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Apple To Turn Carrier?

May 2, 2012

Michael Harper for RedOrbit.com

In what may be the only rumor older than the Apple TV mumblings, people are now beginning to wonder aloud if Apple will start their own mobile service, overtaking the likes of AT&T and Verizon, further taking control of the entire iPhone and iPad experience.

According to BGR.com, a veteran wireless industry strategist by the name of Whitey Bluestein said Tuesday that Apple will soon begin to offer wireless service to their iPhone and iPad devices directly. According to Bluestein, Apple not only has the distribution channels and content portfolio to be a strong contender, they´ve also got a strong customer base. This customer base is an incredible leverage point for Apple, as each has trusted Apple with their credit card information.

Speaking at the Informa MVNO Industry Summit in Barcelona, Bluestein is quoted as saying, “The battleground is set, but Apple will be the first mover.”

If Bluestein is correct, Apple´s competition, namely Google, will have to work fast to catch up.

“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.”

Bluestein is also citing some famous Apple patents from 2006 for network architecture. Should these patents be utilized, Apple could stand to be a very powerful and intimidating force in the mobile service provider industry.

Before the first iPhone was introduced, Apple filed a patent for “Dynamic Carrier Selection” which would allow Apple to piggy-back with other carriers, giving iPhone and iPad users the ability to have the best reception on the cheapest network given their specific location. This was seen as a bold plan when the patent filings were first discovered. Then, last June Apple revived these plans, extending the filings and causing those in the industry like Whitey to believe Apple will throw their hat into the mobile service provider ring very soon.

In fact, Bluestein says the only thing Apple has to fear is Apple itself. The iPhone is a truly great device, but without subsidiaries paid for by the carriers, it stands to reason far fewer people would use the phone. A new, 16 GB iPhone on contract starts at $199. Outside of contract and without the subsidiary, customers have to shell out a whopping $699 for a new 16GB iPhone.

However, Apple´s insanely large cash reserves could be enough to float the company until it can make enough from new subscribers and contracts.

“What has been holding Apple back from becoming a wireless provider already,” according to Bluestein, “are the enormous handset subsidies paid by mobile operators (AT&T, VZW and Sprint in the US), which amount to about $381 for each iPhone sold today,” noted BGR.

”That has been a short-term stumbling block for Apple, but the company has its well-known cash reserves and could seize the initiative at any point.”

As Whitey writes for Gigaom.com, iPhone customers spend almost twice as much as the national average on their cell phone bill per month. When Apps, music and video sales from iTunes are added into the equation, Apple wouldn´t only be able to extend the “entire” Apple experience to its users, they´d also be able to make some extra dough while they´re at it.


Source: Michael Harper for RedOrbit.com



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