Apple, IPhone 5 Change Balance of Power Between IT, Vendors

With the release of the iPhone 5, corporate network managers get a glimpse of their unpleasant future in vendor contract management.

Kevin Fogarty

September 21, 2012

9 Min Read
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There's not much question that the best thing about Apple's newest innovation in intelligent device design wasn't a feature on the iPhone 5 itself. It was the Jimmy Kimmel bit showing passing Los Angelenos praising the innovation and big improvements in the iPhone 5--which is out today, as you undoubtedly know--while actually holding and praising an iPhone 4.

Even the guy who claimed to have an iPhone 4S praised the "new" version without realizing the phone he held could have been his own.

Apple's response was to say people loved the iPhone 4S so much they couldn't bear the trauma of too many changes with the new version. That only proves that the death of Steve Jobs may have robbed Apple of its talent for performance art, but not of its ability to deny the obvious with the elan and oblivious confidence of a committed and pathological narcissist.

The False Promise of "Unlimited" Data

There are plenty of good performance-related things about the iPhone 5, too, of course. Apple probably doesn't want to brag about the best of those either, though.

The real, actual best thing about the iPhone 5 is that Verizon reversed its decision to end the unlimited data plan of its current iPhone customers if they were rash enough to upgrade to the newest model.

Not everyone is getting the deal, of course--not even all iPhone users.

New iPhone 4S users could buy the unlimited data plans for less than six months after Verizon began selling the phones and was eager to recruit new iPhone users and entice AT&T iPhoners to change their luck. After then, it was tiered pricing, data caps and higher fees from Verizon.

Unpleasant as it was, it was no surprise. The same day Apple COO Lowell McAdam announced the $30 unlimited data plan he said it was temporary, promotional and would give way to the same tiered-pricing structure that AT&T was already using.

Cult of Mac reported by Feb. 3 that data caps were already on the way for Verizon iPhone users.

Even AT&T customers already using an iPhone 4 didn't automatically get the unlimited data at Verizon--they signed when AT&T was already offering a tiered plan, so they got no shot at Verizon's.

Both AT&T and Verizon used enough subterfuge in the switchover to satisfy a Congressional subcommittee on investigations. Both switched to data plans that charged more beyond relatively low data caps, for example, while still calling the service "unlimited."

Next: The real improvement in Apple's iPhone 5Both made the most of a report showing 1% of smartphones used 25% of the available bandwidth, and that each subsequent generation of iPhones used more data than the one before.

Both pointed the finger at users for inconsiderate bandwidth hogging, even though most of the really excessive bandwidth use came not from users but from Siri--the talking, overly cute digital assistant that's the one big feature Apple keeps promoting about the iPhone (and which, all by itself on the iPhone 4S, uses three times the bandwidth of the entire iPhone 4).

Any network manager realizes that if 1% of users take up 25% of the bandwidth, something has to be done to those users right away.

Verizon and AT&T switched to data caps and fee hierarchies to make those data-hogging users pay for the temerity to buy a phone the carriers promoted so heavily, and then to actually use the phone and its major features for the purposes for which they were designed.

They also claimed they had to increase fees and tighten other restrictions so they could afford to upgrade their networks to keep up with iPhone users--which is a big pipe full of hooey.

AT&T, for one thing, told existing users they could keep the unlimited data plan unless they abused the privilege by using too much data. Then it started changing the criteria for what it meant by "too much," without making too obvious an effort to warn users.

Verizon, at least, never promised it would keep the unlimited data plan, and kept that lack of promise.

In fact, Verizon announced well ahead of time it wouldn't grandfather iPhone users upgrading to iPhone 5 into unlimited data plans. Upgrade your iPhone and you're back on pay-by-the-drink, it said.

That annoyed people so much Verizon had to agree (a day later) to allow the existing unlimited accounts, though it said the price would be that iPhone users with the unlimited plans would get none of the hardware subsidies that make buying a phone bearable. IPhone 5 users would have to pay full price.

Eventually, it had to back off that threat, too, as did AT&T. Both companies are keeping unlimited data plans, but only after getting customers to jump through a new set of hoops.

