Should Apple buy a phone company?
thenextweb.com
thenextweb.com
People don't understand the difficulties of having lots of data on a large-scale network across thousands of miles of cities, countrysides, and elevation differences. They do understand if a computer or phone is slow, though. This way, there are problems, but it's not because of Apple and their immaculate product. Why tarnish your brand with something people won't understand?
All Apple needs to do is switch off video on facetime, find a way to add voip style phone numbers (like Skype et al) and then sell it as $200 phone, no plan required.
I'm always near wifi except when I'm in my car, and I have a pay-as-you-go cell for those times.
AOL was a previous-generation network infrastructure company. Current mobile phone operators are in a similar position. Any IT company should stay away from making long-term bets on them: just play nice to get what you need from the operators now, and let these dinosaurs go extinct when the market eventually changes.
Current operators appear to me as not unlike the railroad monopolies of the late 19th century. Immensely powerful and seemingly irreplaceable, but on the brink of being disrupted to irrelevance.
On top, as Swannie has pointed out, Apple has an international market.
If they buy Clear, they're possibly going to face obsolescence. Many folks think Wimax will lose out to technology like HSPDA+ and LTE in a few years.
Back in the real world, why would anyone want to own a phone company? Even the phone companies don't want to be phone companies anymore.
Clearwire is a little more likely, but WiMax is just not matching the performance:power ratio that LTE is offering.
As the article points out, the expense of a network build is mostly in the land for towers (and the backhaul from tower site to network point-of-presence - sometimes 100s of miles of fiber/microwave links). Buying Clearwire still lands it with a lot of cruft that they don't need.
So the third way, unmentioned by the article, is that Apple goes into a joint venture with a cell co. Joint ventures for infrastructure sharing (site, tower, power on site, security, etc.) have long been established in the UK and other EU countries (site sharing is used everywhere, but often only on a site by site basis, with tower sharing not always happening).
Also in the UK market we've seen consolidation on the radio access network front. Everything Everywhere is the network operator for two UK cell co's. At the moment they still operate their own backend networks, but roaming between the two is free.
If Apple were to go to Sprint/Clearwire with a proposal to create a infrastructure or radio access network sharing operating company, this is a win for all - reduced costs for the existing service provider (giving a competative advantage) and access to Apple to build out their own iNetwork.
This being the case, if I were Jobs - and if I wanted to own and operate a network - I'd want to build my own. But licenses for bandwidth are scare resources, and building a mobile network from scratch takes a long time. The most apparent way around this is to buy a carrier, as the author points out.
So, if Apple were to buy a carrier, yes, it'd be under very specific conditions. Basically, the Apple M&A team would be using a due diligence period to slice and dice the deal (and the carrier) in such a way to make sure Apple skims the cream, and is able to slough off the rest to someone else, and recuperate money off the divestiture, in the process. They would know how they were going to get this done, before they sign any contract, or there wouldn't be any deal.
The problem is, it's hard to see why another carrier would buy the legacy mobile infrastructure from Apple, w/o all the shiny new bits. Also, it's not clear that Apple would want to have to operate, manage, and upgrade a wireless network. I can't see Apple wanting to own a utility company.
So, on a different track, I think the author discounts the "soft carrier" approach too easily. In addition to saying "No." to crappy stuff, Jobs wants to enter markets where Apple can change the game. So, how would one change the game as a wireless carrier, not just as a mobile device manufacturer?
If I were Apple, I'd license spectrum from multiple carriers, depending on who has the strongest coverage in a particular geographic area.
Apple is already using the chips/antennas in the iPhones that support both the CMDA & GSM standards across all freqs. With licenses to operate AppleNet over multiple carriers, Apple would be uniquely situated to create smartphones and other mobile devices that could seamless operate over a multi-spectrum/multi-protocol virtual wireless network. Ultimately, Apple could license spectrum from multiple carriers in the same market, and have their iOS devices automagically switch from one to another without the customer noticing the handoffs. Plus, Apple can do the same in different markets, scaling AppleNet globally. Customers would have one AppleNet account, with "local" billing, regardless of where in the world they are.
Now, that would be a mobile market game changer. Again.
Of course, this multiple-licensee "soft carrier" approach to an AppleNet is probably a pipe dream, as well. The roadblock to innovation in the wireless industry, as always, are the wireless carriers. While stupid and slow, the carriers are cunning operators. They would likely see this move by Apple as being against their long-term interests, and resist Apple treating them as the utilities that they really are. Apple may be able to overcome their concerns by appealing to their short-term profit interests (a weakness of any publicly traded company), just like they did with AT&T and the original iPhone. But this time, if Apple were to make it happen, the short-term bait wouldn't be a shiney iPhone. It'd be good, old-fashioned, cold, hard CA$H monies.
The ipad.
But I certainly do have to give you that nobody seems to match them in the same form factor, so that's reasonable enough.
Meh, I would have to say in retrospect that itunes music pricing is (or was) there as well, though not by Apple's decision necessarily.
Ok, I guess I should rephrase. Apple does not cut prices to beat competitors. They may set a price point initially that only works at scale, and rely on competitors not being able to match. But if Dell comes out with same-but-cheaper, Apple doesn't do price wars, and if Apple enters a market it's generally at a premium to existing brands. I still wouldn't expect cheaper wireless from Apple.
Anyway, the days of $99 a month phone plans are presumably coming to an end.
The idea is completely contrary to what Apple is good at and what they want to do.