I held my ground with Verizon, but many people eagerly switched over to AT&T to get an iPhone — many of those probably abandoned their Verizon accounts and gladly paid the termination fee. You can be sure Verizon was keeping count. And you can be sure this is what Apple told Verizon would happen when Apple refused to accept Verizon’s terms for the iPhone launch. AT&T was just a pawn.

This also puts into perspective Apple’s cracking down on open iPhones — it’s not that Apple doesn’t want iPhones used on every cell network — it’s just that they needed to break the back of the industry first, using consumer demand as a blunt instrument.

Steve Jobs always has a plan.

Find more about diamond jewelry.

At Silicon Alley Insider, Dan Frommer observed:

But if you’re a Verizon subscriber drooling for one of Apple’s iPhones, don’t get your hopes up: the iPhone — and its exclusive U.S. carrier, AT&T (T) — use a different kind of cellphone network, called “GSM.” Apple (AAPL) would have to design a new phone to work on Verizon’s (VZ, VOD) “CDMA” network.

What makes you think they aren’t already working on one?

Of course Verizon’s move isn’t just about the iPhone — Om details the other factors (and is rightly skeptical — there’s probably a lot more drama to unfold). But this unprecedented move by Verizon a mere five months after the launch of the iPhone is unlikely to be a coincidence.

To quote Om once more, open carrier networks means “Bye-bye subsidies” for handsets — you can see Steve Jobs smiling.

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There’s nothing wrong with the mobile web, you idiot. Only a complete moron like you who doesn’t know how to use the mobile web would think that. It’s not the mobile web that sucks, it’s YOU.

From geeky fans of a technology, this attitude is certainly rude, but not particularly consequential in the grand scheme. But when developers of mobile technologies, applications, and platforms are openly hostile towards users, it’s downright troubling.

Why? Because the USER IS ALWAYS RIGHT. Any developer of technology who wants users to change to suit their technology instead of creating technology that empowers users to do what they want is playing a very dangerous game.

This week also had another striking example of overt hostility towards users — from Apple. A new version of software for Apple’s iPhone was released on Friday, which wiped out all third-party applications that users had added to their phones and that rendered inoperable — “bricked” — phones that had been unlocked for use on carriers other than AT&T.

The relationship between the owner of a mobile phone and the wireless carrier for the phone has always been hostile — Verizon, for example, has been notorious for disabling or limiting some of the capabilities of the phones they sell for use on the Verizon network, e.g. Bluetooth file transfer.

Preventing the unlocking of iPhones is understandable at one level, because Apple shares revenue with AT&T. But render these unlocked phones useless — as well as wiping out third-party applications that add functionality many users thought was missing from the iPhone — was an overtly hostile act by Apple towards its users.

Much of the problem it seems stems from the wireless carriers. I can put any third-party application I want on my MacBook Pro because the relationship is only between me and Apple. Apple doesn’t care how I access the internet because the business models of Apple and the ISPs I use don’t depend on the hardware accessing the network via an exclusive channel.

It may be that certain technology and contractual factors gave Apple no choice but to take an overly hostile act towards its users. And it may be that I’m not a savvy user of the mobile web.

But that’s not the issue. The issue is how users PERCEIVE the way you treat them — when they are frustrated by your technology or want to do something that you didn’t intend for them to do.

Providers of technology, applications, web-services, etc. need to understand their users needs at a deep level, understand what users want and need to accomplish, and then help them do it ways that make the users smarter, faster, and more successful. In short, to quote the deeply-missed Kathy Sierra — help users kick butt.

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Ubiquitous high speed access is a new experience for me. I’ve done this drive before with AT&T and T-Mobile, and the continuity of service is spotty in some areas, nonexistent in others. If I’d had an iPhone with me, I would have been SOL — no tethered modem, no WiFi to “hop” onto when the AT&T network was unavailable.

The New York Times is reporting today that a security firm has found a way to hack into an iPhone to steal personal data — one of the ways to exploit the security flaw is through WiFi.

As I write this, I’m sitting in Panera Bread enjoying free WiFi, ignoring the fact that my computer is probably hackable right now.

My point with all this? The iPhone is a breakthrough mobile device. My MacBook Pro is a fantastic, albeit somewhat less portable mobile device. But without the kind of secure, always-on high-speed Internet access that I enjoy while sitting at a desk, with a router plugged into the wall, these devices can only deliver a fraction of their value.

“Web 2.0″ has been driven by wide adoption of broadband access in homes and businesses. Now everyone’s looking to mobile for Web 3.0. But it’s simply not going to happen until high-speed Internet access is always on, plug-and-play, SECURE, and truly UBIQUITOUS, just like I enjoy at home on my encrypted WiFi network (although who knows how secure that really is).

