Strategy Differences Emerge...

Verizon Wireless, the No. 2 U.S. cellphone carrier, passed on the chance to be the exclusive distributor of the iPhone almost two years ago, balking at Apple's rich financial terms and other demands, says USA Today. Among other things, Apple wanted a percentage of the monthly cellphone fees, say over how and where iPhones could be sold and control of the relationship with iPhone customers, says Jim Gerace, a Verizon Wireless vice president. "We said no. We have nothing bad to say about the Apple iPhone. We just couldn't reach a deal that was mutually beneficial."

We don't know what deal Cingular struck with Apple. But there's a difference of opinion here about how far one can go in partnering with strong partners bringing assets into a relationship with a service provider. The cable industry decided sometime ago it couldn't partner too closely with Microsoft for advanced set-top boxes because customer control was at stake. at&t is making different decisions. Verizon seems to have taken the cable approach, at&t perhaps has taken a similar approach to its Yahoo! and Microsoft partnerships.

Some will say Verizon and the cable companies acted to maintain customer control. Others will argue at&t is taking a more open and collaborative approach. It isn't clear yet which is the better path, or whether either path will ultimately prove to be better than the other. It simply is worth noting a difference in perspective here. One approach offers more control, at the risk of less innovation. The other offers more innovation at the risk of losing at least some customer control.

Perhaps it is enough to note that The Yankee Group expects more purchased infotainment content to be supplied by "off deck" providers compared to the walled garden "on deck" interfaces used by mobile providers, over time. The same sort of process should be at work in just about all phases of wireline service provider offerings as well. Over time, more value will be contributed by partners, even as walled garden offerings controlled directly by service providers are created.

Leaning towards open and collaborative efforts, even at some risk, seems like a good idea.