Apple's Grand Plan: AT&T's lack of Web understanding may forever change wireless

Implications: Yes, there will be a small but growing segment of the population interested in an unlocked iPhone, both for making calls and more importantly for the supercharged iPod, as I will discuss.  What is more interesting, though, is to look at unlocking as another piece in Apple's strategy to be a dominant wireless player IN PLACE OF THE CARRIERS.  This article looks into AT&T's lack of comprehension of the power of the Web, the changing nature of the Web, in its ability to influence all digital media.

Analysis: Yes, there will be a small but growing segment of the population interested in an unlocked iPhone, both for making calls and more importantly for the supercharged iPod.  Early adopters have long decried locking phones, and they may now have a proponent in FCC Chair Kevin Martin, who is proposing to provide open access at the 700 MHz spectrum.  There were many consumers who unlocked phones in the past, but the iPhone will have many more consumers eager to use them because of the nature of the iPhone base, who are currently early adopters.  Still, this is likely to be a small segment of the population, at least in the beginning.

However, the big news is that, by unlocking the phone, and by Apple controlling distribution and branding and activation and a share of residuals, where does that leave AT&T ... along with Verizon and T-Mobile and Sprint? 

If there is one adage that rings true in the digital age it is: the hackers are always one step ahead of the software developers.  Why?  First off, in general, the hacking population is smart.  Second, they are committed, loving a puzzle to unlock.  Third, there are many ways to hack code, while, in general, only one code written. 

Forth, and perhaps most important in understanding the current state of the Web, the Web is now a social phenomena were people have begun to work collectively, efficiently.  To wit, the iPhoneDevCamp was launched even prior to the iPhone launch and is now being expanded across the world for developers to get together and develop applications for the phone ... and unlock it.  In the week after launch, the blogs were on fire, giving a virtual play-by-play of the progress on unlocking the phone and providing consumers with a super-charged iPod.  So finding out the immediate progress toward hacking is not surprising at all.  Nor is it surprising that there are scads of great apps that have already been developed on the closed Safari platform.  You put an active, motivated social network to use, and this is what you get.

To me, the more intense questions are: 1) is AT&T being blind-sided; 2) does this and 2) is this part of Apple's grand plan to turn the wireless business on its head; and 3) does this open the door for other Internet players?

To the first question, I absolutely believe AT&T is not fully aware of what is going on with the iPhone phenomena, and they will continue to be blind-sided.   They are a wireless carrier, concerned with their network and ARPU and churn and network usage and loyalty, but they do not know the Internet.  They are not different from the other carriers: Verizon and Sprint Nextel and T-Mobile.  All the carriers have a substantial lack of Internet intellect, and this is one of the big reasons for the failure of wireless Internet penetration, not the lack of consumer willingness as they have previously offered.

As far as Apple goes, yes, I believe Apple is a more dominant player in this transaction than AT&T or wireless prognosticators could have imagined.  They understand the Internet profoundly, have great foresight on user interface, and ability to create powerful brands in multiple, diverse settings. As I describe in this article, I believe Apple gamed the carriers, pitting AT&T against Verizon until one of them flinched, to terms that only Apple could negotiate.

And they are definitely insightful enough into the power of software developers to unlock their phone and use it as a developing platform.  Now, Apple is definitely a brand intent on protecting its control, but I think they would rather cede some of that control to consumers than they would to another brand.  This all appears to be part of the grand scheme, to leverage the ever-burgeoning power of the Net and consumers to increase their own brand power.  If we are going to give Apple the credit that it is due, we need to look at Apple within the Web 2.0 scope and AT&T within the wireless 1.0 scope.  Call it Wireless 2.0.

Apple is not the only company who could exude this much control over Wireless 2.0.  Google and Yahoo both have made forays into the mobile playing field, with Yahoo being the most aggressive over the past year but handicapped by less developing oomph and a declining brand.  Microsoft, experiencing a renewed growth burst in their search platform recently, could also be a strong player. 

The point is that the Internet software and user experience giants and not the network owners or the hardware players players are probably most likely to take advantage of this new wireless scheme.  Unlocking is just the beginning.