No link here, just the observation that it seems to me that Verizon is working with a strangely unambitious business strategy. Basically, they've got themselves the best cell phone network out there. Their calculation seems to me that, given the superiority of their network, they ought to put forward a product that's inferior in other respects, secure in the knowledge that their network will always give them a healthy market share. A much better strategy, it seems to me, would be to offer the best network and the best phones and just drive everyone out of business. They seem to have reconciled themselves to trying to be like Toyota in the auto industry when they could achieve Microsoft-esque levels of domination if they wanted to.
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Second-Guessing the Business Strategy of Others
07 Sep 2007 11:49 am
Comments (42)
And you didn't even mention their piss-poor customer service!
This strikes me of a lifestyle version of "there ain't no such thing as a free lunch." For the same price, your life will always have the same level of mediocrity. So you can get a better cell phone network, but you have to sacrifice better phones. Or you can get a nicer house, but you have a long commute. Or your commute will be shorter, but other people will move there over time to ensure that your commute becomes just as crappy as it was before you moved.
Another term for this we used in college was "conservation of lameness."
Consumers have a certain tolerance for overall suckiness, and businesses will endeavor to reach that level of suckiness which is just barely tolerable for consumers to stick with you.
Having lived in NY for a while, where Verizon is the local phone network, I can tell you that being the "best" at anything is not exactly a high priority for them. I was actually thrilled when Time Warner started offering phone service so I could switch -- and lemme tell ya, when you pale in comparison even to Time Warner, you are really sucking wind.
In Tales of the City, this was expressed as "Mona's Law": You can have a hot job, a hot apartment, and a hot lover -- but you can't have all 3 at the same time.
Sorry, I was referring to Tyro's "conservation of lameness" thesis.
Crazy Talk. My Verizon service and Motorola phone has worked flawlessly. By far the best service/phone combo I've ever had. I recently switched to a new LG phone (my motorola, sadly, had died of natural causes). I bought the LG on the recommendation of some websites and the sales guy. It too works great. My only complaint is that Motorola discontinued my prized phone so I had to switch. Luckily my new phone works great too.
I think the problem is that Verizon picks phones that work best on their network (e.g., I think all Verizon phones have external antennas). This means a lot of cool phones are not allowed. Plus, Verizon uses CMDA, not GSM.
Verizon is for people who don't have passports. You can't use their stupid phones anywhere except Good Old Amurica.
Please - I have the standard free phone Verizon gives out with the re-up for 2 more years.
It's an LG and it works just fine. It makes phone calls and stores numbers, i.e. it does what a phone ought to do.
Plus the Verizon network is hands down the best in my area.
It doesn't rub my back, buy my lunch, or sign my check.
This techno-geek fussines is the most frustrating thing about people under 30.
You can make a strong case that Toyota is more dominant that Microsoft.
I don't know, I've been wildly happy with my Sony-Ericsson w600i; Stores a fair amount of music, it's a decent camera, and I even get calls inside moving elevators deep inside buildings. It was frighteningly expensive when I bought it a few years back, but quite affordable when we got the second one for my wife this winter.
Hey, external antenna are just a fact of physics, you don't want one, expect lousy reception.
Matt:
I think you are just unhappy that your very cool I-phone is saddled with the very uncool AT and T network. Until recentely I traveled in some pretty out of the way places in the US and Verizon was the only carrier that always worked in places like Washington county Kansas.
dapple and kvenlander nail it. Verizon might have the best network but their substantial capital investments in said network actually preclude their having excellent phones. Pretty much the rest of the world (and here, AT&T, T-Mobile, etc.) is on GSM, and so the cell phone makers invest substantially in development of superior phones, which because of the fierce competition of a huge global market are both better and cheaper. Verizon sits on its excellent CDMA network with crap phones that will, over time, continue to get worse relative to both the rest of the world and their U.S. GSM competitors (there are also technical reasons for this vis-a-vis CDMA vs. GSM - the latter are more power-hungry and tend to require more in terms of signal amplification, so can't be as small). The iPhone is a great example of this - even if Apple hadn't put together an exclusive deal with AT&T, there's really no reason to invest in making them CDMA. This sort of thing will only get worse as more and more devices are SIM-card-embedded multifunctions with WiFi/Bluetooth/etc.
