Apple, which long ago ditched the 'computer' in their name, is known more as a phone cum mobile device maker and digital content distributor; and rightly so, their last earnings report showed these non-computer segments accounting for three-fourths of their revenue, with most of that coming from the iPhone. Having defined the smartphone feature set with a high bar all others must match, and with the Verizon model flying off the shelve
Apple, which long ago ditched the 'computer' in their name, is known more as a phone cum mobile device maker and digital content distributor; and rightly so, their last earnings report showed these non-computer segments accounting for three-fourths of their revenue, with most of that coming from the iPhone. Having defined the smartphone feature set with a high bar all others must match, and with the Verizon model flying off the shelves, one wonders what Apple will do next? How about utterly changing the wireless business model by decoupling the device from the carrier.A painful and frustrating reality of the cell phone market, particularly in the U.S., is a purchasing model that resembles razors and blades on steroids. You get a sexy phone for a cut-rate, subsidized price, but you're locked into a specific carrier and costly subscription for upwards of two years. Apple actually exacerbated this situation with the iPhone by granting AT&T exclusivity until just this month -- previously, one could get roughly the same model, be it a BlackBerry or MotoRazr, on any carrier. Yet what many, dare I say most, people would like is for the phone to operate like any other information appliance -- my TV doesn't care which cable, satellite or streaming service I use, nor does my computer lock me into a certain ISP. Well, a couple recent Apple patents hint that they may one day use their overwhelming market power to upend the wireless business by completely disaggregating device from service provider.
A patent entitled Dynamic Carrier Selection describes a technique whereby the phone acts as a free agent, querying available carriers for data service (remember, that in the 4G realm, voice is just another slice of data) and requesting bids for service. Here's where it gets interesting. Quoting from the patent:
"In some situations, bids are received from multiple network operators for rates at which communication services using each network operator can be obtained. Preferences among the network operators are identified using the received bids, and the preferences are used to select the network operator for the mobile device to use in conducting communications."
While the patent doesn't state this, it seems logical that billing for an Apple device would be handled through an iTunes account. In essence, mobile data service becomes just another item in the app store. If this seems technically infeasible, consider there are strong indications Apple is also working on a virtual, software SIM that would enable the phone to have multiple carrier personalities.
Why would carriers agree to such a scheme you ask? How about if it becomes the only way to gain access to all those iPhone users. When Apple becomes more powerful than the carriers -- and, with a market cap three-times Verizon's and double AT&T's, along with almost $30 billion in cash, who's to say they aren't already -- carriers may have no choice. Now that Apple's got Big Red and Big Blue both vying for iPhone users, which will continue to make up a growing piece of their customer base, they will soon have the carriers by the short hairs. Someday, probably not the iPhone 5, but perhaps sooner than we realize, Apple may well drop the hammer and say they're handling the customer relationship now and that the only way to get iPhone traffic is to bid on it.
. We've got a management crisis right now, and we've also got an engagement crisis. Could the two be linked? Tune in for the next installment of IT Life Radio, Wednesday May 20th at 3PM ET to find out.