Collaboration Gone Bad: Lessons to Learn from the Rokr Phone

Collaboration between companies—even competitors—is so hot these days. The hype from collaboration vendors is boiling over. (“What?! You’re not collaborating?! What’s wrong with you?!”) In a rush to partner with diverse business suitors and, as received wisdom has the outcome, gain efficiencies, many companies are plunging ahead with deals both great and small.

But not every engagement ends happily ever after. In a recent and very public case, one big trio’s union did not end up looking like a partnership of equals.

Sept. 7, 2005, was going to be a celebratory day for Apple, Motorola and Cingular Wireless. On a San Francisco stage, in front of a salivating audience, Apple chief Steve Jobs put an end to all the rumors and hype and unveiled the fruit of the three companies’ collaborative efforts: the Rokr E1, a combination cellphone and digital music player (with Apple’s iTunes software inside) that stores 100 songs and costs $250.

In addition to the Rokr E1, however, Jobs also debuted Apple’s new iPod Nano, a scary thin MP3 player that holds 1,000 songs. It cost $250 as well.

In the ensuing buzz, the Nano only solidified the iPod’s reign as the coolest MP3 player, while the Rokr seems headed in the same direction as New Coke—fizz that’s quickly going flat. User and analyst reviews from the tech community have been biting about the Rokr. To quote one (from Slashdot): “The companies are pitching the phone as a Shuffle combined with a Motorola phone, which makes it a big, expensive Shuffle packed in an unattractive body surrounded by a user interface that’s notoriously bad. It appears that Motorola licensed iTunes, but forgot to license the cool that goes with it.”

Roger Entner, vice president of Wireless Telecom North America for Ovum, has followed this collaborative effort with great interest. It was Entner who broke the news about the new device in The New York Times on Aug. 30, a week before Jobs unveiled the phone. Since then, Entner says, the Rokr has been the red-haired stepchild for Apple, and the situation has been a “nightmare” for Motorola and Cingular. “Clearly the Nano overshadowed the Rokr,” Entner says. “If you look a the Apple website, it’s Nano, Nano, Nano. In the bottom corner is the Rokr.” Rokr has fallen further down the food chain with Apple’s release of the video-playing iPod.

Little more than a month after the collaboration’s big splash, the three companies are looking more like the three stooges for putting this deal together. Motorola CEO Ed Zander was so fed up with the press Nano received (and, presumably, Rokr didn’t), that he spouted off in September at a leadership seminar. “Screw the Nano,” he said, according to Macworld website. “What the hell does the Nano do? Who listens to 1,000 songs? People are going to want devices that do more than just play music, something that can be seen in many other countries with more advanced mobile phone networks and savvy users.” (The rumor was that Motorola and Cingular didn’t know Apple was going to launch the two devices at the same time—and they weren’t thrilled with Apple’s timing.)

Days later, Apple’s iPod division head, Jon Rubenstein, said that music devices and cell phones are best left separate. “Is there a toaster that also knows how to brew coffee? There is no such combined device, because it would not make anything better than an individual toaster or coffee machine,” he said, according to the BetaNews website. “It works the same way with the iPod, the digital camera or mobile phone: It is important to have specialized devices.”

OK. So why didn’t anyone heed these immutable edicts, and why did they go through with this in the first place?

Motorola’s new push into this market was sparked by its new phones—the Razr and Q, which are regarded as sleek and cool. “There’s been a resurgence of the brand in a miraculous way,” says Entner. “[Motorola] wants to wow people with its devices.” So at the outset, Motorola had to believe that more cool was going to be on the way with this device, but what it ended up manufacturing turns out to be just the opposite—disappointingly unhip, according to many reviews.

For Cingular, this was just another way to differentiate the company in the cut-throat wireless world. But with the ring tones market still bringing in healthy revenue ($245 million in 2004 U.S. sales for wireless carriers), Cingular didn’t want to lose the up to $3 it gets per ring tone download. So Rokr users can’t use songs purchased from the Apple iTunes online store as ring tones. (Users can use their own MP3s as ring tones, but loading them onto the Rokr is quite an ordeal, reviewers have said.)

For Apple’s part, the Rokr needed to be positioned as an enhancement to the iPod (which generates a third of Apple’s revenue) rather than a potential alternative to the successful digital music player. So 100 songs was the limit. “This device holds 100 songs. Apple restricted the number,” Motorola’s Zander said in a San Jose Mercury News interview in October. Also the Rokr doesn’t have the “click-wheel” (which makes an iPod elegant-looking and easy to use), and users can’t directly download songs to the Rokr—they have to go through Apple’s iTunes software.

“[Apple] didn’t want to make it too successful,” Entner says. “Look at the device: This is literally last year’s phone…with some new software on it.”

So it all came down to this: The technological limitations of the new Rokr E1, which geeks and gadget-heads are now bemoaning, were actually the result of thorny business issues and defenses against tons of potential lost revenue, and not related to any technological shortcoming. In the end, the trio of companies was so against cannibalizing one another’s revenue flows that they were thwarted in creating something that was innovative enough to be worth the trouble.

This was business collaboration at its worst. “There’s a difference between partners and collaborators,” Entner says. “In this game, Cingular and Motorola were more collaborators than partners. Usually between carriers and handset manufacturers there’s more of a partnership.” He says there’s a fine line between the two: Partnership is an equal relationship, and the partners do things together. Collaboration is where they more or less use each other. Apple’s demanding presence fragmented the relationship into an effort to simply get the product to market.

The cultures of the companies are so distinct and revenue streams are so critical that it’s a wonder they were able to deliver anything.

Apple, for one, is well known for its desire to have full control over its products. Its entrance into the wireless phone space was definitely a learning experience for the company. For example, the rules for wireless manufacturers and carriers are clearly defined. “The carrier owns the relationship in this country,” Entner says. When brand-paranoid Apple dipped its toes in the wireless waters, it may have not liked the cold reception it received. Traditionally, Apple has control of everything. “In wireless, you can’t,” Entner says. In a recent article on Slate.com, author Jack Shafer writes, “Apple incites fanaticism about its products via ad campaigns and evangelist outreach programs designed to make its customers feel as though they’re part of a privileged and enlightened.”

So it’s no surprise Apple has since distanced itself from the pedestrian Rokr. On its website’s front page this week, Rokr wasn’t mentioned once. On Motorola’s and Cingular’s front pages, you can’t miss it. Of course, by not enveloping the Rokr with its distinctive iPod look, Apple always had a way out if the Rokr didn’t rock the market. Apple execs had plausible deniability because the device wasn’t called an iPhone and didn’t look much like an iPod.

What’s surprising to note is that there’s more to come from this troubled union—version 2.0 of the Rokr. It could be a chance for the threesome to redeem themselves. “If the [next version] looks and feels like a Razr, then you have an iconic device…that would kick it out of the stratosphere,” Entner says.

Perhaps the expectations for version 1.0 were too high. Device coolness comes with a price. In this case, it seems that price was too steep because it cut into each company’s sacred revenue streams. And while they were collaborating, nobody was willing to share.

What’s your take on this? Can collaboration between equals ever go equably? Have you been down this road? Let us know.

Staff Writer Thomas Wailgum looks forward to your input.