An Apple mobile phone?
I came, iPod, iPhone
Sep 14th 2006
From The Economist print edition
Why Apple is taking its time in launching a mobile phone
EVERY Apple product-launch is preceded by feverish speculation about what, exactly, Steve Jobs will have up his sleeve. This week's unveiling of a movie-download service was correctly predicted by many of the websites devoted to Apple-related trivia. Oddly, however, the most talked-about product among Apple-watchers is one that the company has yet to admit even exists: an Apple mobile phone, or iPhone. It is an obvious product for Apple, given the power of its brand, and the threat to the iPod posed by mobile phones with built-in music players. So where is it?
The problem for Apple is that mobile phones are not like iPods, but are sold in a completely different way. People do not generally buy them in shops, but from mobile operators. And they do not pay the full price of the handset, but get a subsidy from the operator in return for signing a service contract. So if Apple sells iPhones as though they were iPods, they will be far more expensive than competing handsets. The alternative is for Apple to sell iPhones through operators, as other handset-makers do. But being reliant on operators, with their poor reputation for customer service, could damage Apple's iconic brand.
A third option would be for Apple to deepen its partnership with Motorola, the second-largest handset-maker. The two firms have already worked together to add Apple's iTunes software to some of Motorola's phones. But it seems unlikely that Mr Jobs, a legendary perfectionist, would want to co-brand a handset with Motorola. And any such phone would still have to be sold via operators, as Motorola's are today.
There is another option: for Apple to set up as a mobile operator itself, by leasing network capacity from an existing operator. This is known in the industry as a “mobile virtual network operator”, or MVNO. It would give Apple complete control over sales, service, support and billing. But it would be expensive and risky. The MVNO launched this year by ESPN, a sports channel owned by Disney, has been a flop. Yet perhaps Apple's powerful brand would see it through. For Apple's fans, it could be a case of iPhone, therefore I am.
I came, iPod, iPhone
Sep 14th 2006
From The Economist print edition
Why Apple is taking its time in launching a mobile phone
EVERY Apple product-launch is preceded by feverish speculation about what, exactly, Steve Jobs will have up his sleeve. This week's unveiling of a movie-download service was correctly predicted by many of the websites devoted to Apple-related trivia. Oddly, however, the most talked-about product among Apple-watchers is one that the company has yet to admit even exists: an Apple mobile phone, or iPhone. It is an obvious product for Apple, given the power of its brand, and the threat to the iPod posed by mobile phones with built-in music players. So where is it?
The problem for Apple is that mobile phones are not like iPods, but are sold in a completely different way. People do not generally buy them in shops, but from mobile operators. And they do not pay the full price of the handset, but get a subsidy from the operator in return for signing a service contract. So if Apple sells iPhones as though they were iPods, they will be far more expensive than competing handsets. The alternative is for Apple to sell iPhones through operators, as other handset-makers do. But being reliant on operators, with their poor reputation for customer service, could damage Apple's iconic brand.
A third option would be for Apple to deepen its partnership with Motorola, the second-largest handset-maker. The two firms have already worked together to add Apple's iTunes software to some of Motorola's phones. But it seems unlikely that Mr Jobs, a legendary perfectionist, would want to co-brand a handset with Motorola. And any such phone would still have to be sold via operators, as Motorola's are today.
There is another option: for Apple to set up as a mobile operator itself, by leasing network capacity from an existing operator. This is known in the industry as a “mobile virtual network operator”, or MVNO. It would give Apple complete control over sales, service, support and billing. But it would be expensive and risky. The MVNO launched this year by ESPN, a sports channel owned by Disney, has been a flop. Yet perhaps Apple's powerful brand would see it through. For Apple's fans, it could be a case of iPhone, therefore I am.
