Steve Jobs was able to strike an unprecedented revenue sharing deal with AT&T (formerly Cingular) due to his deep involvement with the iPhone, says Raj Aggarwal, a former telecommunications consultant who worked with Jobs on the deal.
In an interview with Forbes, Aggarwal details the history behind the deal, which saw Apple receiving a portion (approximately $10) of the monthly service charges that AT&T collected from each iPhone user. The revenue sharing agreement, which ultimately ended in 2008, allowed AT&T to offer the iPhone exclusively as other carriers, like Verizon, were unwilling to agree to the terms of the deal.
Under the terms, Apple also had control over pricing, branding, and distribution, in addition to getting AT&T to create a number of new features for the phone.
Aggarwal, whose Adventis consulting stint with Jobs occurred in "early 2005," said that Jobs was able to pull off the AT&T deal because of his personal involvement in the details of the iPhone, his efforts to build relationships with carriers, his willingness to make demands that others perceived as outrageous, and his nerve to bet major resources on that vision.
According to Aggarwal, Jobs was hands-on in a way that no other CEO was. He personally met with the CEOs of each carrier, and "got deeply involved in the details he cared about." Jobs, Aggarwal recounts, was willing to take risks to "realize his vision" and made "outrageous" demands that ultimately worked out in Apple’s favor.
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."
AT&T's exclusivity agreement expired in 2010, but the deal Jobs struck with the company earned both AT&T and Apple an enormous amount of money thanks to the iPhone's immediate popularity with customers.
