Apple offered Verizon Wireless to become the exclusive carrier in the U.S. of the Apple iPhone but the cell phone carrier refused the offer. Verizon says they couldn't reach a deal that was mutually beneficial:
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. "We said no. We have nothing bad to say about the Apple iPhone. We just couldn't reach a deal that was mutually beneficial."
Verizon's decision to pull the plug on talks sent Apple into the waiting arms of Cingular, which will be the exclusive U.S. carrier for the iPhone. The multifunction device is expected to ship in June and cost about $500.
According to Verizon, Apple CEO Steve Jobs insisted that he have hard control over iPhone distribution.
The problem? While Apple and Verizon stores would have it, Wal-Mart, Best Buy and other Verizon distributors could have been left out. "That would have put our own distribution partners at a disadvantage" to Apple and Verizon stores, Gerace said.
Customer care was another hitch: If an iPhone went haywire, Apple wanted sole discretion over whether to replace or repair the phone. "They would have been stepping in between us and our customers to the point where we would have almost had to take a back seat … on hardware and service support," Gerace says.
It's not sure how long the iPhone will remain exclusive to Cingular in the U.S. but some industry sources claim its five years.
