One of the first thing Steve Jobs did before developing iPhone was to go to the cell phone carriers. He talked to them separately in early 2005, promising to build a device “light-years ahead of anything else”. He soon made a deal with America’s #1 carrier, Cingular. The provider knew that the only way to increase its profits was not by competing on price, but by charging users for their increasing use of data online. Since the iPhone was going to surf the Web, it fit their strategy pretty well.

By looking at Apple’s deal with AT&T, one has once again to wonder at Steve Jobs’ extraordinary negotiation skills. Before iPhone, wireless carriers treated handsets manufacturers like slaves. They used to dictate the phone’s features, pricing and marketing, in exchange for the right to use their networks. The iPhone deal completely reversed this balance of power. AT&T-Cingular begged Apple for five years of exclusivity and a 10% margin for sales in its stores, just so they could be