PC Magazine - 2009 04.pdf - Libertad Zero - Blog

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The biggest flaw in Apple’s near-perfect iPhone has always been the network it’s on. So as rumors have arisen once more (based on an old story from September) of Apple developing an iPhone for Verizon Wireless, the most reliable cell-phone network in the U.S., the Internet has been going absolutely nuts. Of course Apple wants to develop an iPhone for Verizon. At this point, Apple wants to develop an iPhone for everyone. There’s just one problem: the hideous, mysterious, Faustian contract Apple signed with AT&T. And that one is a showstopper. Apple’s exclusivity contract with AT&T was an attempt to rewrite the eco- nomics of the cell-phone business. This arrangement wasn’t about visual voice mail or even, really, about branding. It was about money and control. In exchange for a bond of blood, AT&T would kick some of its monthly subscription fees to Apple and let Apple control retail distribution. This was radical. This was unique. This was a failure. The iPhone sold well here, but the United States is a fraction of the global mobile market, and international carriers weren’t too comfortable with Apple cutting into their monthlies. It turned out that mobile-phone carriers around the world are much more comfortable kicking in one-time subsidies than kicking back monthly fees. So for the international market, Apple went to a much more normal system of accounting (normal for the cellphone industry, that is), and as a result, the iPhone has reached spectacular sales numbers around the world. 28 PC MAGAZINE DIGITAL EDITION APRIL 2009 SASCHA SEGAN iPhones for Everyone! Along the way, Apple has also learned that tying itself to one wireless carrier damages, rather than reinforces, its brand. This is because the quality of its product becomes too tightly coupled to the quality of that carrier. Notice that in many of Apple’s “later” countries, the iPhone is available on multiple carriers. Apple’s acting CEO Tim Cook has clearly stated that the company is not married to a one- carrier strategy. Apple has also gotten more flexible in regard to pricing and distribution, two major stumbling blocks when Apple first tried to get Verizon interested in the firstgeneration iPhone, at least if you believe Developing a new iPhone for Verizon will take a year or so. But Apple plans ahead: It’ll have that phone ready when its AT&T contract is up. USA Today. Heck, these days the iPhone is available even at Wal-Marts across the country. Apple of 2009, as opposed to Apple of 2006, is much more willing to work and partner with mobile-phone carriers and third-party retailers. Mobile-phone carriers have learned a couple of things in the past few years as well. Everyone’s dabbled with visual voice mail. Phones like the T-Mobile G1 and the Palm Pre have made U.S. carriers more comfortable with phone manufacturers’ taking a starring role in product rollouts and software updates, though Apple takes that kind of control to a new level. Two years have also proved that the iPhone is a unique phenomenon that everybody wants in on. So Apple will put iPhones on everyone’s network, but in the U.S. it will want to put them on Verizon’s first. Verizon is now the largest carrier in the country. Also, Sprint has what Apple would consider an unhealthy relationship with Palm, and T-Mobile has that Google Android thing going on. If the iPhone were to go to Verizon before 2010, Apple would have to build a version for Verizon’s CDMA network. That would have been a great chore back in 2007. Apple isn’t actually that big a company; developing two cell phones from scratch would have been a big deal for it. But Apple is going on its third phone by now, and it has a few years of experience. The company could pull it off at this point. Developing a new phone for Verizon will take a year or so (especially considering the tasks of getting it through the FCC and Verizon’s own hellish network-testing process). But Apple plans ahead: It’ll have that phone ready when its AT&T contract is up. Verizon will likely demand a threemonth CDMA exclusivity agreement, to which Apple will consent. Sprint and T-Mobile will follow after a few months. If the AT&T contract lasts past 2010, a Verizon launch gets even easier. The iPhone could be one of the first devices on Verizon’s new LTE network, which will use a fourth-generation technology that Verizon will share with AT&T, T-Mobile, and dozens of international carriers. An LTE iPhone would eventually be an almost universal device. Apple’s AT&T contract is still shrouded in mystery. All we know about the terms is that the contract is a “multiyear.” Under the most liberal interpretation, that means Apple could be out from under AT&T’s thumb by July. But USA Today reported in separate stories that the contract runs through the end of 2010 or even 2012, which puts the Verizon launch firmly in the LTE zone. I’m pretty sure that whenever that clock goes ding, a whole lot more people will be able to buy iPhones. STAY PHONE-SMART Keep up with the latest on smartphones by reading Sascha’s column at go.pcmag.com/segan.
