Analyst Whitey Bluestein recently spoke at a presentation held at the MVNO Industry Summit in Barcelona. His belief is that Apple will eventually begin providing wireless service.
Whether that sounds likely or not, it’s worth noting that Bluestein isn’t just some random dude at a podium. He has been studying the wireless industry for some time now.
He laid down the reasons as to why Apple is set to become a carrier during his presentation, and he makes some good points. Let’s take a look.
Apple Has All of the Critical Elements
According to Bluestein, Apple has what it needs: the world’s leading brand, distribution (363 Apple Stores), digital content (iTunes for music and movies, and the App Store for Apps) and 250 million iTunes accounts with credit cards on file. That’s just as much, if not more than many of the other mobile manufactures, and is definitely something that many carriers may not have.
It’s also worth noting that Apple was eyeing, and bidding on the wireless spectrum a few years ago. This was around 2007, the first year of the iPhone’s availability. Google and Microsoft were also said to be involved, but the fact that Apple was looking as well is a good indication of what they wanted to do.
The government is also sitting on a good chunk of wireless spectrum, and it’s being used for nothing. Seriously. They, as well as carriers, are working on a way to free some of this up. Even then, some do not believe that there is a spectrum crisis.
Apple Has Filed a Patent Application
Back in October 2006, Apple filed a patent application for a network architecture that would help them move into the wireless business as a carrier. This was just months before the original iPhone was announced (January 2007). Bluestein adds that they extended the application in 2011. Accoridng to him, this is more evidence that Apple has seriously considered how to go about providing wireless services directly to consumers.
Main Points Bluestein Brought Up
- Apple will in the near future begin providing cellular service, data, voice and roaming, directly to its customers
- Apple will begin by offering mobile data plans bundled with iPads (vs. current practice of selling GSM iPads with AT&T data and CDMA iPads with Verizon data plans)
- Apple will then offer iPhone customers activation, data and international roaming plans through the iTunes Store
- Apple will provide voice, data and messaging plans directly to its iPhone customers, on an ala carte basis as an alternative to their current mobile operator and then as wireless service provider directly to customers
- Google, while behind Apple in technology, distribution and back-office capabilities, will nevertheless follow in lock-step behind Apple and provide wireless data services directly to its Google Tablet customers
Apple Will Move First
Bluestein believes that Apple will move first, “the battleground is set,” he says, adding that “Google will have to scramble because it lacks retail distribution, experience with subscriber services and the iTunes ecosystem of content. iTunes and the iTunes Store provide Apple with one-click buying and customer care. Google can acquire most of these capabilities, as it has before, but it is not a core competency of the company.”
Apple’s Biggest Challenge?
Holding Apple back, Bluestein says, are the handset subsidies paid by mobile operators, which is around $381 for each iPhone handset currently sold. However, he adds that their massive piles of cash can come in an help them here.
Would Apple Become a Carrier?
We’ve heard before that Steve Jobs wanted Apple to become a carrier. He gives a good argument. Whether it will happen is another thing, but it seems that Apple is capable. I don’t know how differently they would do things, but we’d hope it wouldn’t ruin competition. For instance, right now, the iPhone is available on three major US carriers. They each have their advantages and disadvantages. Each offers something that makes it enticing, or has a fault that makes it less desirable, and prices range. If Apple became its own carrier, what would we be left with if we wanted an iPhone?