Google knows this — that’s why it’s bidding $4.6 billion for the FTC auction of the old 700MHz wireless spectrum. The condition?

• Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
• Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
• Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
• Open networks: Third parties (like internet service providers) should be able to interconnect at any technically

feasible point in a 700 MHz licensee’s wireless network.

Google wants to make Internet access like the electrical outlet next to my table that I’m plugged into for free.

Until that day comes, mobile devices will be symbols of unrealized potential, waiting for the mobile network to catch up.

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It makes perfect sense, though. They are all on an enterprise Blackberry server, and the iPhone clearly didn’t provide enough incentive for them to go off the corporate grid.

But I don’t think this a failing on the part of Apple or iPhone. The first generation iPhone is not intended to compete with the Blackberry. It’s intended for early adopters, Apple fans, and independent creative and tech professionals, i.e. Apple’s core users. Apple has already show that this group is capable of buying A LOT of iPhones — and they are willing to pay A LOT. And as for the AT&T network, this group would have bought an iPhone even if it only worked by connecting with a piece of string.

By not focusing on business users, Apple was able to focus on developing iPhone’s core innovations, e.g. full touch screen, full web browser. But that doesn’t mean that Apple has no interest in the business market (or in the market of price sensitive consumers). I would guess that future generations of will be designed with more business appeal — the big challenge will be breaking the lock that Blackberry enterprise servers have on business users. The first step is probably to woo business Treo users.

A few notes on my favorite topic of iPhone’s network limitations. First, I realized on this trip what a deal breaker it is not being able to use the iPhone as a tethered modem. At the conference, the hotel’s WiFi was locked behind an overpriced pay wall, so I just used my Blackberry as a modem through Parallels — which was nice and zippy on Verizon’s EVDO network. At the Atlanta airport, I discovered that WiFi is only available through individual providers for $8 and up, so again I used my Blackberry.

The notion that iPhone can simply “hop” onto WiFi to escape the slow AT&T data network is tempered by the reality that doing so means taking out your credit card more often than not — a raw deal if you’re already paying for Internet access through your wireless carrier. (I’m writing this in Panera Bread rather than the Starbucks down the block because Panera has free WiFi.)

That concludes this week’s iPhone reality check.

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For those of you still wondering whether Publishing 2.0 has suddenly become a gadget blog, I can assure you there is method to this iPhone madness — there is not a publisher or media company who shouldn’t be tracking the iPhone closely. The iPhone is a window into the future of media. If you’re in media, and you haven’t at least played with an iPhone, it’s as mandatory as spending time with this interweb, series of pipes thing.

Ok, here are a few of my observations:

1. The iPhone interface is truly like nothing you’ve ever seen.
   • Like using a Mac back in 1984 (which I did — my father bought the first one).
   • 100% touchscreen is the only true multimedia UI, i.e. the only UI that works well (although not always optimally) for text, images, video, web pages, etc.
   • Resizing the screen with the two finger pinch and scrolling with a finger “flick,” as if you were working with a physical object, fundamentally changes the way you interact with a computer screen.
   • Browsing album covers is a deeply nostalgic experience.
   • Visual voicemail just rocks (to skip this message, press…).
2. The 100% touchscreen interface still needs work.
   • Placing your finger over the content you’re using in order to scroll it can be annoying because, for example, you can’t see what you’re doing, and on web pages, you can accidentally click a link.
   • It would be nice if you could easily activate a small dedicated scroll bar on the side to use if sticking your finger in the middle of what you’re doing doesn’t happen to be optimal.
   • Scrolling zoomed in web pages, especially those that have been sized to make the text fill the screen, often makes the page slip back and forth laterally — there should be a way (maybe there is) to lock the web page laterally and just scroll vertically.
3. The keyboard still needs work.
   • I trust Walt Mossberg, who had a breakthrough with the keyboard after five days of frustration — I trust that once you get in a groove, it works well — but when you first try it, it’s a train wreck. Everything I tried to type came out has gibberish.
   • You also have to point your thumbs directly down rather than rest them comfortably against a mechanical keyboard.
   • Rotating the iPhone when using the keyboard for email or notes doesn’t switch to landscape and the bigger keyboard — you’ve got to be kidding!
4. The iPhone isn’t optimized for text-centric use.
   • This may be heresy, but if you just want to read text articles, it isn’t necessarily an advantage to load the “real” version of a web page rather than the mobile version.
   • If I just want to read the NYT headlines and the text of the articles, why do I need to deal with the layout? Why reproduce the experience of a 15 inch screen — or, heaven help us, a print newspaper — on a 3.5 inch screen (which, sorry, is still pretty darn small)? Why not optimize for the device dimensions? (Maybe Steve Jobs spent too much time hanging out with the NYT front page print editor, given the cameos in all the commercials.)
   • When you load a web page with a dense, wide-screen layout, the text is SMALL, and it can be hard to get your bearings.
   • You constantly have to double tap to get the main text to fit to the screen without running annoyingly off the edge.
   • Removing the physical keyboard to provide full-screen viewing was a brilliant move, but it’s also a declaration that text input is less important than image viewing — that doesn’t mean text input doesn’t work once you get the hang of it, but in a mobile device with finite space, everything is a trade-off.
   • Given that 95% of my mobile device use is phone, email, and text viewing on the web, I’m not sorry I went with the Blackberry on Verizon — it’s optimized for text — and you can flick your thumb across the new Blackberry trackball same as your can on the iPhone screen; if I used my mobile device mostly for images, multimedia, and rich web-browsing, I’d be aching for an iPhone.

