Apple Rapidly Moving to Become Direct Mobile Service Provider, Predicts Strategist

[btarunr]

Apple’s next big move will be to provide wireless service directly to its iPad and iPhone customers, according to veteran wireless industry strategist Whitey Bluestein.

Bluestein told an international gathering of wireless operators, resellers and suppliers that Apple has all of the critical elements – the world’s leading brand, distribution through 363 Apple Stores, digital content (music, video and apps)—which will allow it to exploit its 250 million iTunes accounts with credit cards on file.

He also noted that Apple has a patent-pending network architecture to enter the wireless industry as a service provider. Apple filed a patent application in October 2006, shortly before the first iPhone announcement, with a diagram on how it would offer wireless service directly to customers using networks of several mobile operators. The patent application was extended in fall 2011. Bluestein said that the patent confirms that Apple has thought through how it would offer service directly to customers.

At a presentation at the Informa MVNO Industry Summit in Barcelona, which he also chaired, Bluestein said:

• 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

“The battleground is set, but Apple will be the first mover,” said Bluestein. “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 also predicted that Google will acquire a back-office provider to help it get into the mobile business. He said that Google is accustomed to such acquisitions, having acquired 79 companies in 2011.

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. 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.

Bluestein has been a prominent strategic advisor to the wireless/mobile industry for more than two decades. Prior to his current advisory practice, he spent much of his career at MCI Communications, then later at NorthPoint Communications and Visage Mobile. Since then he has built a strategic advisory practice helping young and established companies enter the mobile space or launch new mobile initiatives.

For additional details of Bluestein’s briefing, please visit this page.

A presentation on the topic can be found here: Are Apple and Google About to Become MVNOs (PDF).

[entropy13]

All Hail the Holy Apple!

[Sasqui]

Hell, the Amazon Kindle has been doing this for years through AT&T (most customers didn't even know that) ...and it's free.

They must be wrangling behind the scenes with a lot of wireless service providors to get the coverage and bandwith they need. Or simply buy one of them. Anti-trust suits will be all over them if they try that though.

[phanbuey]

Super interesting... I hope that it is true, and as any time new competition comes in customer wins. Especially if google AND apple go at it.

I am ready for cheap smart phones.

[Steevo]

It sounds nice to have more competition, however the real to benefit customers might be due to the locked down apple approach being forced to open up a bit to allow competition with their own devices. Honestly it is about time for another major player in cell services, they have stagnated everywhere except a few key locations and even those have issues.

[Cold Storm]

Originally Posted by Sasqui

Hell, the Amazon Kindle has been doing this for years through AT&T (most customers didn't even know that) ...and it's free.

They must be wrangling behind the scenes with a lot of wireless service providors to get the coverage and bandwith they need. Or simply buy one of them. Anti-trust suits will be all over them if they try that though.

THat's what I've been talking with a few people at work.. Amazon's been doing that. Yet unless you read the pages fully you don't see that they are.. Most customers feel that they're doing what Apple/Android does with their tablets if it has 3g...

It's going to be nice to see how it all comes down to it.. Pretty crazy numbers placed in the PDF, but if they can pull it off...

[Octavean]

Originally Posted by Sasqui

Hell, the Amazon Kindle has been doing this for years through AT&T (most customers didn't even know that) ...and it's free.

They must be wrangling behind the scenes with a lot of wireless service providors to get the coverage and bandwith they need. Or simply buy one of them. Anti-trust suits will be all over them if they try that though.

Are you referring to the “Kindle Keyboard 3G + Wi-Fi” with free 3G access?

If so, yeah it was an interesting approach because one could access Amazon to buy books and download them. Free sample books as well. Browsing the web was also possible for free. However these older Kindle products were different types of devices then Apple iOS devices (iPhone, iPod, iPad). They were monochrome, sluggish and not much fun to use with respect to online content.

The newer Amazon Kindle products dropped free 3G support.

It would be interesting if Apple allowed / arranged for some sort of free 3G access on iOS devices but why would they? Perhaps for access to their Apps store, book store, iTunes and so on but likely restricted to just that for the purpose of facilitating the sale. Its doubtful they would allow browsing.

Its also not clear how they would allow access to any device other then those with SIM card / cellular antennas. There are a lot of iPod and iPads without cellular support.

[Easy Rhino]

Originally Posted by Steevo

It sounds nice to have more competition, however the real to benefit customers might be due to the locked down apple approach being forced to open up a bit to allow competition with their own devices. Honestly it is about time for another major player in cell services, they have stagnated everywhere except a few key locations and even those have issues.

true. i would prefer a locked down approach for cell service by apple than any of the other wireless telecoms.

also note, apple has over 80 billion in cash. it has to spend that some time!

[Grings]

I expected them to do this years ago.
In the UK the iphone userbase is far larger than the virtual networks (Virgin and Tesco mobile being probably the largest)
I imagine this is the same in most other countries.

