Telstra and Optus nuts over Apple iPad?

Are Australian telcos completely insane for not wanting to sell the Apple iPad when it launches in Australia on 28 May?
Written by Renai LeMay, Contributor

commentary Are Australian telcos completely insane for not wanting to sell the Apple iPad when it launches in Australia on 28 May?


(iPad Case image by Yutaka Tsutano, CC2.0)

The iPhone sold like hotcakes in Australia from launch day, and has revolutionised the mobile phone market in only two short years. Optus capitalised on that opportunity with nicely targeted plans aimed specifically at the iPhone and took a large slice of the mobile market as a result — particularly in the early adopter segment.

Even Telstra, I thought, which can at times appear to be a slow, lumbering elephant, couldn't possibly misunderstand the opportunity the second time around. Wouldn't Telstra and VHA be coming out with all guns blazing, to ensure they won a slice of the big, fat, juicy iPad pie to make up for their relative loss on the iPhone front?

That's why I was shocked by the revelation yesterday that neither Telstra nor Optus would be directly selling the iPad from their retail stores. (We don't know about VHA yet, which says it will be unveiling plans next week).

Don't they want to make money? What the hell is going on here?

And then it hit me. It's not that Telstra and Optus don't want to sell the iPad. The problem must be that Apple has simply cut them out of the loop. If you look back on several revelations made by the telcos over the past few months, this theory starts to make a lot of sense.

Firstly, there was the news broken in late April by MacTheMag that Apple was cutting tier two resellers in Australia — over the long weekend they received an email letting them know they were no longer permitted to sell Apple hardware. This, taken by itself, is not so much of a big deal — most of Apple's major resellers in Australia were still on the books.

But there is also the noticeable reticence by Telstra, Optus and VHA over the past few months to say anything at all about the iPad apart from the fact that they would be selling dedicated iPad pricing. I and others had chalked up the telcos' silence on the iPad as the normal effect of Apple's reality distortion field.

The telcos, the thinking went, were so scared of Apple that they didn't want to say anything and jinx their relationships with the iconic technology supplier. But what if the opposite was true? What if all along, all three telcos knew for a fact that they wouldn't be selling the iPad in Australia and simply didn't want to publicise this embarrassing fact?

At this point, this theory seems more than likely.

The question is — why would Apple cut such a massive retail channel out of its Australian sales strategy? And yet again we have a recent news story to give us a hint into that answer.

Just last week iTnews revealed that Apple had obtained a remarkable special treatment in a new court undertaking between the Australian Competition and Consumer Commission and VHA over the length of phone warranties. Mobile carriers will now have to offer 24-month warranties on handsets bundled with 24-month plans. But one hardware vendor was left out of the agreement — Apple. Why? Because Apple prohibits VHA from servicing iPhones at its service centres. Instead, VHA has an agreement with Apple whereby those customers with faulty iPhones out of warranty can buy a refurbished iPhone for $288, iTnews reported.

Reading between the lines here, it is relatively easy to see that Apple has a major problem with Australia's mobile telcos. Not when it comes to selling iPhones through their retail outlets, but when it comes to servicing them. It is, quite simply, a pain in Apple's ass for it to deal with telcos constantly repairing faulty iPhones — Apple would rather take care of all returns itself.

It strikes me as likely that Steve Jobs, in thinking about Apple's long-term future, would prefer that telcos stick to doing what they do best — running their network — and get out of the business of selling handsets and other devices that access mobile broadband networks alongside telco services. Starting with the iPad.

It's been hard to know precisely how the iPad will be sold outside the US, as Apple has been quite miserly in terms of releasing information on that front. But examining the situation internationally, it appears as if other countries' telcos are also being locked out of the Apple eco-system when it comes to the iPad.

There's just one problem with this: the company's apparent decision to lock telcos out of the iPad buying chain will cause annoyance with consumers.

There just aren't that many Apple stores, and creating a situation where telcos are not able to assist with servicing or selling Apple mobile gear such as iPads (and, eventually iPhones?) will gradually cause a significant amount of angst towards Apple as consumers won't be able to easily get their equipment fixed.

There is also the cost factor. If you can't buy an iPad from a mobile telco along with a two-year plan, you can't have it subsidised and have the cost amortised over several years of a contract. What this means is that customers will be paying the full upfront cost of iPads when they buy them.

Now I don't want to give people the wrong idea. Sometimes Australia's telcos are simply a pain to deal with and some people will love it if it truly is Apple cutting them out of the chain. Maybe there is also some value in the argument that the iPad is more like a laptop and should be sold by Apple itself.

But like so many of Apple's control freak initiatives, many people will find themselves turned off by what appears to be yet another Steve Jobs idea that will give them less options than they're used to.

It takes a special sort of company — unique, almost — to be able to have its cake and shoot itself in the foot at the same time.

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