Oh, yeah, AT&T (at least in Tysons Corner, VA) is SLLLLOOOOWWW….zzzz….oh is that the web page I was loading? Still, once the page is loaded, it’s darn cool. (Ride ‘em hobby horse!)

That all said, there is more innovation in this one device than most companies can muster in a lifetime — I’m sure I won’t be able to resist buying a future generation that works out the kinks and is finally on an optimized network.

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So here’s a quick reality check. From iPhone user Staci Kramer at mocoNews:

– maps and directions that disappear from view when I lose a good signal.

– no step down (at least none that I’ve seen go into action) to formatted-for-mobile pages when the speed isn’t good enough. Several times, I’ve been able to load a perfectly usable page through the AT&T Edge network on my usual device while the iPhone is stuck in a loading loop.

– YouTube can be a lot of fun but it also can disappear, like the maps. I was in the middle of a demo over the weekend when the OK Go video refused to go. Then again, Go To My PC wouldn’t go either, surprising my mom, who assumed I’d be able to log right in and fix something with my trusty iPhone.

A next generation web browser and UI really DOES need a next generation network to deliver the next generation mobile web.

When I used AT&T and T-Mobile, I used to get poor or lost signals all the time. On Verizon, it NEVER happens — the iPhone would be positively transcendental on Verizon.

But how well is the iPhone selling despite this, relative to all those other “innovative” cell phones like the RAZR?

Apple over the weekend sold more than 700,000 iPhones to rocket past analyst predictions and shatter AT&T’s record by selling more iPhones in three days than Motorola’s RAZR did in its first month. Apple’s supply of iPhones depleted at more than half of its retail stores less than a week after the cellular handset hit shelves at 6:00 p.m. ET last Friday night. Buyers cleared out both Apple and AT&T stores in 10 states, with 95 of 164 stores selling out on Monday night, according to Bloomberg. Apple stores located in Hawaii, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, Oklahoma, Rhode Island, Utah, and Washington state sold their entire stock of iPhones yesterday, and AT&T sold its entire stock at almost all of its 1,800 stores.

Hmmm…a phone that sells out on the least desirable network, shattering its sales record. I wonder if Verizon is feeling just a wee bit of pressure.

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To close out this all-iPhone weekend, I thought I would share this error message I got when I clicked on this referral link in my stats:

Someone is reading Publishing 2.0 on an iPhone. I am humbled.

Now back to our regularly scheduled programming.

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Because Jobs knows that everyone will buy an iPhone anyway, even if they hate the network. And that, as Umair points out, shifts all the power to Apple.

Apple will significantly improve the already revolutionary iPhone in subsequent generations, and lower the price, as they did with the iPod. With each new release, more and more people will look at Verizon and Sprint, who don’t carry the iPhone, and say, WTF!?

The real battle for control is between Verizon, which has hands down the best network, and Apple, which now has hands down the best handset. The tide will turn when die hard Verizon customers start switching in significant numbers to AT&T to get an iPhone. People like me, who stood firm on the network is more important principle, will crack under the pressure. There will come a tipping point, then, when the cost to Verizon of refusing Apple’s terms will be greater than losing customers to the iPhone.

What Apple really wants is to sell unlocked iPhones that can be used on any network — and I believe they will pull it off. Thus, Apple will do to the wireless carriers and other cell phone makers what they did to the music industry and makers of digital music players — they will completely take over.

