Apple has a long relationship with AT&T. In fact, we share 1984 as a rebirth of sorts for both companies - us with the introduction of the Macintosh, and them with their government-forced breakup into eight companies, thanks to intervention by the U.S. Department of Justice. By 1986, we saw AT&T rise to the #3 position in computer sales, while we held the #2 spot, behind IBM. In the early 1990s, we asked AT&T to design Hobbit, a high-speed low-power chip for our Newton project. While we later chose ARM for the Newton, we respected AT&T's efforts. I could keep going, but just trust me when I say the two companies have long worked closely together to pioneer the world of telecommunications and computing and there have been many good times. More recently, in 2007, Apple chose Cingular as our exclusive provider of cellular phone service for the iPhone. We chose Cingular because it was the best, and the most popular. After this time, Cingular purchased AT&T Wireless, and became the new AT&T. Our old friend, back again. Today, the two companies - Apple and AT&T - still work together to serve customers cellular phone service and 3G mobile Internet access - but beyond that there are few joint interests.I wanted to jot down some of our thoughts on AT&T's wireless service so that customers and critics may better understand why we should soon be moving away from exclusivity with AT&T on our iPhones and iPads in the United States. AT&T has characterized our relationship as strong, and heavily leans on revenue they have received from Apple iPhone customers to show the company's strength - but in reality, this relationship is falling apart based on technology issues. AT&T claims that they have the strongest 3G wireless offering in the country, and that almost all Americans have access to their network, but in fact the opposite is true. Let me explain.
First, there's "The Best 3G Experience"
AT&T says they have the "best" 3G experience. This is true, assuming you live in one of the few places in the United States that has access to 3G. The reason it is the best? Because they have access to the iPhone and the iPad. It's not the network that makes the 3G experience so good. It's our applications and our hardware. While AT&T says their 3G network is widely available, that does not mean you can get access to it - even in major metropolitan areas, such as San Francisco and New York. By almost any definition, AT&T's "best" is a level of mediocre so horrid we would never allow it to have an Apple brand associated with it.
Apple has many products we also call the "best". Our laptops are the best in the world. Mac OS X is the best operating system in the world. Our digital devices are best in class. They are practically works of art that belong in a museum, and you would leave your significant other to have one. Apple defines what is best because we are the best. We have set the standard in every market.
Second, there's "The Nation's Fastest 3G Network"
AT&T has repeatedly said their network offers the fastest 3G experience - and their commercials highlight benchmarks that show quicker download speeds than Verizon. What they don't say is that this only happens in 3 out of the top 100 metropolitan areas in the country, and when you are actually sitting within 40 feet of an AT&T access point, provided nobody else is using the network at the same time you are. With the iPad and iPhone presenting perhaps the best content discovery and viewing experience ever, you will be frequently challenged to find a place where you can consider AT&T's 3G network "fast".
This is evidenced by the recent news that the 3G experience on our new 3G iPad is crippled, stuck at an embarrassing 64 Kbps when streaming video on AT&T's network. The only way this is the fastest is when it comes to how quickly our customers are giving up trying and hitting stop, only to wait until they don't need to rely on this slow 3G network, and can tap into trusted WiFi. There are more videos, songs and game titles available for iPhone and iPad than for any other platform in the world, but AT&T's "fast" 3G network isn't fast enough.
Third, there's "Talk and Surf at the Same Time"
AT&T recently highlighted the network's ability to talk and surf the Web at the same time on a single device. We know first hand that AT&T can make this claim only because they drop so many calls automatically, customers are still looking up the data on the Web before they realize the conversation has been interrupted. AT&T's fine print shows you can surf the Web and talk at the iPhone at the same time, so long as you are only talking with yourself. We don't want to reduce the reliability and high customer satisfaction of our iPhones and iPads by sticking with AT&T.
In addition, AT&T has promised network upgrades every year that would withstand the high demand from our customers. We have routinely asked AT&T to deliver the ability to tether iPhones to laptops or iPads, or any mobile device, to provide Internet access, for a few years now. We have never seen it. AT&T publicly said that tethering would ship in late 2009, then the first half of 2010, and now they say the second half of 2010. We think it will eventually ship, but we're glad we didn't hold our breath. Who knows what level of mediocrity they would ask us to accept?
Fourth, there's HTC and BlackBerry and Nokia.