[FreedomEclipse]

I suppose this response is because Apple recently got scrutinized by a UK regulator on their ipad '4G' claim

there is only a very very limited 4G service here in the UK, its so limited its vitually non existant but it exists.

So i guess by launching their own network they can forfill the 4G claims they are being slapped on the wrist for which im sure most apple users would lap up even if its slightly more expensive.

Problem lies with the UK's attitude towards technology. the UK is seen as one of the most developed countries in the world but a lot of the telecomms system dates back to pre-war years. throw in the constant network usage for broadband and telephone calls and the whole system becomes bogged down and no one ever sees their advertised speeds not to forget that we pay more for internet and get slower speeds compared to people across the pond.

If it aint broke - dont fix it.

Situations slowly improving though, we now have ISPs offering super fast fibre optic broadband but that still comes at a price.

[MxPhenom 216]

Originally Posted by phanbuey

Super interesting... I hope that it is true, and as any time new competition comes in customer wins. Especially if google AND apple go at it.

I am ready for cheap smart phones.

cheap is not in apples vocabulary.

[Easy Rhino]

Originally Posted by nvidiaintelftw

cheap is not in apples vocabulary.

exactly. they make very high quality products and charge a fair amount for them. all of the other manufacturers are forced to undercut apple prices just to compete. if it was not for apple you would be seeing sony,samsung,etc marking up their smart phone prices well above what apple charges today.

[jmcslob]

Originally Posted by Easy Rhino

exactly. they make very high quality products and charge a fair amount for them. all of the other manufacturers are forced to undercut apple prices just to compete. if it was not for apple you would be seeing sony,samsung,etc marking up their smart phone prices well above what apple charges today.

And some people can't see the benefits to slavery...

[Xzibit]

A more reasonable explanation that got reported couple weeks back is here in the U.S. tele-comunication companies are tired of subsidicing the iPad & iPhone for the possibility that a customer who buy ones will stick around after 2yrs of service when that customer becomes profitable to the company.

If the companies stop subing the iPads and iPhones. Apple profits will plummet and shares will fall.

Whos gonna want to put up with the real price that Apple is charging for a iPhone starting$600+ . When next year you'll want to upgrade. No profit to be made.

I think they are testing the waters with tele-coms

[Nkd]

I wouldn't be surprised if the use sprint as the background operator of their wireless service. Since they are pretty much desperate about gaining more customers.

[DannibusX]

Deutsche Telekom is selling T-Mobile, Apple. The FTC cockblocked the AT&T merger, but I'm pretty sure they're still interested in ditching the US as a market.

[Tatty_One]

Originally Posted by jmcslob

And some people can't see the benefits to slavery...

Your point is a very good one but I am willing to bet if we analysed the social/envoirnmental impact of these manufacturers we would all come across hardware that we owned from sources and conditions that were scary, probably including some of the hardware you (and I) own.

I find it a little hypocritical (honestly not aimed at you) that so many jump on the Apple bandwagon because their practices have been identified as less than favourable when I am willing to bet there are plenty more manufacturers out there with the same or similar practices....... don't get me wrong, it's all bad but if someone decides not to buy say an Apple laptop off the basis of fairly recent news reports and therefore buys a Toshiba or Sony instead, they may feel better in themselves but in fact they "could" be fooling themselves......

http://www.ethicalconsumer.org/buyer...dnetbooks.aspx

[xenocide]

It's a problem with the system, not the companies taking advantage of it. It would be illogical for Apple not to use Foxconn if they can get the best deals from them. Not supporting them won't really accomplish anything since the underlying system is where the problem resides.

[pr0n Inspector]

Originally Posted by jmcslob

And some people can't see the benefits to slavery...

Yeah keep eating up whatever the media feeds you, never mind the fact that when you are poorly educated there are no good jobs for you in China, never mind the fact that working at Foxconn is so much better than at a Chinese grocery store that thousands of people line up to get a chance of providing a better life for their future children.

A poster on [H] hit the nail on the head:

Originally Posted by NKDietrich

Uh, probably any company with hundreds of thousands of employees is bound to have a number of suicides. The only reason Foxconn stands out is because they are the ones getting the press because of Apple.

It was pointed out nearly two years ago that Foxconn employees commit suicide less often than even the lowest estimates of China's national suicide rate.

Working in China as a Chinese citizen sucks the vast majority of the time compared to working in another country, or even working in China as an American or European where they pay you out the ass and treat you really well. That isn't in dispute.

But all this attention Foxconn is getting is nothing more than media hype and the West flaunting their "superiority" over the Chinese. It's propaganda, basically, and it's a shame that so many of us here who are supposedly intelligent, tech-savvy individuals are falling for it.

Working conditions in China suck compared to the US. But Foxconn is not outside the norm for China. In fact, the workers there are probably better off than most. Tech workers there, even the grunts, are a lot better off than some of the others.