iPhone and Cell Phone Market Dynamics
CNN Money offers a good breakdown of the current dynamics between cell phone carriers and cell phone manufacturers. It also discusses the options Apple may have in introducing a cell phone to the U.S. market, and how it may upset the current balance of power:
Device manufacturers reportedly don't like this system in that it devalues their phone, and gives them less control on how to market its phone and accessories. The author feels that Apple's entry into the market could convince consumers to pay a premium for their cell phone.
As well, Apple has a retail presence already in place which could serve as a distribution channel for the mobile phones should they decide to offer their own mobile virtual network operator (MVNO) by reselling airtime from another carrier. While this concept of Apple as an MVNO has been primarily speculative, one UBS analyst reported last week that they "believe Apple could launch a branded wireless service in 1Q, purchasing wholesale network service from Cingular."
Finally, another option is one that was hinted at by Kevin Rose. The concept of an "unlocked" phone is more popular in Europe and Asia, but customers can buy a phone independent of service and buy service in the form of SIM cards from Cingular or T-Mobile. This concept, however, is less familiar in the U.S. and could introduce some confusion to the consumers.
Today, phone companies heavily subsidize handsets in exchange for long-term commitments from customers. That Nokia phone you got for free from Cingular obviously cost the phone company something - probably hundreds of dollars - to buy from Nokia. Cingular, in the meantime, can make all kinds of demands of Nokia: It can ask for special packaging, prominent logo placement, etc.
Device manufacturers reportedly don't like this system in that it devalues their phone, and gives them less control on how to market its phone and accessories. The author feels that Apple's entry into the market could convince consumers to pay a premium for their cell phone.
As well, Apple has a retail presence already in place which could serve as a distribution channel for the mobile phones should they decide to offer their own mobile virtual network operator (MVNO) by reselling airtime from another carrier. While this concept of Apple as an MVNO has been primarily speculative, one UBS analyst reported last week that they "believe Apple could launch a branded wireless service in 1Q, purchasing wholesale network service from Cingular."
Finally, another option is one that was hinted at by Kevin Rose. The concept of an "unlocked" phone is more popular in Europe and Asia, but customers can buy a phone independent of service and buy service in the form of SIM cards from Cingular or T-Mobile. This concept, however, is less familiar in the U.S. and could introduce some confusion to the consumers.
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67 months ago
unlocked phones would cause confusion? How? It's a pretty simple concept to me. Buying chunks of airtime seems to be the big hurdle. Who would provide support for problems other than with hardware?
67 months ago
I like the unlocked solution the best. Support would be an issue though, but I'm sure Apple would offer something in that regard (and the 90 days garbage isn't it).
applerocks
applerocks
67 months ago
unlocked phones would cause confusion? How? It's a pretty simple concept to me.
I think it could cause a lot of confusion for consumers who don't care to know about the details of cell phone service.
"I want this phone".
"That'll be $300."
"ok, how many weekend minutes do I get?"
"Oh, this is just the phone, you have to pick a cell phone carrier somewhere else and tell them you want a SIM card for your unlocked phone. If the sales person doesn't know what you are talking about, ask to speak to customer service, they'll know how to get it done."
Depending on the dynamics w/ cell carries, I suppose Apple could bundle service with sale of the phone, letting the customer decide at the time of buying.
arn
67 months ago
There's nothing to stop a carrier from offering a discount on the plan itself instead of the phone:
Bring an iPhone & Cingular (or Verizon or whomever) will give you a $200 discount on a 2-year plan commitment.
Isn't that a more rational plan than hiding the cost of the hardware? It's just like discounting the plan for comitting to more minutes in advance of using them.
Bring an iPhone & Cingular (or Verizon or whomever) will give you a $200 discount on a 2-year plan commitment.
Isn't that a more rational plan than hiding the cost of the hardware? It's just like discounting the plan for comitting to more minutes in advance of using them.
67 months ago
[QUOTEmacrumors]wholesale network network service
interesting ;)
i think the manufacturers would jump at this if Apple headed in to the market doing this. over here we have the same situation, heavily customised and branded phones, but Apple really could - and would - change all that.
while i didn't initially like the idea of an unsubsidised phone, i think it could work for Apple.
but they better do it 'unlocked' too. that's the best way, in my opinion.
i'm also glad it's not locked to a US network by being CDMA - and to be honest, 3G hasn't gained enough acceptance (here anyway) to be a big selling point - probably why Apple are perhaps not bothering with it...
interesting ;)
i think the manufacturers would jump at this if Apple headed in to the market doing this. over here we have the same situation, heavily customised and branded phones, but Apple really could - and would - change all that.
while i didn't initially like the idea of an unsubsidised phone, i think it could work for Apple.
but they better do it 'unlocked' too. that's the best way, in my opinion.
i'm also glad it's not locked to a US network by being CDMA - and to be honest, 3G hasn't gained enough acceptance (here anyway) to be a big selling point - probably why Apple are perhaps not bothering with it...