To achieve a long partnership when working in mobile, companies need to be working together as one. But despite our exclusive agreement with AT&T for them to be the sole wireless carrier for our devices, they never returned the favor, offering to sell only Apple mobile devices - despite the fact ours are the best. Many of AT&T's alternative partners, including HTC and Nokia, are actually in the middle of deep, intricate lawsuits with us, and we cannot abide with a "partner" who makes deals with these other companies behind our back.
Although AT&T claims to be offering a wide family of devices with a family of mobile operating systems, at Apple, we recognize that it is support of all these other devices which is slowing their network down, and reducing accessibility for the only customers who really matter - Apple customers, who have proven themselves as valuable and more intelligent customers because of their computing device choices.
When carriers open up their networks to competitive products that are infringing on our patents, which we will defend tirelessly, we cannot trust that those clients are not reverse-engineering our hardware and software by intercepting our wireless signals. We cannot risk the security and trust of our customers by spending another day sharing the spectrum with cheap knockoffs such as these.
Fifth, there's Sex.
Apple is sexy. I famously once asked a job applicant at Apple, "Are you a virgin?" Some of these AT&T drones, and their entire business, have absolutely no sex appeal. There is nothing sexy about telephone wires, counting minutes and pixelated video. Apple's revolutionary multi-touch interface and hardware doesn't need to be made impotent by being tied to such a soulless and emotionless corporation who cannot deliver in the boardroom, let alone the bedroom.
Even if AT&T were to redesign their sterile Death Star-like logo to be hot pink and they started every commercial with electronic house music, it would not solve the problem that their access is terrible, their leadership is poor and they are pulling us down like an oil slick takes down a seagull.
Sixth, the most important reason.
Besides the fact that AT&T does not offer fast 3G access practically anywhere in the country, constantly drops standard voice calls in every place in the country, cannot handle our current demand from its elite Apple customer base, and cannot be expected to upgrade their network or deliver basic features, such as MMS or phone tethering, on a schedule that is even close to its competition, and that they lack loyalty and sex appeal, there is a more important reason we do not want to move forward with the AT&T relationship with iPhones and iPads. We have discussed the many downsides of this AT&T contract, and how it has crippled our revolutionary devices, but AT&T wants you as consumers to pay more for the privilege of getting screwed.
We know from painful experience that bad customer service does not always return an inexpensive price. After all, look at Microsoft Office or Adobe Creative Suite for two examples of hugely expensive products that stink. AT&T must have gone to the same school of price gouging and marketing to come up with their strategy to charge Apple customers, because many of you are paying triple digits each month just to get your phone to see two or maybe three bars a few hours every day.
This becomes even worse if AT&T tricks you into purchasing an unlimited data plan for your iPad or your iPhone. You are paying upwards of $30 a month for data alone, only to find you can't download hardly anything over AT&T's network, because you can never get to it. Again, we cannot accept an outcome where our customers are blocked from using our innovative devices because their downstream Web services and applications are inaccessible on the network.
Our motivation is simple - we want to provide the most advanced and innovative platform for our customers, and we want them to pay a fair price for high quality. At Apple, we aren't shy about asking customers to pay the most if they are getting the best, and we will always deliver the best the world has ever seen. We want to continually enhance our offerings so everyone wins. AT&T is standing in our way and yours, and we want to delight you in the way we know we can.
Conclusions.
AT&T was created in the 19th century for a time of operator switch boards and later, rotary phones. Wireless is a successful business for AT&T and we can understand if they don't understand this new world of 3G, high speed data and next generation mobile devices. This new era is all about instant access and real connections - calls that complete, downloads that actually happen, and openness for the best hardware platform in the world - all areas where AT&T falls short.
The avalanche of wireless carriers begging to be associated with Apple's mobile devices demonstrates that AT&T is no longer necessary for Apple's iPad and iPhone to move forward. The millions of phones we have in consumers' pockets around the world show that our ecosystem is thriving, despite having AT&T as a boat anchor in our home country.
New standards for download speeds, connectivity and real-time application response will win on mobile devices like the iPad and iPhone. Perhaps AT&T should focus more on creating access points and any connectivity at all, rather than criticizing Verizon and other mature carriers for delivering good products. Apple is going to leave the past behind. You just wait.
May, 2010