Everyone either owns one, has played with one or wants one, the Apple iPhone is the biggest consumer product on the shelves today. The blend of technology and art that delivers one of the most perfect portable computers ever released. Both Apple and ATT have benefited from its strong sales and passionate adoption but there is another side to this story.

Like all strong consumer products there will be copies and look a-likes but as most of us in the iPod generation know, any MP3 player is not an iPod. The iPhone copies will have the same fate. The market anticipates competition and this is why Apple partnered with ATT to distribute the phone in its retail stores and this is why they gave ATT the exclusive USA network rights to the phone.

Apple creates the phone, ATT provides the service with a minimum of a two year commitment at about $45 per month. With ATT as the exclusive network provider Apple is able to take a piece of the monthly service as part of the deal. For every phone sold, ATT bills about $1200 for the service and Apple sells a phone for about $500. Seems like a both win deal. The market place has passionate consumers, and passionate consumers like to consume. But if it were that simple I would not be writing about it!

iPhone Unlocking

There is an underground movement that has gained critical velocity in the last few weeks, this is the drive to “unlock” the iPhone from its service provider and allow it to be used on ANY network. Yep, you heard me. Hack the phone to run on any providers GSM based network, this means that Sprint, Vodaphone, T-Mobile and prepaid users on other networks can all have the sexy iPhone without the two year contract with ATT. They can use their existing cell phone service with a brand new phone.

If you want to understand a little more about iPhone unlocking you can check these movies:

Or this one from one of the largest and most popular technology blog sites out there

Why should I care?

What difference does it make to me if ATT looses their exclusivity on the phone and the iPhone can work anywhere? Honestly there is no reason for you to care. I don’t really care about this little hack but the reason that you should care is because of how vendor relationships can fail.

Follow me on this, who stands to benefit from this? Apple or ATT. Initially this partnership was balanced, it was a good marriage with both sides supplying an exclusive piece. A real both win deal. Now Apple stands to make the greatest gains from this little software hack. Sure they will fix it with a code update, but the cat and mouse game has begun and the vendor / supplier relationship is forever tarnished. In the future another Telecom provider will be less eager to enter into an exclusivity deal with a vendor for a hot product. But remember Apple still wins by selling more phones.

Still, how does this apply to ME?

Most of you on this list are business owners or in upper management. Consider this: What perceived exclusivity do you have in your vendor relationships?

What rules are currently being respected that if broken could really damage your relationship with your customers or even your entire business process. Let me explain by example.

Crossing the line

This is where this all started from, I have a client that is in the “drop shipping and fulfillment” of Internet orders business. The specifics are not important but needless to say he has invested hundreds of thousands in his company and he makes a handsome living. His website displays products, his customers purchase the products and he blind drop ships from his vendor to the direct end user. Business was great until he received a catalog in the mail and email to his inbox from a new widget selling company that was selling the same products directly to consumers.

Farming the customer database

He discovered that the distributor was going retail. They had decided to deal directly with the end user and they had a database of thousands of customers that they were reaching out to, customers that they had shipped to on behalf of their clients. This
situation is still working itself out, but you can see just how quickly a partnership can turn sour.

In hindsight he could have saved himself the nightmare of having his customer database stolen if he had used a fulfillment house to mail the packages to his customers (Yes, he could have also used an honest distributor).

Look at your relationships

Are there vendor relationships that you have right now that could jeopardize your business if they fail? Now what can you do if anything to mitigate these risks? Where can you change the balance of your relationships? Sometimes just exposing a blind spot is enough to change the balance. Don’t find yourself in a one sided relationship with your suppliers or customers, when there is a shift in control, its time to look at your options.