From there, Apple will turn its attention to the last great battle — PCs. Once you own both an iPod and an iPhone, you’re going to look at your Windows PC and ask yourself — what am I thinking?

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Would anyone stand in line for your product?

A question everyone else in tech/media should ponder.

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Here’s the bottom line — buying an iPhone is like buying a MacBook that only supports dial-up access. Sure, it rocks for offline uses, but this would be a deal killer for nearly any laptop buyer. How can iPhone reviewers tout the web browser as the “real dazzler” and the “closest thing to the real Internet” when it crawls along like a 1200 baud modem?

But it’s not just about the slow EDGE network for mobile web use. As useful the web use is, the BIG problem with the network is first and foremost about PHONE service. It doesn’t matter how revolutionary the phone software and phone user interface are — a dropped call is the same on an iPhone as it is on one of those throwaway phones you get for free with new service.

Here’s a great line from David Pogue’s iPhone FAQ:

How snappy is the real iPhone, compared with Apple’s ads? It’s identical, with one exception: Apple never shows the iPhone when it’s on AT&T’s cellular network. That would just be embarrassing.

Embarrassing indeed. What’s embarrassing is that Apple pulled out all the stops to make the iPhone a truly revolutionary device in terms of form and function, but they couldn’t cut a deal with Verizon. What a pity.

And Steve Jobs knows it. That’s why he went on the offensive today with AT&T’s CEO Randall Stephenson to try to address the network issue. According to Jobs (via WSJ):

You know every (AT&T) Blackberry gets its mail over EDGE. It turns out EDGE is great for mail, and it works well for maps and a whole bunch of other stuff. Where you wish you had faster speed is…on a Web browser. It’s good enough, but you wish it was a little faster. That’s where sandwiching EDGE with Wi-Fi really makes sense because Wi-Fi is much faster than any 3G network.

Yes, WiFi is great, but I used the web on my fast Verizon Wireless connection today numerous times, and not once was I near a WiFi hotspot.

But that all aside — Steve, what about the dropped calls and the dead zones? What about the PHONE?

As John Markoff puts it in the NYT times coverage, “The lack of appeal in AT&T will be one of the biggest unknowns as the product rolls out.” To say the least. Nevertheless, there’s a good chance that iPhone sales will live up to the hype as well — there are more than enough people suffering from iPhone blindness who will wait in line to buy a crippled revolutionary device.

When the iPhone is available on Verizon, which it will be eventually, I’ll be the first in line. (It will 3rd or 4th generation by then and will REALLY rock.)

UPDATE

Here’s Walt Mossberg momentarily suffering from iPhone blindness before he finally comes to his senses regarding the downside of the AT&T network:

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Two minor issues that contributed to my decision were the lack of a mechanical keyboard and the lack of push email. But I could have gotten over these. For me, the big deal killer was the network, i.e. the iPhone is only available on AT&T/Cingular.

As Walt Mossberg and Katherine Boehret put it:

But the iPhone has a major drawback: the cellphone network it uses. It only works with AT&T (formerly Cingular), won’t come in models that use Verizon or Sprint and can’t use the digital cards (called SIM cards) that would allow it to run on T-Mobile’s network. So, the phone can be a poor choice unless you are in areas where AT&T’s coverage is good. It does work overseas, but only via an AT&T roaming plan.

In addition, even when you have great AT&T coverage, the iPhone can’t run on AT&T’s fastest cellular data network. Instead, it uses a pokey network called EDGE, which is far slower than the fastest networks from Verizon or Sprint that power many other smart phones. And the initial iPhone model cannot be upgraded to use the faster networks.

I have used Verizon, T-Mobile, Sprint, and Cingular/AT&T in the Washington, DC metro area and in many other cities — Verizon kills the competition. That’s why they can afford not to get taken to the cleaners by mobile device manufacturers offering hot new phones. The reduction in dropped calls and dead zones with Verizon is simply astonishing — it’s as close as a mobile network comes to actually working. And I need my mobile device to function as PHONE as much an Internet device.

Bottom line is: The network MATTERS — a lot. It matters for voice and it matters for the ultra-hyped mobile web. Verizon’s high speed network IS faster — it’s not full broadband speed, of course, but it blows away the slower networks I’ve used, i.e. the kind of slower network the iPhone has with AT&T.

So much of the Web’s promise went unfulfilled in Web 1.0 because the network simply wasn’t ready. Buying an iPhone with AT&T would be like buying a laptop that only supports dial-up.

I still believe the iPhone is a revolutionary product. The Blackberry is a highly functional business device, which is no small accomplishment, but the 8830 doesn’t fundamentally change the way I work compared to the older, more primitive Blackberry I had been using.

