Cracks form in Telstra-Apple relationship

Summary:Telstra chief executive David Thodey last week said there were problems in the telco's relationship with notoriously demanding manufacturer Apple and criticised what he called the company's lack of openness, in a speech in which he praised Google and demonstrated Telstra's upcoming Android tablets built by Chinese vendor Huawei.

Telstra chief executive David Thodey last week said there were problems in the telco's relationship with notoriously demanding manufacturer Apple and criticised what he called the company's lack of openness, in a speech in which he praised Google and demonstrated Telstra's upcoming Android tablets built by Chinese vendor Huawei.

David Thodey

Telstra CEO, David Thodey (Credit: Ben Grubb/ZDNet Australia)

"We are Apple's largest customer in Australia, yet with Apple we are still working through some areas in how to work," Thodey told a lunch held by the Australia-Israel Business Council last week. "We need to be more sophisticated in our view of our relationship with a lot of companies."

Thodey added that the iPhone ecosystem was "quite contained", describing it as a "walled garden".

Apple is known to set stringent conditions on the way that it works with telcos globally and in Australia. For example, whenever the US giant has launched one of its iPhone devices in Australia over the past several years, or the iPad this year, Apple is believed to have prevented Australian telco partners from releasing any details of pricing until the last couple of days before the launch.

In Australia, Apple also insists on servicing all of its hardware defects itself, which has led to telcos like Telstra leaving the company's handsets out of their normal warranty processes. And the company does not allow telcos to take a cut of software sales through its App Store or to customise its handsets as other manufacturers do.

Telstra sells plans for the iPad, but last week it also revealed it was planning to sell a line-up of Android-based tablets known as the "T-Touch".

At the lunch, several dozen attending executives raised their hands when Thodey asked the audience who currently had an iPad, including Fujitsu Australia chief Rod Vawdrey and Alcatel-Lucent's local leader Andrew Butterworth.

The Telstra CEO then held up one of the telco's T-Touch devices, confirming it was manufactured by Huawei. "I think you'll see quite a few of these coming out," he said.

In comparison with Apple's ecosystem, Thodey said Google was more open, although it still had some way to go. "I won't say Google is open, I would wash my mouth out if I said it was open, but it's more open than an Apple world," he said.

Thodey said over the past 18 months, the biggest changes in consumer technology had come from Apple devices, the iPhone and iPad. However, he said that within a year he expected Google's Android platform to have caught up. "It will probably be equal," he said.

In comparison with his company's difficult relationship with Apple, the Telstra chief said his company had a more multifaceted relationship with Google, dealing with the company from an advertising side with its Sensis directories division, for example, as well as on the Android platform and so on.

"We are working through that, and trying to work out how to best position [ourselves]," he said, noting that Telstra itself needed to be more flexible, but that it would be "very, very dangerous" to ignore how the developing dynamics of the market.

In a wider sense, Thodey said the idea that Telstra was just a provider of "dumb pipes" delivering other people's applications over its network was false.

"One of the things that people say to me is that David, you're just the dumb pipes of the world," he said, noting there were "people in our industry who want the internet to be free" and were building platforms on top of the internet. But Thodey said Telstra had calculated there was more compute power in its networks than in any corporation in Australia.

"Wash your mouth out if you say 'Telstra is just dumb pipes'," he said. "We are very creative, innovative."

Topics: Android, Apple, Google, iPad, Telcos, Telstra

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