Apple's Invisible MVNO To Go With Its Invisible Phone

from the i-whatever dept

Running alongside the iPhone rumors is another one that’s just as persistent: that to sell the as-yet-invisible iPhone, Apple will set up a virtual operator, or MVNO, and sell mobile service directly to end users. It’s a rumor that’s even harder to believe than the iPhone itself, not least of which because Steve Jobs’ reference to the major US operators as “the five orifices” probably doesn’t make them keen to do business. But, nevertheless, the rumors persist, dragged on by Wall Street analysts who need research-note fodder. Today’s update comes courtesy of the bank UBS, an analyst from which says Apple will launch its MVNO next year — before spelling out all the reasons why such an approach isn’t a good idea. Apple lacks ample distribution channels for such an endeavor; it can’t subsidize the iPhone lest it hurt iPod sales, but it must subsidize the phone because consumers don’t like paying high prices for handsets; the barriers to getting a customer to change mobile providers are significantly higher than getting them to buy an MP3 player (as ESPN found out). In light of all these factors, the analyst remains bullish and reiterates his buy rating on Apple stock, confident that a deal’s been done for Apple to buy airtime wholesale from Cingular. An MVNO still remains the least likely model for Apple to enter the mobile market, and all these wild-eyed sales predictions seem to hinge on Apple being able to convince a lot of iPod owners to buy iPhones — when slowing iPod sales really isn’t something Apple will want to do. The key to the mobile handset business is volume; only selling your device through an MVNO severely inhibits your potential market for a number of reasons, in particular the inertia and contracts that keep people from switching away from their current provider.


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Comments on “Apple's Invisible MVNO To Go With Its Invisible Phone”

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11 Comments
Michael Long says:

Only?

“only selling your device through an MVNO severely inhibits your potential market for a number of reasons”

I found that statement interesting, in that it conains the inherent assumption that if Apple had an iPhone and if Apple had a MVNO, then the iPhone would only be available through it.

What if it was available on any network you wanted through a SIM-swap, and also on an Apple-branded MVNO?

What if an Apple MVNO was to the iPhone what .Mac is to it’s computers? A subscription option that enhances it’s use?

Think about it.

Nathan says:

Yes, but...

While I completely agree that an Apple run MVNO is probably not in the near future, I would disagree that it is the *least likely* model. Apple is known for retaining control over a lot facets of their business. If Steve feels that mobile operators are that awful, he may feel he could do better, and what better way that to just present the whole “Apple experience” as an MVNO. Again, not likely, but I wouldn’t say it’s the *least* likely.

sam gonzales (user link) says:

mvno not too far

a few things,
-the iphone is still just a rumor.. who knows if it will be released early 07.. i hope so cause im sick of the rumors lol
-apple has the database to spam about their new iphone on their new mvno “italk” make it a nice offer and i could see people switching no problem
-there is already a relationship with cingular, and they wouldnt care since they still see the $ from the airtime being rented

I think those are enough reasons to not disregard this fully..

ErattixConcepts (user link) says:

Apple iPhone

It seems as though Apple doesn’t understand that the longer it takes them to put out an official press release, the harsher the toll will take on their stock. As a stockholder, I continue to be disappointed that Apple won’t at least correct the speculators/analysts and tell them that they are wrong about their predictions.

Every time an analyst “predicts” or has some “hard fact,” their business is hurt because they think that they’ll make up for it. With this kind of business, I just wish they’d reconsider. How about a demo at CES 2007? or even a Apple.com notice correcting incorrect speculations. That’s just my two-cents.

Nobodyknows says:

ESPN failed because there was no demand for sports

ESPN failed because they went into the MVNO racket with three bad assumptions. 1) that people would be so ravenous about sports they would happily cancel existing cell contracts and jump to ESPN, and 2) there are millions of such such people, and 3) these customers cannot already get real-time sports info elsewhere.

In fact, people do not like to switch cell carriers -it costs money and fees to casually do that. There are not that many ravenous sports fans. There just aren’t. And those that do exist already have some method of getting their fix. I mean, what did ESPN think these people were doing for sports BEFORE the MVNO? Had to be something going on.

Apple faces the same challenges: get enough people to switch and eat the fees for doing so, and offer some compelling REASON to switch. Is music-playing enough? How is this phone going to be a better music player than the iPod people already own, which still works just fine?

Supposing it’s tightly integrated with OSX. OK. That’s a selling point. But it’s a phone. Does it NEED to be integrated with OSX?

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