Verizon iPhone second glance: exclusivity farce a fireable offense?

by Bill Palmer

With minutes to midnight on the Verizon iPhone countdown clock, it’s worth stopping to pose a vital query in hindsight. This is not about blame, as everyone, including every successful regime, makes their share of mistakes along the road to success. And this isn’t about a seeming lack of foresight, as no one can predict the future with anything approaching a full degree of accuracy. But if only so something can be learned and banked on for the next time around, here goes: With that original long term iPhone exclusivity deal with AT&T having been a quantifiable mistake even amidst the greater iPhone success story, just how much of a screw-up was this? Put another way: If Apple were being run by a less accomplished CEO, one without such a stunningly positive track record of getting so many things right year-in and year-out, would the lack of a Verizon iPhone these past four years be a fireable offense?

Before anyone goes off and willfully misinterprets that, let’s be clear. Steve Jobs is the most successful CEO of the past decade, easily, and is the odds-on favorite to retain that title in the next decade. No company has been more successful, and no executive has been more vital to that company’s success. That isn’t likely to change any time soon. But that said, imagine if Steve had retired five years ago and the 2007-ish decision to sign a deal to keep the iPhone out of the hands of close to three-fourths of U.S. consumers (unless they changed carriers) for as long as five years had instead been made by new CEO Phil Schiller. Or perhaps Tim Cook. Or some new CEO from outside the company. Heck, Apple just canned iPhone hardware boss Mark Papermaster, and while we still don’t know exactly what it was that got him tossed, it can’t have been as bad as the decision to throw away the majority of potential iPhone sales in the U.S. for a five year period for reasons which in hindsight are completely indecipherable. Not only would there be two to three times as many iPhone users in the U.S. right now, it’s doubtful that the competing Android OS would ever have gotten off the ground in any mainstream capacity (see Google’s other pet geek project, Chrome, for an example of just how tiny Android marketshare would likely be if the iPhone had launched on all four U.S. carriers simultaneously and three of them hadn’t been desperately searching for a counter measure). So the iPhone user base would be massively larger, hardware revenue (and app sales, music sales, etc) would be massively larger accordingly, and the iPhone’s biggest competition would the BlackBerry (which is withering of its own accord) and the always-struggling Windows Phone.

And yet one stupid executive decision later, and here we are with the two most oft-asked iPhone questions headed into 2011 being “When is the iPhone coming to Verizon?” and “What is iPhone going to do to fight off Android?”. Of course the answer to those two questions is one and the same, and the arrival of the Verizon iPhone will likely put the Android hype, which is still significantly overproportioned in comparison to actual Android sales, to bed at last. But if you’re an Apple shareholder, or someone who roots for Apple to do well, or an iPhone user who believes your experience will improve as the user base grows, ask yourself this: if it had been Apple CEO John P. Smith who had signed that absurd AT&T exclusivity contract to keep the iPhone off Verizon, Sprint, and T-Mobile for all these years instead of Apple CEO Steve Jobs, you’d probably be calling for his head by now. On the other hand, if the lack of a Verizon iPhone is the biggest screw-up of the second Jobs era (and it is), then that actually speaks volumes about just how well the rest of that era has gone. Here’s more on Verizon iPhone.