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Apple's Hard Lesson about Sales Partnerships

Apple just learned an important lesson about sales partnerships -- the hard way. The launch of the iPhone 4 was marred by consistent problems in AT&T's ability to process data, The disaster comes hard on the heels of AT&T's system being hacked for email addresses of iPad users. And that's atop constant complaints that AT&T's system can't handle the iPhone bandwidth in some cities.

Because AT&T can't get their act together, the iPhone continues to lose momentum, giving other platforms the breathing space they need to build a credible alternative. That's very bad news for Apple.

It's now clear that AT&T was a poor choice of partner from the start, and giving them an exclusive agreement for a long period of time was a massive blunder on the part of Apple marketing. (See Apple Marketing's Top 10 Dumb Mistakes.)

When picking their go-to-market partner, Apple should have followed the rules that I laid out in "Build Sales Partnerships in 5 Easy Steps." While that post lays out how sales reps from different firms should partner together, it's also a roadmap for how companies should partner.

As the partnership now stands, AT&T gets all of the benefits of the partnership, while Apple gets all the liabilities. AT&T gets a huge magnet to attract more customers than it can handle, while Apple gets a millstone tied around the neck of an otherwise superlative product set.

That disparity was built into the Apple/AT&T partnership from the start. Since AT&T has other phone architectures, there was little risk in adding the iPhone to their stable. By contrast, superlative carrier support is necessary in order to keep the iPhone momentum going, so Apple was taking on the lion's share of the risk, especially when you consider the development costs involved.

What's resulted is a skewed partnership where Apple takes on all the risk while being completely dependent upon AT&T's weak performance as a carrier and data processing handler. In "Build Sales Partnerships in 5 Easy Steps, I pointed out:

As you look at a potential sales partner, go back to your self-assessment to be sure that can deliver the value that the other partner values - not just the value that you think the potential partner ought to consider valuable. The last thing you want is a situation where one partner delivers "value" that the other partner did not consider to be worthwhile.
Apple obviously thought that AT&T valued having the Apple product line as an exclusive and would throw the entire energy of their organization behind supporting it. Instead, what's resulted is a relationship that looks increasingly dysfunctional every day, to the point where the clamor to move iPhone beyond AT&T has become almost deafening.

If you're hoping to build your business through partnerships, your number one priority is to avoid the mistake the Apple made: not really understanding the commitment (or lack of commitment) of your partners. Failure to heed this warning means partnerships will eventually become a liability.