I feel a large dose of schadenfreude whenever iPhone users get dropped in the middle of their calls with me. Somehow, the failings of the overtaxed AT&T network (through which all iPhones must connect) make me feel better about staying with a cheaper, less feature-rich phone on a more reliable network.
If today’s announcement of a Google-Verizon partnership plays out as planned, that’s a tradeoff we won’t have to make anymore.
That’s right: The biggest and most notoriously closed wireless carrier on Earth is partnering with the biggest and most open Internet company ever, to bring Google’s new Android phone platform to users who want a truly expandable smart phone, yet still require a robust and dependable carrier.
Verizon has learned the most important lesson for a technology company: The easiest way to make money is simply to do something really well.
I first played with an Android about a year ago, when handset manufacturer HTC gave me a demo unit of the first Google phone to hit the market. The phone and software were very cool. Problem was, I couldn’t get a signal in my neighborhood from the phone’s exclusive carrier, T-Mobile—and it ended up being the first free handset I actually sent back before the demo contract had expired.
By partnering with Verizon, Google guarantees its Android system will be unencumbered by such networking issues, and capable of serving the kinds of enterprise and corporate customers who purchase a few thousand contracts at a time for their employees or sales forces.
The Google-Verizon marriage is big news, not least of which because it throws a tag team into the ring with greater technological and financial reach than its adversaries, Apple and AT&T. It’s an interesting and counterintuitive matchup. Apple is offering the highly branded, very advertised, closed, and consumer-ready phone operating system, tied to an Apple-produced device (the iPhone) through an exclusive arrangement with AT&T. Google, on the other hand, is giving away a phone operating system to any handset manufacturer who chooses to use it, and requiring its network partners to utilize open standards when implementing it.
For Google, those open standards mean handsets capable of using Google’s latest and greatest potential killer apps, such as Google Voice—a free suite of phone applications so useful they threaten to make many aspects of pay telephony obsolete. That’s why Apple famously banned the application from its iPhone store.
For Verizon, however, it means the final step in a reversal of policy. Remember, this is the same phone company that has successfully leveraged its “best network” status to offer the most limiting software and expensive contracts in the industry. Verizon’s versions of handsets often lacked basic features—like file exchange or emailing photos—because the company wanted to sell these services itself.
Verizon CEO Lowell McAdam began to see the error of his ways in 2007, when he realized that his company’s take-no-prisoners policy was fine with big businesses (who don’t like employees using unauthorized applications, anyway) but an increasingly tough sell to regular users demanding more flexibility from their cellphones. After visiting Europe and Asia, and seeing how freely a cellphone culture can actually work, McAdams decided to adopt an “open-access” policy right alongside its closed one.
In the closed universe, Verizon will continue to spend its own money on development, stand by its phones, and offer customer support. In the open-access universe, however, Verizon will relegate all these responsibilities to the handset manufacturer or Google’s help pages.
In this sense, Verizon is reducing itself to a pure network, and giving the costly headache of hardware, software, sales, and customer service to its partners. Unlike AT&T, which is still rationing its bandwidth, Verizon wants customers to become increasingly dependent on its connection. So what if people are using a Google Voice application through the phone’s modem instead of the Verizon phone contract to make a call? Connectivity is connectivity, and still requires Verizon’s network to work. That’s why Verizon is also looking forward to being able to offer a myriad of upcoming Android-based bandwidth-hogging devices, like netbooks and PDAs.
Verizon has learned the most important lesson for a technology company: The easiest way to make money is simply to do something really well. They may actually come to make more money by letting their users do more with their phones and software, instead of less.
Apple, meanwhile, is putting itself in Verizon’s old shoes. By tying their phone operating system to their own hardware, and then restricting their phone’s flexibility to suit AT&T’s network limitations, they end up in the role of enforcer—butting up against users who are just now discovering the advantages of openness and developing the skills to exploit it.
Of course, it’s only a matter of time before Apple ends its exclusive contract with AT&T, and begins offering a Verizon version of the iPhone. But by then, it might be Verizon demanding a bit of openness from Apple.