Steve Jobs Strikes Deal with AT&T

In the early 2000’s, it was common for cellular companies to have complete control over the design of their phone models being sold. This changed in 2007 when the first iPhone was released to the public with AT&T as the service provider. This long-awaited deal that Steve Jobs reached was created through his persuasion efforts which included building trust with the carrier and his nerve to make outrageous demands.

Jobs convinced AT&T to share revenue with his company, Apple, greatly through his use of ethos. This is initially recognized through his position in the company, seeing that he is the CEO of his multinational corporation; yet, he was also able to appear trustworthy to the wireless carriers by personally handling matters. Steve Jobs met with the CEO’s of each cellular company individually, thus building trust with the corporations he consulted with. The fact that he did not simply send someone else in a lower position to represent Apple proved to AT&T that he was determined to reach an agreement that is in both of their best interests, and that he personally shares the same values of those representing the wireless carrier.

In addition, Steve Jobs made radical demands in order to prove his point, which resulted in him getting more than he otherwise would have (also known as the Goldilocks technique). Raj Aggarwal, who consulted with Jobs twice a week for two years until reaching the final deal, recalls Jobs going after goals that were considered unfeasible at the time. Jobs said, “$50 a month unlimited voice, data, and SMS plan — that’s our mission. We should ask for and go after something unreasonable that no one has been willing to accept” (Cohan 1). Because he pursued seemingly impossible monthly payment plans, he was able to come to a consensus because of his later proposition of a (seemingly) more reasonable proposal. This technique made the initial offer seem senseless, but that was the reason why his later offer seemed rational to AT&T.

Overall, the success of Jobs stemmed directly from his ability to develop a reputation that embodied trustworthiness and flexibility. This was the first time in history that the company producing the cellular device was able to retain complete control over the design, manufacturing, and marketing of their phones, as opposed to the carrier having these abilities.

Through Steve Jobs’ use of ethos and his emotional appeal to AT&T’s sense of fairness within the sharing of revenue, Apple was able to receive approximately $10 of the monthly service charges that AT&T collected from each iPhone user. This deal earned both AT&T and Apple an exceedingly large amount of revenue thanks to the iPhone’s immediate popularity with customers.

 

Works Cited

          Cohan, Peter. “How Steve Jobs Got ATT To Share Revenue.” Forbes. Forbes Magazine, 16 Aug. 2013. Web. 22 Sept. 2013.

“Raj Aggarwal Details Jobs’ Tenacity in AT&T/Apple Revenue Sharing Deal.” – Mac Rumors. N.p., n.d. Web. 22 Sept. 2013

Advertisements

4 thoughts on “Steve Jobs Strikes Deal with AT&T

  1. Do you think that Steve Jobs would have been as successful if he had offered the reasonable price first and had not offered an unrealistic price first?

  2. Why do you think Job’s usage of taking the middle road effective in making the deal when starting with unrealistic goals and prices

  3. Job’s use of the goldilocks technique helped him reach his realistic goal, in comparison to his first offer it sounded more reasonable. This appealed to At&t’s goal of their reaching their maximum revenue.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s