Making big, surprising moves is part of Apple’s corporate DNA. Given the huge commercial success of its iOS devices, the next surprise Apple may undertake is to become a wireless service provider, believes wireless industry strategist Whitey Bluestein.
All the ingredients are there and in place, Bluestein told an international gathering of wireless operators, resellers and suppliers– the world’s leading brand, distribution through 363 Apple stores, digital content that includes music, video and apps. The content offerings enable Apple to exploit its 250 million iTunes accounts, all of which have credit card data on file.
Bluestein also noted that Apple’s patent-pending portfolio includes network architecture to enter the market as a wireless telecoms service provider. A 2006 patent filing–before the first iPhone announcement– includes a diagram showing how Apple would offer wireless service directly to customers using several mobile operators’ networks.
It’s the huge handset subsidies mobile operators such as AT&T provide wireless service subscribers that’s held Apple back to this point, Bluestein said, noting they amount to about $381 for each iPhone sold today.
Apple’s huge cash reserves, even after declaring its first-ever dividend recently, and extending the 2006 patent filing last fall indicates that management has figured out how it would offer wireless telecom service directly to its customers, he stated at the MVNO Industry Summit in Barcelona.
“The battleground is set, but Apple will be the first mover,” he continued. “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.
Here are highlights of what Bluestein foresees re Apple, Google and wireless telecom:
- 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 a la carte basis as an alternative to their current mobile operator and then as a 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