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• Is Apple's iPhone Activation Through iTunes A Trojan Horse?

iTunesLogoiphone2.jpgSomething wonderful is going to happen at 6:00 PM on June 29, 2007 - and it isn't the introduction of Apple's iPhone.  Don't get me wrong - that will be a great thing, too, and I intend to get one (although I'm not about to stand in a queue all night - I'll just order online and let Mr. FedEx drop it at my door).  No, the great thing that will be happening is that, for the very first time in the 20+ years of cellular phone sales history, you won't have to go through the activation process in the store where you bought the phone. 

With no disrespect meant to the hard-working salespeople in retail I can tell you that my experiences in getting phones activated (and I've gone through this, conservatively speaking, about 25 times) has been uniformly unpleasant.  It's a mysteriously long, convoluted and repetitive process that makes you feel like the Tin Man - frozen in time - being serviced by the Scarecrow (if they only had a brain).  Why the process couldn't be more automated has always been a source of frustration to me; in a world of web sites, over the air programming and broadband access isn't this something that I could do myself?   

Apple has always espoused others to "Think Different" (although I've always wondered if that's grammatically correct - shouldn't it be "Think Differently"?  Maybe so, but not nearly as catchy for advertising.) and this time around they're thinking oh-so-very-differently about everything involving the experience of owning an iPhone.  That's what Apple has always made its bones on - the entire experience - and buying an iPhone will be no exception.  The process that everyone will use to activate their iPhone after buying it at the store will be simple, straightforward and done in the comfort and privacy of your own keyboard.  If you're thinking of buying a new phone of any kind, this alone might be enough to sway you to spend the extra bucks on an iPhone if you've ever been through the traditional activation process before. 

You'll activate your phone using Apple's ubiquitous music software called iTunes.  iTunes is becoming a misnomer for this software because, yes, it does manage your music collection, syncing to your iPod and purchases from the iTunes Music Store (1 BILLION songs sold and counting), but it does so much more even today.  My iTunes already syncs my calendar, address book and photos to my iPod.  It can sync games, videos, TV shows, etc.  This is more than "tunes," folks.  If Apple didn't already make a software package called "iLife" I'd suggest that they call this software exactly that.  

But here's the thing that I believe a lot of people are missing.  Just like Apple created iTunes and the iPod in tandem and designed them to work with each other I believe that Apple has enhanced iTunes and created the iPhone to work with each other.  Certainly, you'll be able to buy games, ringtones, wallpapers, screensavers and more for your phone via the iTunes application (actually dipping into the iTunes music store to do so) but I am wondering if there's a hidden agenda here, too.  

There was a time in the cellular industry when agents and resellers were doing more business selling phones at retail than the carriers.  That no longer is the case and the carriers are able to keep the rather large commissions that they paid at one time to the resellers and agents.  But what if Apple, through the creative, inventive use of iTunes, began activating not just iPhones, but other phones, too, as a service to various carriers?  Think of the advantages to a carrier in reducing their retail sales staffs, wait times in their stores, automating the activation process, etc.  The potential advantage for a carrier is huge.  Basically the phone becomes a box sale, meaning that Walmart, Target, Costco and others could sell the phone right off the shelf.

What does this mean?  It takes the hassle, time-consumption, errors and frustration out of the equation.  It puts the carriers back in charge of their own services while getting broader distribution of their product.  It allows people to shop for phones the same way they do for computers - buy one at the store and then go home and arrange for your Internet access (although activating your phone is likely to be a whole lot easier).  

From Apple's standpoint it creates a potential revenue stream from a completely outside source - in much the same way that artists and recording labels provide the content for iTunes, which then spurs sales of songs and further sales of iPods, the sales of cell-phone-in-a-box could ignite an entire new way of selling phones.  Imagine if you could buy special branded phones from Nike, Nordstrom or anyone else and then take them, connect them via the iTunes music store and activate them with the provider of your choice (within limits - you'd have to buy either GSM or CDMA-standard phones, limiting you to a somewhat smaller universe of phones). 

In short, this opens a new world for Apple and new distribution channels for carriers.  It could provide consumers with greater choice, easier activations and less aggravation.  Upgrading or changing plans could be done through iTunes, too, making it easy to add features, renew contracts, transfer numbers, etc.

Apple has a reputation for elegant software that makes things that were hard, easy.  This time around they might have hit on something that could make use of that ability in an industry that could certainly benefit from it.   

Posted on Friday, June 29, 2007 at 08:00AM by Registered CommenterThe Wireless Wizard in | CommentsPost a Comment

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