Cracks form in Telstra-Apple relationship

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.

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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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12 comments
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  • I think Telstra needs to understand (because they already know) that an open programming platform does not mean an open business management platform, they are 2 completely different things.

    Turn this around and I don't think anyone will be happy if someone else runs their business.
    Apple keeps secrets from their consumers all the time.
    That's how they run their business.
    It's a pity Telstra cannot show any corporate appreciation because they don't get their way with other companies.
    But, then again it's Telstra.
    cootified
  • Telstra just want to have the cake and eat it themselves per se.

    Whereas the rest of the pack like android phones and what have you are manufactured by independent manufacturers which are fighting for the customers have to depend on telstra to sell their products so they are more amicable and easily manipulated.
    AdanC
  • Apple's attitude of "You vill dancen to mine tune" has ensured I will never purchase any of their hardware.
    grump3
  • "We are Apple's largest customer in Australia..."

    Okay, I see your problem. Repeat after me: "You are not Apple's CUSTOMER". You are a business partner. The Apple customer is the customer who bought the Apple product.

    Apple's main concern is not your comfort and needs because you're not the customer. Apple is more concerned with the person who bought the phone from you. You are a business partner meaning if you see the profit of selling a well designed product that does what the customer wants, then you're free to sell it.

    There is something else you need to learn Mr. and Mrs Telco: That person who bought that iPhone or iPad is also YOUR customer and not the victim of your evil plot. Maybe its time to take a cue from Apple and actually cater to the customer's needs instead of thinking of the customer as some sort of ATM cash dispenser you can use to fatten up your bottom line.

    I've heard this complaint over and over again. Telcos complaining that "Apple doesn't cater to our needs". These needs usually include the ability to create their own app store, so they can force customers to go there and pay the telco for the apps. The ability to load impossible to remove crapware from the phone because somebody paid them 40 pieces of silver to put it on. And, the ability to decide what features the customer should and shouldn't have on their device.

    I know it's a strange position for the telcos to be in: Customers come into your store with fat bulging wallets and here's Apple preventing you from picking their pockets as if that's some sort of crime! But, maybe if you take a few lessons from Apple, you'd be like them: One of the most admired companies in the world instead of being with the rest of the telcos who are one of the most despised business groups in the world.
    qazwart
  • Best. Reply. Ever.
    Kabal-a05ff
  • QUOTE: "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."

    CORRECTION: Consumers are Apple's customers. Not the Telcos. Thus Thodey has a lot to learn. Telstra is simply trying to make more money off Apple's customers - such as by wanting to customize the iPhone, wanting to put apps in the iPhone, wanting customers to pay Telstra for apps. Telstra wants to think it is Apple's customer. But it is not. Consumers are Apple's customers.
    jameskatt
  • "Wash your mouth out if you say 'Telstra is just dumb pipes'," he said. "We are very creative, innovative."


    What is it with Telco's and their fear of becoming 'dumb pipes'.

    'Dumb pipes' have given us clean water & sanitation for many decades. The utility of 'dumb pipes' is responsible for many of the increases in lifespan and health. It is one of the keys to civilization.

    Telco's need to realise their strength is in their networks, not in additional services or added value via the crap they insert onto devices. 'Dumb pipes' are something to value instead of fear, they connect the world, whereas the additional products & services they dream up are almost entirely worthless.

    Stick to the job you know & do it well, leave other companies to do their do best.
    Drudus
  • Let me begin by saying how much I admire both of these companies. Okay, that's a lie, I hate them both. Apple, because they are so closed & their boss is a jerk who stated when the iPhone's aerial was found to be faulty said that all smartphones have that problem. He lied basically! The guy is a liar & therefore a jerk.

    As for Telstra having a go at Apple for being closed, what a bunch of hypocrites, especially Thodey. I wouldn't get a Telstra anything on the base that it firstly has to be 850mHz & therefore can't be used with any other reasonably sized provider. Everyone else uses 2100mHz & that includes most providers overseas. So screw you big T. Secondly, I am positive you'll be putting some of your own non-removable software onto anything Android. Thirdly, until your board proves that it will actually offer a reasonable service for a reasonable price with reasonable support, I wouldn't advise anyone to go near you. You are Telstra & therefore not to be trusted.
    alfielee@...
  • @Rex: What is your novel admiration for 2100Mhz as opposed to 850Mhz? Is it because it's "bigger"...or do you work for one of the dinosaurs using the old frequencies because they're too cheap to provide a modern (world leading) network and sell stuff (service) they don't/can't provide? Do you want a phone that also supports another 15 year old technology (CDMA) because several (mostly third world) telcos still use that? Should we not improve technologies because someone is using 2G or analogue or even PSTN?
    Keep trying to use whatever you're ideologically stuck to - it doesn't actually bother anyone else. If anyone thinks you have a usefull point of view, I'm prepared to sell them a large coathanger and stocks in MS.
    Sane people prefer stuff that works as advertised (of which there is remarkably little). Do you own a Trabant and pretend it works like a Honda?
    You are right about telco crapware though, Android is very open to that.
    macyourday
  • remarkably, the Apple iPhone supports both 850 and 2100 (900 too), go figure!
    gikku-2ce6c
  • I wonder if Telstra's attitude to Apple would change if Apple allowed Telstra to put their crapware and logo all over the iPhone and market the phone how Telstra wanted to?
    Phormic
  • Telstra has a fantatsic network with great coverage, but it is essentially a carrier & not a content provider for the iPhone, let Apple do it's thing & Telstra do your thing. If Telstra was to loose the iPhone I would certainly change carriers to stay with the Apple product. Telstra should concentrate on getting it's blling system in order before telling another company how to run their business.
    mgmaher