the issues and problems (and how to avoid/prevent many of them) when dealing with cell phone companies. I could share stories from within the company I worked for that would make you fear ever filling out an application (with your social security number and such) again. But the real education I got turns out to be very significant in lieu of the iPhone release later this year.

Contracts, you see, are the key to making money in the cell phone business. My store didn’t even sell phones. You couldn’t buy one. Period. What we sold was contracts. My cut of activating one carrier was $45 for a one year agreement. $50 for turning on a one year satellite contract. You get the idea, and can imagine the money being made by the company itself, and the cell phone company (though they take the risk that the customer will keep paying those monthly bills; and if they don’t, there’s always those cancellation fees.)

More and more companies push for two year agreements. So did we, even though we were still able to activate one years; we were told not to offer them, period. That’s good for us (more commission) and good for the cell co (you can’t take your business elsewhere without them still getting money) but … bad for anyone trying to sell a phone to the majority of people walking through the strip mall.

“Sorry, I’m under contract” was what changed my job from a potential “$50,000 year” commission rate to a lousy $6.50/hour retail gig. And when working for a specific GSM company, with poor coverage in many areas of my state, they simply weren’t even an option for those who could have signed up (unless we lied about how great it would work on their farm; lying is also very important to successful cell phone selling, it seems).

So the iPhone comes out, and only folks like me who have been out of contract for years can even think of buying one without spending a few hundred more on cancellation fees. And even if you do that, or can get out of your contract using “other techniques,” will Cingular even work in your area?

Folks like me, smart enough to avoid contracts and perfect early adopters for anything high-tech with Apple on it simply can’t have an iPhone. There’s still question to whether or not I’m going to be able to buy them in my state, and even if I can, will I be able to use them anywhere outside the main city limits?

The iPhone will be an amazing device. It should easily be able to outsell the Treos and similar “smart” phones, but probably not touch the Blackberry corporate environment (who refuses to switch to Unix-compatible Macs while slowly embracing nonstandard standards of Linux). But none of this matters.

The iPhone may be a roaring success when compared to the Treo (and I’d toss my 650 in a minute if I could), but compared to the Apple iPod… it will be seen as an iPhailure. Apples to Apples, that’s what will make the iPhone seem like a failure.

Even if it manages to destroy many other competing smartphones easily…

Now, if only Cingular can find out if I can buy one in my area. I’m out of contract, and we finally got Cingular service here about two years ago.

I can’t wait to find out.

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