Most people will say that the iPhone is a fantastic device. Then they will continue to say that the App Store review issues and ATT’s network really make it hard for them to truly take advantage of the capabilities of the phone. This love/hate relationship with the iPhone parallels the same relationship that Apple has with its users. This is one reason that the iPhone has not completely taken over the mobile device market. Granted they are continuously growing and deals with other countries telecom companies, like the China Unicom deal, will further spur that growth.

However, the current growth has been limited due to some very interesting decisions. First, Apple decided to give exclusive rights to ATT. Kent Newsome has an interesting post about how Apple’s partnership with ATT could be the worst business decision ever. He sums it up nicely in one paragraph:

At this point, we don’t know who to blame.  Is this Apple being paternalistic and arrogant?  Is it ATT being hapless?  Or is it some combination of the two?  I don’t know how to allocate all the blame, but that’s OK because there’s plenty to go around.  Here’s what I do know.  When the iPhone and the ATT partnership was launched, there is no way the executives involved intended things to turn out like they did.  This phone was supposed to change the world.  The fact that it had the impact it did in spite of the multitude of problems says more about the cult of Apple and the design of competing handsets than it does about the execution of the iPhone launch.

The second interesting limitation is that you can not freely install any application, it must be reviewed by Apple and made available in the App Store. Kent does mention these issues as well, saying that developers would likely be more willing to write applications for a platform where the application would be readily available. Instead many developers fear the delay of approval, sometimes lengthening into weeks.

What if Apple had been open from the beginning? Many mobile phone manufacturers make slightly different models for each carrier in order to spread their revenue opportunities over a wider subscriber base. Given the changes between each model are fairly minor there is likely more potential revenue than the costs of manufacturing each model. Imagine if the iPhone was available from ATT, Verizon, TMobile and Sprint. Would the iPhone have double their current marketshare? Would they have as much as triple? That is not probable unless the locked phone problem and the App Store debacle were corrected.

Continuing our fantasy, let’s assume that the iPhone is available on the major US carriers. It is an open phone, much like any other mobile phone, where you can install any application that you would like. To further sweeten the dream, these applications are all readily available on the App Store without any intervention from Apple. Sure, you have to filter through the spam and malware applications, but crowdsourced reviews and the eventual malware detection in the store will limit any danger.

At this point, you have a phone that is typically considered the finest mobile device there is, on any major US carrier, with the ability to install any application. This phone would quickly dominate the mobile phone market. By limiting the availability, Apple has eliminated this scenario for the foreseeable future, and that is a good thing. Why is this good? First, the limitation means that it does not become the defacto standard for mobile devices. This means that competition in the near future will be fierce. We already have the Blackberry Storm, as well as the Android based devices. When competition is that tight, innovation tends to rule, and customers win in that scenario. By not becoming the standard device, we have remained free of what has become an “Apple Dictatorship”.

If you do not agree, take a look at the Inquisitr post by Steven Hodson that I linked to earlier. This quote says it best:

For all the life long fans have given to Apple there will be a breaking point as dissatisfaction with this silent treatment from the company that many of them love reaches a breaking point. It might not be a breaking that will turn that fan base away from the company but it is one that may seriously discourage any new people from taking up the Apple mantra.

Given the fact that the iPhone is probably the best phone available, Apple could have ruled the mobile industry. Their own decisions have set the rules, but in other companies favor. Their failings and missteps will not be their downfall, but it definitely stopped them from becoming the Microsoft of the mobile industry.

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