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Does the Apple iPhone Damage Network Operators?

Does the Apple iPhone Damage Network Operators?

Strand Consult have laid out, in one of the clearest forms yet, why having the Apple iPhone on your network might not be the best thing in the world. While the online fans of the iPhone are legion (literaly), there still needs to be a business case drawn for any adopter, be it an individual, company, or network. In their own words:

Strand Consult is not in the business of creating hype around technology, our business is to explain to mobile operators how the future market will evolve and how to make money for their shareholders.

…so their ten points on the iPhone are well worth reading in this report. You can read the details here, but let me break out their main topics, and do a little cliff notes of my own thoughts on each area.

1. Limited Market Segment
With 6 billion people in the world, 4 billion handsets, and 1 billion personal computers, even the massive sales of the iPhone (upwards of ten million) is impressive yet still a very small drop in the ocean. And while no single handset rival matches sales, Nokia could argue that the N95-1 N95-2 N95-3 (and so on) are outselling if you add the unit sales.

2. Marketing the iPhone takes away staff from more profitable sectors.

3. Does this leave a gap for competitors to go after forgotten users of the iPhone ready network in each country?

4. While the data usage of the iPhone is promoted, most people are switching to the iphone from other data handsets, not coming into the network specifically for that.

5. The iPhone uses a lot of mobile data – and it’s flat rate so there is litte recompnese on the network.
Although I would say that this is a transition period and in 18-24 months time this point will be much less valid.

6. The iPhone pulls down ‘regular web pages’ and not ‘;mobile’ pages driving data bandwidth up by up to ten times.
See the same argument as in point 5.

7. Apple’s App store gives no fees to the operator (in the same way as Nokia share revenue via the N-Gage on device store), and has a kickback from the data tariffs.
In short they regard networks as dumb pipes moving 1’s and 0’s, almost a necessary evil.

8. I’ll quote this one “our research shows that there is not one single Apple partner in the world among the mobile operators that has increased their overall turnover, profit and market share due to the iPhone.”
Blimey. Bet Apple are profiting though.

9. The unlocking handset market worldwide is huge for unofficial handsets.
Well, what do you expect when you create a drought in the marketplace? Profiteering happens.

10. Other Operators and MVNO’s are directly benefiting from (9) without having to invest in all the other iPhone structure requested by Cupertino.

It’s fair to say that the cost of a mobile phone to a network is not usually one of the main topics of covnersation, but Apple was always one of the few companies that could have been a game changer. Instead they played the current system, and by Strands accounts played it well. To be honest I think any manufacturer would be happy to deal with networks in the way that Apple does, and as times get tight in 2009 we may some pressure applied by Google and Nokia for their smartphones, in a similar style.

But the networks, with half an eye on churn and costs per user, are going to be in a tougher place, and do need to balance everything out. The iPhone is inherently unbalancing and could be a millstone for some networks in 2009.

[Thanks: http://www.mobilemessaging2.com]

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