What the Real Smartphone War Is About

If a blogger says the iPhone is coming to Verizon it is just wishful thinking. If a pundit says the iPhone is coming to Verizon it is mere speculation. If the Wall Street Journal says the iPhone is coming to Verizon it is time to rethink your investment strategy. At least that is the way people are reacting to the WSJ's story that the iPhone will be on Verizon early next year.

Which brings us to the smartphone wars. Right now there is a huge war going on and it isn't really Apple versus Google, Android versus iOS, or even RIM versus Windows Mobile 7. The actual battle is customers versus providers. The notion of you battling your cell phone service provider comes as no surprise. Cell service is one of those have-to-have things, and when companies are maximizing profits on something you see as a must-have you get pissed.

At this point we need a cartoon version of a cell phone user. This admittedly stylized version won't be representative of many, or even most users but Fictional Joe (that is his name) will be representative of the problems a lot of people have with cell service.

Fictional Joe (what were his parents thinking?) sees a cell phone as a necessity. He sends twenty texts a month and every text consists of either "yes," "no," or "about 4:30." Fictional Joe also uses his cell phone for calling. He talks to another human about twenty times a month. His conversations are short and usually consist of "yes," "no," or "about 4:30". Of course, fictional Joe also uses his phone for FaceBook, Twitter and browsing.

Fictional Joe has some serious problems, but the only problem a cell phone provider can really address is the problem of his bill. Since Fictional Joe doesn't want to talk a lot or text a lot he'd like a plan that minimized his charges for those services, but he does like to use the 'net a lot, so Fictional Joe doesn't mind paying a bunch for data transfer.

When Fictional Joe heads to a cell provider he is screwed. To get the data plan he has to sign up for a text plan and, worse yet, Fictional Joe has to pay for 399 minutes of calling time per month he'll never use. Besides, Fictional Joe is semi-smart and he knows that data is just freaking data whether it is a text, a call or web browsing and wonders why the cell providers are so intent on charging him three different times for the same freaking thing.

The reason Fictional Joe and every real person gets charged three times for data transfer from their cell providers is simple: because people will pay it. You can adjust the blend however you see fit, but no matter how you slice and dice it you're paying for data transfer in several different ways. This is the model of the cell service providers and it amounts to: "if we can get you to pay for it (and we can) you'll pay for it!"

Business-wise you have to hand it to the cell phone companies. They sell one thing and manage to charge you three times for it. It is like the electric company charging you one price for your air conditioner, another for lights and a third price for your computer. Nice business when you can get it.

Which brings us to the real race in smartphones. The most important thing to think about when you start considering where the smartphone is headed isn't the chip, the screen or even the OS. The most important thing to think about is the customer.

With the iPhone everything is built around the end user, the last customer. Apple tries to make it as easy for you to use as possible. Apple happily provides iPhone support both in the Apple stores and over the phone (if you can get a signal). Sounds great but there have been valid criticisms about Apple's model. Tim Bray came up with a very nice description of Apple's model:

"The iPhone vision of the mobile Internet's future omits controversy, sex, and freedom, but includes strict limits on who can know what and who can say what. It's a sterile Disney-fied walled garden surrounded by sharp-toothed lawyers. The people who create the apps serve at the landlord's pleasure and fear his anger."

And Tim is essentially correct. This galls the tech savvy. Who is Apple to tell the assembled hackers what they can and can't do with their phone? It's your iPhone if you want to install a password sucking porno app that relies on Flash that should be your call right? Absolutely, but you're not the target market for the iPhone.

Turns out not everyone is a geek who wants complete control of his tech. Most people don't want to be bothered, they just want a solution. To them the lockdown of the iPhone isn't a bad thing, it's akin to the licensing of Doctors.

That doesn't mean there isn't some serious marketing to be done with the model Apple uses. If you want the solution to the iPhone you want Android. It's open!. Well, kind of open. You can do anything you want with it and all, anyone can sell a program for it but none of this makes it better for the consumer. It is surely more enticing for hackers but think like your Grandma for a moment. What does Android or openness do for them?

The answer, for the average person, is that Android's openness does nothing. For the average cell phone user Android phones are the closest thing they can to the iPhone while avoiding AT&T. That said there are some people who love Android. No need to guess who loves Android, we can find out from Google CEO Eric Schmidt:

"The iPhone established a whole new category, but...the Apple model is closed. Same hardware, same applications, same store-a so-called vertical stack. All the other vendors want an alternative, and Apple is not going to give it to them. Along comes this Android operating system, which is a complete turnkey solution with similar capabilities. Most important, we make the software available for free. So all of a sudden, Android becomes very popular with companies like Motorola and LG. We now have more than 200,000 of these phones being turned on every day-in 59 countries. We think Android will end up being one of the small number of very successful mobile devices."

Now the conflict is clear. Android is there not for the last purchaser of the phone, Andoid's customers are cell phone manufacturers. It is easy to see why cell phone manufacturers love Android. Android doesn't cost anything and they are manufacturing companies not software experts.

Here comes the rub: Who is the customer for the cell phone manufacturers? You don't see any Motorola stores and when your LG craps out you don't call LG. The customers of the cell phone manufacturers are the cell service providers. Android might be the greatest mobile OS ever devised but when you're selling it to cell phone providers they'll find a way to screw it up. They'll add Vcast or convoluted hoops to get this or that feature, anything to bleed an extra nickel from you.

We can sum it the entire discussion at this point by noting Apple wants to sell phones to consumers and that consumer is you. Cell phone manufacturers want to sell phones to cell service providers. The thing consumers want out of a cell phone is, unsurprisingly, not the same thing that cell phone service providers want out of a cell phone. One wants a device they can use without any effort and the other wants something that sucks another dollar from those captured with a contract.

Put another way: When you buy an iPhone you are counting on Apple's reputation for a great user experience, when you buy Android phone you get to count on your cell phone provider's reputation for a great customer experience.

None of this makes the iPhone a sure bet or even a better option. They are just different models. If the iPhone ever comes to Verizon you'll find out which model is superior.