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.