How Steve Jobs Got ATT To Share Revenue

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As most everyone knows, when Jobs first launched the iPhone in June 2007, he cut a deal with AT&T in which Apple would get a portion of AT&T’s revenue. According to the Harvard Business School case, Apple Inc. in 2010, “AT&T, the exclusive U.S. operator for the iPhone, agreed to an unprecedented revenue sharing agreement — Apple got about $10 a month from each iPhone customer’s bill – which gave Apple control over distribution, pricing, and branding.”

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Aggarwal pointed out that Jobs was different than other CEOs who delegate strategy implementation. “Jobs met with the CEOs of each carrier. I was struck by the hands-on nature and his desire to make his mark on everything the company was doing. He got deeply involved in the details he cared about. He made it happen,” said Aggarwal.

Aggarwal was impressed by the way Jobs was willing to take a risk to realize his vision. “In one meeting in the conference room with Jobs, he was annoyed that AT&T was spending too much time worrying about the risks of the deal. So he said, ‘You know what we should do to stop them from complaining? We should write AT&T a check for $1 billion and if the deal doesn’t work out, they can keep the money. Let’s give them the $1 billion [Apple had $5 billion in cash at the time] and shut them the hell up,’” Aggarwal recounted.

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Aggarwal also found Jobs unique in his outrageous demands. As he explained, “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.’ He would come up with these outrageous demands and fight for them — getting much more than he otherwise would have.”

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As Gouch explained in an August 30 interview, “Raj was part of an Adventis team that included me, Adventis president, Raul Katz, Max Weiss and others that Steve Jobs summoned in early 2005 to Cupertino. When Jobs presented his idea of an unlimited voice and data plan for $49.95 a month no such thing existed in the industry. Weiss said to Jobs, ‘The carriers will never go for that.’ Jobs looked at Weiss and said, ‘Duh…..Duh….That’s why I am paying you the big bucks — to figure out how to make it work.’”

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