Verizon, the largest US cell phone service, rejected an exclusive distribution deal for the Apple iPhone because of restrictive terms from Apple. In a USA Today article Verizon says "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, said Jim Gerace, a Verizon Wireless vice president."
Verizon has distribution deals with Wal-Mart, Best Buy, BJ's, and Circuit City. Apple would not allow Verizon to sell the iPhone through those stores...only Verizon corporate stores and Apple stores.
Cingular agreed to Apple's terms and will be the exclusive distributor of the phone for 5 years. The phone is expected to cost $500.
The iPhone is a beautiful piece of art, but I don't think it will be wildly successful in a financial sense. Apple needs huge distribution to amortize the costs and they aren't going to get that with Cingular. Second, the cost is at the high end of the range which will limit its appeal to the masses. Third, processing email on the iPhone will be much harder than on the Blackberry, Q-phone or other keyboard devices. The touch screen is not very effective for typing more than a few words.
This controlled distribution strategy sounds a lot like the original Apple Computer model...Apple stores only, premium price, etc. Maybe Apple is happy with 5% market share in personal computers but I thought they would take a different approach with the iPhone. Time will tell if this is a winning strategy.
