Could Apple Become Their Own Wireless Carrier?

Could Apple Become Their Own Wireless Carrier?

What’s next for Apple? Which industry will they disrupt next? Some analysts think Apple’s next field of conquest will be the mobile phone carriers. They say Apple will be the next big player in that arena. Are they making the right call, or do they have a wrong number?

At a recent presentation for international wireless operators at the Informa MVNO Industry Summit in Barcelona, wireless industry analyst Whitey Bluestein claimed that Apple will soon be providing wireless service directly to its customers. He thinks Apple will beat Google to become a “mobile virtual network operator”. He noted Apple’s biggest barrier would be the subsidies paid by carriers to offer iPhones at their current prices.

What are the pros and cons of such a move by Apple? Let’s take a look with the help of articles from Gigaom and The Mac Observer.

Pros

  • Apple can use it’s power as an industry leader to force mobile carriers to strike wholesale deals, so Apple can provide wireless service directly to its customers as “Apple Mobile”.
  • The carriers will want to play ball with Apple, any reluctance on their part will be outweighed by the huge business opportunity it presents. Any carrier that says no will probably be kicked to the curb.
  • Apple has already filed a patent for “Dynamic Carrier Selection” The patent application portrays Apple as the wireless service provider who then connects to multiple carriers. This would allow Apple to contract with multiple carriers, and offer customers choices in plans and services.
  • Apple has been fighting with other handset vendors over a new, smaller sized SIM card for GSM and LTE handsets. Some think such a SIM would allow Apple to bypass carriers completely and activate a new customer through the iTunes Store.
  • Apple has all the pieces for such a wireless service already in place. They have the world’s leading brand, a loyal following willing to pay a premium for their products and services, over 360 stores worldwide, and iTunes; where it has a digital content and billing platform to offer one-click service.
  • iPhone customers typically spend almost twice as much on their monthly wireless bill than non-iPhone users. Three words: “High Value Customers”. If Apple offers mobile service with their iPhones and iPads, the company provides the full digital Apple experience.

Is Google a possible competitor? Google would probably find it hard to follow in the footsteps of Apple. They have the number two brand in the world, behind “guess who?”, but they don’t have the retail stores, experience with subscription services, and the customer care Apple offers.

Cons

  • A move like this would put Apple in direct competition with the companies that have been so instrumental in Apple’s amazing rise in revenue and profits.
  • The wireless providers pay Apple the highest subsidies in the industry. These subsidies keep the iPhone down to a reasonably affordable level.
  • Apple would have to believe there are enough customers that would switch carriers to come on board with Apple. That’s a big “if”.
  • If Apple can’t come to a wholesale agreement for bandwidth and services from the carriers, they would have to buy a carrier. Then they’d be stuck with supporting all manner of Android, Microsoft, RIM, and Nokia devices. They wouldn’t want that.

Apple is all about one thing. Control. Apple would be attracted to setting up their own wireless service network for nothing else but the control it offers them all the way through the user experience process. If they think they can make money at it too, all the better.

But does it all add up? Does it make sense for Apple to invest in creating their own wireless service network? If they were doing something like this, even in the early stages, wouldn’t something have leaked by now? Hard to do something like this in secrecy.

What do you think? Will Apple create their own wireless service network? How would they do it if they attempted it? Would they build out a new network, buy a current provider, or lease services from multiple providers? I’d love to hear your opinions. Please share yours with us in the comments section below.

  1. Demonstr8r says:

    Not only is Apple not going to become a wireless carrier, they will not release a TV set in 2012 either. These so called analysts must be huffin paint fumes.

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