iPhone: Apple Making All the Wrong Moves

Todd Sullivan submits: Last week I wrote a post on the iPhone in which I opined that the AT&T (NYSE: T - News) lockup was a mistake for Apple (NasdaqGS: AAPL), and that the real winner in all this was AT&T.
The #1 response from readers I received (other than I was a moron) was that this "was a short term arrangement that all carriers do, within six months the iPhone will be available to all carriers." Hold the phone (pun intended) - it would appear that the iPhone will only be available to the 47 million AT&T subscribers for the next five years!
USA Today reports the supposed half-decade deal also precludes Apple from developing a CDMA handset in that time. It would also appear that the arrogance and dismissive attitude Apple took with carriers during negotiations may come back to bite them. Word is that the #2 carrier in the US, Verizon, will introduce its own version and is claiming it will be an iPhone-killer. According to Denny Strigl, Verizon CEO, "We do have a very good response in the mill. You'll see that from us in the late summer."
Rather than have a market all to itself for some time by playing nice with all carriers, the attitude Apple took has caused a rush to introduce like versions to coincide with its launch. Now not only will the iPhone not be available to the other 140 million plus US cell phone users, but those folks will be able to get their own version from other carriers this summer. Anyone want to bet it will be available for far less than the $500 -$600 the iPhone will be?
Now, any Verizon offering will not have the iPod application that the iPhone will have, but if my many critics are to be believed, that was not going to be a major selling point anyway, so the elimination of it will really be an insignificant factor to those purchasing these phones from Verizon. What will matter? Price. If consumers are able to avoid cancellation fees, can get a similar phone at a cheaper price and already have an iPod, there is zero incentive to rush out and get the iPhone.
This also means that the 10 million units Apple plans to have sold by the end of 2008 will be done to 47 million AT&T subscribers, meaning one in five will have one? Doubt it.
How long does anyone think it will be before Research in Motion Limited's (NasdaqGS: RIMM) Blackberry has a version out there that will be available through all carriers?
When entering a new business, it is not really a good idea to strut in and tell folks who have been doing it for many years how much better you are than them and why you are going to dictate what they can or cannot do. All reports out there indicate this is what Jobs did and in the process, seems to have caused other carriers to compete with him rather than work with him. Bottom line is that he needs their networks for his product; he seems to have forgotten this or chose not to recognize it.
I said before that the iPhone, as things are currently configured, will be nothing more than a niche product and that it will be Apple's first stumble after a string of hits in recent years. If the USA today article is correct, the AT&T deal all but assures it.