67 months ago
I think it could cause a lot of confusion for consumers who don't care to know about the details of cell phone service.
"I want this phone".
"That'll be $300."
"ok, how many weekend minutes do I get?"
"Oh, this is just the phone, you have to pick a cell phone carrier somewhere else and tell them you want a SIM card for your unlocked phone. If the sales person doesn't know what you are talking about, ask to speak to customer service, they'll know how to get it done."
arn
Another way to think of this general issue is:
"Ohhh, I like this phone!"
"Will it work with my existing service?"
67 months ago
Didn't Steve say at some point that his goal was to control all of the technology in anything apple was involved in? (as w/iPod-iTunes, Hardware-OSX, etc...)
Not that apple would buy or build their own wireless phone co. but MVNO does sound more in line with this philosophy. Gives them more control (and it would go nicely with their retail).
I wouldn't be surprised...
...and if they do do an MVNO - watch them bundle it with .mac subscriptions
:eek: :p
Not that apple would buy or build their own wireless phone co. but MVNO does sound more in line with this philosophy. Gives them more control (and it would go nicely with their retail).
I wouldn't be surprised...
...and if they do do an MVNO - watch them bundle it with .mac subscriptions
:eek: :p
67 months ago
Wow... if Apple is really planning to sell their phone unlocked, and at full retail, they're under enormous pressure to hit a home run with the hardware. No wonder there have been so many purported delays... it gotta be just right, or it could bomb spectacularly.
67 months ago
Makes sense to me.
You can buy an iPod and are expected to take care of it. You buy a cellphone and can lose it/damage it because your carrier has an insurance policy.
If you pay more on the phone, and it's also an iPod, you would probably take better care of it. Because you bought the iPhone independent of a contract, you cannot trade it in for a free update everytime your renegotiate.
Cell companies also replace your phone (in an emergency) next day because they make all their money off of their contract, not from the hardware. Apple trying to make money from hardware, and reselling minutes as an MVNO should be interesting.
But, this isnt going to be like courting record labels to a store, this is going to be creating your own network, or somehow taking control of the existing networks by promising the phone of a lifetime. Perhaps the wait is so long because Apple is teasing service providers to cave to their demands.
I still honestly, could care less what features are in the device. I am more curious about how Apple is maneuvering this as a business adventure.
You can buy an iPod and are expected to take care of it. You buy a cellphone and can lose it/damage it because your carrier has an insurance policy.
If you pay more on the phone, and it's also an iPod, you would probably take better care of it. Because you bought the iPhone independent of a contract, you cannot trade it in for a free update everytime your renegotiate.
Cell companies also replace your phone (in an emergency) next day because they make all their money off of their contract, not from the hardware. Apple trying to make money from hardware, and reselling minutes as an MVNO should be interesting.
But, this isnt going to be like courting record labels to a store, this is going to be creating your own network, or somehow taking control of the existing networks by promising the phone of a lifetime. Perhaps the wait is so long because Apple is teasing service providers to cave to their demands.
I still honestly, could care less what features are in the device. I am more curious about how Apple is maneuvering this as a business adventure.
67 months ago
In Europe and Asia, it's common for providers to sell unlocked phones with a contract plan at a reduced rate. When you sign the contract, you obviously lock yourself in... but your device remains unlocked. The whole locking technology is utterly infuriating to me.
For the record, I've got an unlocked SonyEricsson phone that I purchased in Australia on a 12 month contract, which I now use in the US with a T-Mobile PrePaid SIM Card. It works great and the phone wasn't expensive up-front because of the 12 month contract which I signed with the provider.
At the end of the day, you pay for the phone, regardless of how the plans are organized. But yes, I do agree that the initial outlay of cash can deter consumers. Hopefully, Apple can create a revolution in the cell phone market: the SIM locking technology is ridiculous (if you buy a household phone, you can use it with any provider... why not with cell phones?). What doesn't seem to be acknowledged in much of the press coverage is the fact that network providers can still subsidize the handset by selling the phone bundled with a service contract.
For the record, I've got an unlocked SonyEricsson phone that I purchased in Australia on a 12 month contract, which I now use in the US with a T-Mobile PrePaid SIM Card. It works great and the phone wasn't expensive up-front because of the 12 month contract which I signed with the provider.
At the end of the day, you pay for the phone, regardless of how the plans are organized. But yes, I do agree that the initial outlay of cash can deter consumers. Hopefully, Apple can create a revolution in the cell phone market: the SIM locking technology is ridiculous (if you buy a household phone, you can use it with any provider... why not with cell phones?). What doesn't seem to be acknowledged in much of the press coverage is the fact that network providers can still subsidize the handset by selling the phone bundled with a service contract.
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