Apple as a Wireless Opperator: Great Idea!

Apple as an MVNO would have a fighting chance:  Stevie Just Do It

Forbes' David Walt recently posted what Om Malik termed a "seriously speculative" piece, on how Apple could enter the wireless market in the U.S..  Highlighted in the Forbes article was how by becoming an MVNO (Mobile Virtual Network Operator) like Virgin Mobile or the recent Disney wireless announcement; Apple could do an end run around the few network operators to control the revenue sharing of the soon to be released iTunes-enabled cellphones.

I like the idea.  Apple is one of the few brands in the U.S. that could do it, do it well, and sustain the operation.   Of course, Dell could do it, Walmart, Sony, AOL, NASCAR and a dozen or two other ubiquitous brands.  The reason why I would love to see an Apple entry is that Apple is already a progressive hardware company known for style, and as an operator Apple wouldn't have to play in the discounting games that most brands would centre their USPs around.  I believe they could attract premium prices or at least those ARPUs similar to what wireless carriers have attracted from the better SOHO and corporate segments.

Apple could leverage the coming avalanche of audio-enabled cellphones from Motorola, Sony Ericsson, etc. and stylize their iFon (see comments) models to suit the what Apple customers expect (iPOD/iBookish white, Power-based silver models, etc.).  As their iPOD success has shown us, Apple would not have to discount or subsidize (much) their iFon's and as long minute packages are comparable to carriers; Apple would likely attract a strong loyal niche following.  Add to this, Apple's ability to bundle in iTunes tracks (weekly ringtone of your favourite iTunes genre based on the charts, etc.), multi-platform licenses support (access your purchased music library via iFon or your desktop), integrated iChat/iPhoto/iMovie/.mac support, etc.   There's plenty of opportunity for Apple to attract higher than average MVNO margins.  The back-office carrier may even benefit from monitoring this Apple application iSandbox(?) to see take-up rates and grow their internal learning's.

As someone who in the past has had to negotiate directly with Apple executives to gain exclusive "official Australian Apple ISP" status; I know how well Apple can negotiate deals with carriers.  They would rather delay a launch, then see their brand risked or their vision sandbagged by an inflexible partner.  I can't imagine a progressive mobile carrier saying No to Apple; risk losing its brand momentum and market niche to a competitor just because Apple won't share its iTunes margins.

Let's face it, carriers aren't used to making money from mobile music in the USA anyway, so they aren't losing too much if they benefit from the learning's, the partnership,  and  Walmart-inspired margin pressure.  Apple customers may actually use the capabilities of a mobile 3G network! Apple would rather a flexible partner and pay an extra cent per minute (as an example only) then do without a partner that can see the benefits of muual market development.   I can't see this iPOD tidal wave going on for another three years, and Apple moving into the wireless business would have better margins, long-term recurring revenue streams and a better effect on its stock than focusing on just its Macs and iTunes markets.

All the rampant speculation online about Apple entering the the MVNO market-space maybe speculation, just as my comments above, however I see far fewer negatives for Apple behind this move and a lot of strengths.  The time is right for a market move in 2005 or early 2006; any later and Apple risks a slow-down in its iPOD business that would seriously cut the brand's current momentum amongst its users and investors.

What Pro's and Con's have I left out?  Ideas?  Please share your comments!  On the weekend, I'll post a review on the perfect mobile phone that Apple could launch with; I've been using it for two weeks and its near perfection!

Thanks,
Ash

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