The Verizon/iPhone deal behind the scenes

Wed, Jan 12, 2011


With the Verizon iPhone deal now set in stone, Bloomberg delves into the behind the scenes dynamics that ultimately led to the two tech companies striking a deal. As intimated by Apple Marketing VP Phil Schiller, the technological hurdles involved in creating a CDMA iPhone were not insignificant.

Verizon and Apple began cooperating on a CDMA iPhone in 2008 and subsequently led to Verizon erecting cell towers on Apple’s Cupertino campus in order to optimize signaling issues and prevent the type of reception problems that initially plagued the iPhone when it launched on AT&T.

As part of the cooperative process, the two companies also had to divulge plans about upcoming products and initiatives.

“We had to share with them where we were going with our network and they had to share with us what they were planning for devices,” Verizon’s Lowell McAdam explained. “That’s when we said, ‘Yes, this should work.’”

Further illustrating the depths of cooperation between the two companies, a top Verizon engineer named David McCarley who serves as Verizon’s executive director of technology actually spent a full year working on Apple’s Cupertino campus advising them on the ins-and-outs CDMA technology.

McAdam and [Tim] Cook inked the final deal after negotiations that also involved Apple CEO Steve Jobs and Verizon CEO Ivan Seidenberg, McAdam said.

“We probably worked six or nine months on the technical side of this and saw we could make this work,” he said. “Then we did the commercial side. The commercial deal took us a day.”

And as we reported yesterday, users don’t have to worry about the CDMA iPhone bearing a plethora of Verizon branding, as is the case with other handsets. Naturally, the success of the iPhone and its unique ability to draw in new subscribers alleviated Verizon’s concerns about making the unprecedented concession.

“They don’t put a lot of logos on their phones,” McAdam stated. “So that wasn’t a major issue for us.”



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