You might think the duplicitous history of unlimited data plans would put end users off, but it isn't so. AT&T has already announced it set a sales record with the iPhone 5 last weekend and bragged a bit about its plan to let them use Facetime and talk time simultaneously, to contrast with Verizon's already-reversed plan to let users videoconference or use the phone, but not both at the same time. (Verizon stuck to the decision to make iPhone 5 users pay full price for the hardware, though.)

In both cases, the most likely reason is the extra competition from MetroPCS, T-Mobile, Sprint and other carriers who can suddenly burden their networks with the iPhone just as Verizon and AT&T complained.

Next: Why Are Carriers Bugging IT With All This Juvenile NonsenseAll of this nonsense--the semantically slippery and changeable terms of service, prices, too-frequent upgrades, too-thin security and asset control, difficulty in determining what features will actually ship and how long financial terms will hold--is the kind of thing corporate IT buyers round file in the first conversation they hold with any vendor.

No company of any size can afford to continually upgrade its hardware, face invoices significantly higher than the prices to which it agreed or deal with a company that changes the definition of unlimited without getting the support of customers first.

IT, in particular, can't afford to deal with hardware vendors or carriers that either plan capacity so badly that their networks are swamped by increases in traffic that are entirely predictable, or use that incompetence as an excuse to make the terms harsher after all the negotiations have been finished.

Unfortunately, in the era of BYOD, even enterprises often have to deal with carriers, cloud providers or other service companies whose pricing, customer support and negotiating policies were designed for consumers with no influence and less technical knowledge.

Since the beginning of the consumerization/BYOD mania, everyone from business-unit managers to tech-industry analysts to bloggers to news reporters have harangued IT about the need to adapt their corporate, enterprise-IT aloofness to the new reality of actual consumers having influence over corporate IT decisions.

In consumer technology, the balance of power skews the opposite way, and carriers don't seem too eager to change things to make them more efficient.

Rather than learning from their enterprise sales staffs the proper way to sell technology to big companies with big IT departments-- no hard sell, plenty of support, as much stability as possible on hardware configurations, software patches and security updates--carriers seem to have gone the other way, by making IT deal with the same nonsense that apparently works on consumers.

There are a couple of good, IT-manageable things about the iPhone 5, of course:

• Siri is more accurate, so now all the bandwidth users waste will be put to slightly better use.

• 4G LTE is the base protocol for iPhone 5s, offering much faster connection speeds than ADSL--when and where LTE is available, of course (which is in very few places, so far).

There are a couple of good, IT-centric reasons not to use the iPhone 5, too. The one with the biggest impact on the network is that the data-hogging iPhone isn't the only device iPhone users carry, and likely isn't the only data hog. So iPhone 5 users will drag down the performance of networks lacking the endless network-upgrade budgets of major carriers.

There are also plenty of security concerns, even apart from issues that have been widely publicized: the growing body of malware now available for iOS and the increasingly good odds that an end user will use the large onboard storage, lack of full-device encryption, and the likelihood that users will indulge a penchant for convenience by turning off most of the security so all the data is available when the iPhone is left on the seat of a commuter train.

None of those things will slow the influx of iPhones or the extra load they put on your network. One way or the other, you're going to have to deal with that.

Despite all its drawbacks, contractual traps, performance issues and misperceptions, the iPhone 5 should quickly become the fastest-selling gadget of all time, according to Bloomberg, which predicts Apple will gross $36 billion in new iPhone sales from it.

With all its drawbacks--including the decision by Apple not to give customers a free cable that uses the newly designed proprietary data port on the iPhone 5 the way it did with every other edition so customers could buy one for $28 each instead--the iPhone will continue to get more popular and continue (justifiably) as the poster child for consumerization and BYOD.

Network managers have no more real choice in how or whether to deal with all the nonsense than anyone else in IT, as long as the iPhone's glamour outshines its reality.

IT will have to continue compensating for the weaknesses of the iPhone and effort of carriers to be difficult because, as Huffington Post's Neil Katz points out, millions of people are willing to pay full price or change carriers just to get their hands on an iPhone 5, even if they don't really know why.

Welcome to the next-generation downside of BYOD and consumerization.

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