About a year ago, PCMag.com’s networking analyst walked into my office, put a small plastic box on my desk, and told me that we had a new Editors’ Choice for VoIP solutions: the YMax magicJack. The value proposition was obvious: clear calls anywhere in the U.S., dead-simple operation, and, best of all, the box cost only $40 (plus another $20 a year for service). Sure, it sounded too good to be true, but after a lot of testing, we found that the product actually worked as advertised. Fast-forward a year, and even though the magicJack’s network and firmware have been upgraded, our opinion of the product is considerably lower. The magicJack’s story should serve as a cautionary tale for the entire technology industry. Truth be told, we started getting complaints about the magicJack as soon as we published our review. Not just a few unhappy users, but dozens of them. There were also plenty of poor Better Business Bureau reports. Turns out the primary problem isn’t with the product itself—it’s with the company’s technical support. And for many would-be buyers, the issues that are coming to light are deal breakers. My colleague Sascha Segan has already written about the limits of professional product reviews in his column. Reviewers have products for only a short period of time before they send them back to the vendors. This makes it impossible either to perform long-term testing or to evaluate build quality across an entire product line. In the case of the magicJack, however, we tested four different units over the course of a year. Every time we came to the same DAN COSTA The Case of magicJack conclusion: When it works, it’s great; when it doesn’t, you shouldn’t expect much help from the company. YMax has been very busy since the launch of magicJack in 2007. The company’s aggressive marketing efforts have put its product in the hands of pretty much every technology journalist I know, and the resulting reviews have generally been quite positive. YMax has also blanketed late-night cable TV with ads—stay up past 1 a.m. and there’s a good chance you’ll see a goofy infomercial for the magicJack. The company even placed units into a recent TED conference goody bag and We tested four different magicJack units, and every time we came to the same conclusion: When it works, it’s great. When it doesn’t, don’t expect much help. got its own football game: the magicJack St. Petersburg Bowl. All this press has been a boon for YMax. All told, the company estimates it has sold more than two million magicJacks since the product launched, and it’s now selling them at a rate of 250,000 a month. At $40 a pop, plus annual revenues of $20 a year, that’s a lot of cash rolling in. This also means an enormous user base that needs billing, technical, and customer support services. This is where YMax, like many start-ups, comes up woefully short. YMax simply doesn’t answer phone calls. The company doesn’t list a corporate number anywhere on its Web site and offers no live voice support, only live chat. And even live chat is accessible only after you’ve been repeatedly dumped into the site’s knowledge base. Although the product often “just works,” when it doesn’t, you’re in trouble: Live chat is not an ideal medium for helping a user adjust UDP ports or reconfigure firewall settings. YMax CEO Dan Borislow stopped by our offices a couple of months ago to talk about how the company has grown and what it’s doing to improve customer support. He even let me peek into its chat-based support infrastructure, which consists of real-time instant messaging with service reps in the Philippines, who are always on call and are graded based on their performance. The system looks pretty impressive. In our real-world testing, however, the live chat reps were not helpful. Worse, we were directed to make changes to our system Registry to solve routine networking problems. As tech journalists, we can handle that, but for the average user this is a recipe for disaster. It’s a mistake to think of YMax as only a company that hawks a $40 adapter on late-night TV. YMax is a phone company, and a pretty big one. Yes, it uses VoIP, but its business model is very different from those of Vonage and other cable operators that offer phone service. The magic- Jack service has a nationwide network of media gateways and session border controllers, as well as CLEC (competitive local exchange carrier) certifications in all 50 states. YMax is a huge company with a vast technical architecture to support. Unfortunately, it doesn’t seem to be spending enough to take care of that customer base. Sure, managing the explosive growth that YMax has experienced in the past year would tax any company. But YMax seems to have lost track of its purpose. It isn’t just selling an inexpensive gadget, it’s selling a service. And providing a service requires more than simply placing calls. Sometimes it requires taking them. What’s your experience with the magicJack? We’ve set up a comments section on Gearlog. Click here. TALK bAcK To DAn E-mail your thoughts to dan_costa@ziffdavis.com. APRIL 2009 PC MAGAZINE DIGITAL EDITION 29
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