Not to state the obvious but being a Microsoft-style hegemon in the telco industry has historically drawn lots antitrust scrutiny and ultimately been bad for business. Why knock yourself out being the best at everything, when you do just fine milking the great network and doing everything else on the cheap. Especially when the alternative is risking having the whole company broken apart.
See, Matt, getting a phone service that worked on DC's metro doesn't seem so smart anymore, does it?
I realized that years ago-- there's no point wasting time with the Betamax of cellular network providers. All the investment in phone technology is in the GSM phones, so if you want good phones, get a provider that uses that network. As far as the quality of the network? Well, as I implied above, it's just tolerable enough to keep me from switching.
What's wrong with T-Mobile?
yeah, i think bryce nails it.
this is m.y. saying:
"dang, i've got this awesome i-phone--
why does my network have to suck so bad?"
my verizon l.g. does everything i want it to.
and it was free.
What's so sucky about the LG phone that Verizon gives you free with your contract? It's even got a camera with resolution comparable to the kodak I bought a few years back.
Verizon cripples its phones so you can't add or remove music/photos without paying a fee in order to subsidize the cost of its network.
The Verzon RAZOR I have has all the technical bluetooth capacity that others do, but is limited by Verzon's firmware zap.
This is why I hate Verizon and will move on to another carrier regardless of their superior network.
Maybe fear of anti-trust action is deterring them from seeking too much market share.
There are two kinds of cell phone customers:
1. Voice-only.
This group is going to be happy on Verizon, as shown by those who think their free LG phone is just dandy. Nothing wrong with that.
2. Voice + data.
This group is often frustrated with the devices available on Verizon. Verizon has, by far, the best data network in the US. But, the devices to use the CDMA/EV-DO network are generally outdated. For example, the Blackberry GSM device is usually 6-8 months ahead of the comparable CDMA device. Commenters above have nailed the reason for this.
What hasn't been mentioned yet is that Verizon intentionally cripples devices so they can sell add-on services. For example, the newest CDMA Blackberry (8830) has GPS built-in, but Verizon turns it off so they can market a $5.95/month GPS service. That kind of blatant screwing of the customer drives up resentment and desire to switch.
What's so sucky about the LG phone that Verizon gives you free with your contract? It's even got a camera with resolution comparable to the kodak I bought a few years back.
Not to be too picky here but just cause your camera phone has the same resolution as a "real" digital camera a few years ago doesn't mean to much. The light STILL has to go through some good glass to get focused well on to that little bit of silicon. No optical zoom either.
Verizon is indeed stuck with lots of CDMA network and although it has certain efficiency gains compared to GSM ( really a faster version of TDMA ) it's other CDMA partner Sprint is looking to invest in WIMAX for it's next (4G) wireless data offerings.
http://en.wikipedia.org/wiki/Wimax
This might leave Verizon the sole user of the CDMA wireless infrastructure in a couple of years. I don't know if that is a good or bad thing for Verizon ( I assume they think it is a good thing since they are monolithic in their thinking )
Course I am sitting waiting for my iphone to finally sync up so I appreciate the value of a more ubiquitous if not the most spectrally efficient signaling scheme.
"Microsoft-esque levels of domination"
Where have you been? What part of the computer you are working on now uses an ms product? What part of the internet that you are now looking at has anything to do with MS. All the MS crap out there is latent and will be gone in a decade or less.
What's so sucky about the LG phone that Verizon gives you free with your contract?
my LG is OK. but Verizon's software has disabled all the good stuff: no Bluetooth file transfer, for example. because of that one limitation, i have to email pictures to myself one at a time to get them off the phone, and i can't upload my own ringtones. with AT&T, i could do both of those things no problem. with Verizon, i have to pay extra for the privilege.
The other thing you can't do with a Verizon phone is transfer your address book and calendar from a Mac. You used to be able to do this with Apple's iSync on a few of VZW's Motorola phones, but they've since changed their interface and it's now exceedingly difficult, if not impossible.
I was with Verizon for 7 years, but I had to rely on an increasingly arcane set of hacks to try and get my calendar and address book to work on my phone. At some point it became a choice of either ditching my Mac or ditching Verizon. And then it was a no-brainer. I ditched Verizon.
Ah, I forgot about the suckiness of not being able to get the pictures off of my phone without paying. That's a huge pain, I just didn't think of it as an issue with the phone itself.
I think for the vast majority of the people out there, including myself, they just need a phone to make and receive calls and text messages. There's no need for extra fancy frills, and even if they did have them, we couldn't afford them. I can't imagine paying extra for a phone, I just take the free one.
