Apple Computer is poised to launch its own MVNO service by acquiring wholesale capacity from Cingular Wireless, according to a note by UBS AG telecom analyst Benjamin Reitzes, who speculates the company would then sell its much-rumored iPhone music player/networked handset across its 174 retail outlets.
“Apple is embarking on another chapter in multiplying its revenue streams as it sells more accessories and cellular services,” Reitzes wrote. “While there are number of challenges with an MVNO, Apple may be the best positioned of any player yet to make it work given its distribution, brand, installed base of iPods and software and iTunes integration.”
Citing unnamed sources, Reitzes said Apple plans to officially announce the iPhone in March or April, adding the device will likely include between 4 and 8 GB of flash memory and a digital camera.
So far this would fall into the category of a “better-class” of rumor. But if anyone can make it as an MVNO, it would seem that Apple can. The problem thus far with most MVNOs is that they buy their minutes from carriers at a wholesale price that doesn’t offer them much opportunity for margin. So most MVNOs end up having to price their services at a premium price point. ESPN has a very strong brand yet fewer than 50,000 customers were willing to spend $80-$200/month on its MVNO service. Now ESPN is not a product company and therefore it really could not justify selling both its phones and the voice and data service it provides at a premium. Apple – of course – is in a much different situation. Apple is a product company quite capable of commanding a significant premium for its hardware products. Apple is also a services company as it has proven so ably with the iTune downloadable music service.
What We Think
Rumors are nice. But full-time Apple watchers know better than to second guess this company. If Apple is going to enter the fray as an MVNO it will be interesting to see how they fare. The real opportunity for Apple may be in the phone business but also in making the iPOD player freely available as a downloadable application available to any mobile phone that has access to the Internet. This could be a big win:win for carriers … who would be able to get many more people to sign up with regular (non-smart) mobile phones to sign up for internet data plans and/or charge a premium for access to 3G and 4G data plans.
As reported on Fierce Mobile Content