The iPhone will revolutionize the mobile web use, including mobile video — but without a network to support it, the revolution is not happening just yet.

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Apple today announced that its revolutionary iPhone? will run applications created with Web 2.0 Internet standards when it begins shipping on June 29. Developers can create Web 2.0 applications which look and behave just like the applications built into iPhone, and which can seamlessly access iPhone?s services, including making a phone call, sending an email and displaying a location in Google Maps. Third-party applications created using Web 2.0 standards can extend iPhone?s capabilities without compromising its reliability or security.

Apple is following what might now be called the Facebook school of application platforms, i.e. dramatically increase the value of your platform by opening it up to third-party developers, who will see it as a boon for growing their own user base and thus increase the value of your platform in the process.

Of course, it’s probably more accurate to call this the Microsoft strategy — Microsoft crushed the OS competition, including Apple, by running away with all the developers. But that was back when the PC was the only platform for applications — now there’s the web browser, web services like Facebook, and other hardware, e.g. mobile devices.

What’s most notable about the iPhone platform is that’s based on “Web 2.0″ standards:

Web 2.0-based applications are being embraced by leading developers because they are far more interactive and responsive than traditional web applications, and can be easily distributed over the Internet and painlessly updated by simply changing the code on the developers? own servers. The modern web standards also provide secure data access and transactions, like those used with Amazon.com or online banking.

While Apple’s Safari-based platform and Facebook Platform are “Web 2.0,” there are far from open — Apple and Facebook are still calling all the shots, and developers are still at their mercy. But one thing, crucially, has changed from the days of desktop applications — Web 2.0 application providers get to update their code instantaneously, and…they get to keep user data on their servers. And we all know by now that data is the Intel inside.

What’s truly ingenious about Apple’s strategy is building the iPhone platform on the Safari browser. On the surface, you’l see complaints like this:

This gives application developers a path to the iPhone, but it falls short of the software development kit that some were hoping for that would allow developers to create native applications for the iPhone.

That may be true, but the browser-based platform gives Apple a backdoor onto the Windows desktop, the same way that iTunes did. iPhone users who become accustomed to using applications in Safari may well migrate to the Safari browser on their desktop, even if they aren’t Mac users. You can see how Jobs is calculating this:

iPod + iTunes + iPhones + Safari = Mac convert

Regardless of how well that math adds up, hat’s clear is that platform companies — Apple, Facebook, and the already super-dominant Google — will dominate the Web 2.0 era (which is still just getting underway).

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Speaking of which, from the genius mind of Loren Feldman at 1938 Media:

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One-size-fits all is tough proposition, because one size will never fit all — but Apple has a talent for fitting MORE people EXTREMELY well than almost any other tech company. I’d much prefer Apple focus on creating great experiences than on supporting a developer community who might pull them in a thousand different directions.

Perhaps Dave would be willing to demonstrate the benefit of open platforms by letting me post on Scripting News — but that would surely kill the experience of Scripting News, wouldn’t it? (Or how about you, Mathew, can I change the layout of your blog to better suit my needs?)

I could also rewrite the end of Casablanca, or take a pant brush to a Monet canvas, or remix a Jimi Hendrix recording, or…if you don’t like any of those, there are lots of other choices. Apple is not restricting anybody’s choice — if you don’t like the experiences they create, there are plenty of other tech companies out there.

UPDATE

There seem to be two arguments against Apple here:

1. Locking out developers is bad for business

Yeah, that lock-in approach to iPod has sure been bad for business.

And how about Google, that other paragon of openness?

2. Steve Jobs is an egotistical control freak, which offends our sensibilities

Yeah, well, get over it.

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The 19th century aesthetistician Walter Pater wrote:

All art constantly aspires towards the condition of music, because, in its ideal, consummate moments, the end is not distinct from the means, the form from the matter, the subject from the expression

Apple and Google are the two companies with the greatest talent for innovation in this spirit — innovation that achieves true “elegance.” Google Search and AdWords are elegant. iPod is elegant.

And the iPhone is indeed elegant. And obvious — true innovation is exquisitely obvious.

Google may be the great money making machine, but as to innovation, we are all living in Apple’s shadow now.

And DESIGN is now a key differentiator at the convergence of media and technology. That’s why Google, with its elegant and obsessively copied search interface design, and Apple, with the virtuoso design of everything it touches, are the dominant forces.

That’s why Jason Calacanis is searching for the top web designers.

Design. Elegance. Simplicity. Innovation. That’s where it’s at.

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