Because competition is for suckers and for people with Too Much Testosterone. Verizon doesn't want to compete, it wants you to sign a long-term contract and then collect rent.
What part of the computer you are working on now uses an ms product?
Am I completely missing the point here? Or is there a tacit assumption (correct, in the case of this commenter) that all commenters on this blog are Mac users?
Gone in a decade!? Hah! Can you say $6,111,000,000 in cash and $17,300,000,000 in short term investments to BUY the next big thing?
Sometimes I think that Verizon spends my payments on a million shills. I can't think how else to explain all the positive comments. I have a Razr that they were practically giving away. Drops calls all the time, and I have a whopping one bar most of the time at home. The web interface is so spectacularly lousy that I almost never use it, I can't get photos off the phone without paying to email them to myself, the battery life is nowhere near what they claimed (and I know they claim more than they expect I'll get). Took three months to fix a billing error.
I'm sure ATT sucks too, but really I can't imagine it's any *worse*.
I love my LG 8300, and my wife is diggin' the new Chocolate 8550, both on Verizon. Their customer service has been very impressive in my recent dealings with them too.
My gripe is that they freaking nickel and dime you--er, $3.99 and $9.99 you--for extra services and features, and have a crappy user interface on the phones to make you more likely to buy those add-on services. Aside from that though, I'm happy with the LG phones and can comfortably live without an iPhone.
"All the MS crap out there is latent and will be gone in a decade or less."
No. PowerPoint will always be with us. It's the cockroach of the digital age.
I think the reason for this is control. Verizon Wireless is as obsessed with controlling the way you recieve an information/music/data on their phones. They control how you get photos off your phone, how you get music on and off your phone, how you get internet access (no wifi) and 3rd party programs (get in now only). It all has be done through Verizon services and it all costs you extra money.
Even verizon "unlimited data" service is actually limited to a set amount each month so forget about using your sling box to watch TV on your Q.
Despite all that I am verizon wireless customer because I really only care about the voice network. Otherwise I would be a spring customer and get real unlimited data and phone service for $30 a month with the Sero plan and a phone that actually roams on Verizon's network when the spring network doesn't work.
From mad7968: I think for the vast majority of the people out there... they just need a phone to make and receive calls and text messages.
Sorry, but you're wrong. if that were true, there'd be no market for Treos, iPhones, Blackberries, etc. Yet all of those devices sell like hotcakes.
You might not be able to imagine paying for a phone. I can't imagine life without my smartphone.
Posted from my Treo 650.
There's going to be convergence at some point around the various 3G standards. In the meantime, Nokia really doesn't give much thought to the US CDMA market when it can sell tens of millions of phones in Africa and Asia, let alone its European base.
I returned my iPhone today.
iTunes sync to Outlook did not work.
This was my first Apple product and the experience was terrible. The only nice thing was the AT&T customer service people - they waived the restocking fee without any questions when I told them how much trouble I had with the device.
I don't disagree with the many points people have made, including verizon's general level of suckiness at service (though my experience with verizon wireless has been pretty good).
One additional factor holding back Verizon Wireless is tension between Verizon, which owns 55% of VW, and Vodafone, which owns 45%. There's a lot of shareholder pressure for Vodafone to sell its stake for cash, but there's not been terribly strong incentives to own the market when each partner has been hoping to buy out the other first.
Wouldn't having the best network and the best phones and driving the competition out of business cause a lot of trouble with the anti-trustinistas?
"Sorry, but you're wrong. if that were true, there'd be no market for Treos, iPhones, Blackberries, etc. Yet all of those devices sell like hotcakes.
You might not be able to imagine paying for a phone. I can't imagine life without my smartphone."
By hotcakes, do you mean like 10% of the phone market? I think you have a skeewed perception of what the average cell phone user actually buys. Rolexes sell like hotcakes too, but most people don't buy them.
Wow, I didn't even know there was a difference between "networks." Why don't they all use the same one, like radio and TV signals?
Comments closed September 21, 2007.
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Heads in the Sand
Yes, you have put your finger on the great mystery. Verizon has the best network by far. Their phones, however, utterly suck. So, what to do? I use them because I can't stand network problems, but I'm bitter because I can't get better phones and so I develop no brand loyalty.
Posted by IP Guy | September 7, 2007 12:05 PM