The longest-running rumor many of us can cite at the moment is the nearly-constant expectation that Verizon Wireless is going to carry the Apple iPhone. Alas, the rumors, which have heated up again recently, seem to be equally false. No iPhone at Verizon for the foreseeable future, it seems.
Thursday, June 3, 2010
Verizon Says it Has No Immediate Plans to Sell iPhone
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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1 comment:
I believe Apple won't leave AT&T until there's a colossal sea change, and Apple begins getting their "butts kicked" by the competition. Nobody thinks this is likely to happen to Apple anytime soon.
Question: If you're Apple, what's better than selling smartphones for a one-time charge of X-hundred dollars?
Answer: Selling them for X-hundred, PLUS a portion of the wireless carrier's monthly charges! That's essentially what Apple has here--It's dream business, they know it, and one that they're not likely to give up anytime soon.
My take on this:
Wireless companies in the large geographic footprint of the US operate at very thin margins over their high fixed costs. So lets say a wireless company increases its revenue by a modest 5%, that small increase could be mean a DOUBLING of profit (NOT a 5% increase in profit). See what I mean?
Now take a look at AT&T's pricing plans. They're definitely charging a healthy premium for similar services compared to the other nationwide wireless carriers. WHY is that? They do it because they CAN, and they CAN do it because have are the one company that carries iPhone. Apple wins because AT&T pays Apple a chunk of this 'magic revenue' (that AT&T would otherwise NOT have) to Apple in exchange for exclusivity.
If Apple were to do a damn fool thing like bring the iPhone & iPad to other carriers, their 'magical' (high margin) business would turn into 'regular old' business, and it would become a classic "race to the bottom", where the premium goes away for for AT&T (and Apple by extension) as they compete at 'reasonable and customary' rates.
Apple & AT&T would have killed the 'perfectly good' goose that lays the golden egg. It's simply NOT going to happen.
UNTIL...
That is to say, It's not going to happen until people stop buying iPhones in droves. If one day it "comes to pass" that that Apple can't keep up with the respectable products being offered by the competition at the the current MIND BENDING pace that we observe, THEN Apple will IN FACT have little choice but to begin competing on price. When this happens, the price war would of course begin where it hurts Apple least: at the carriers.
That is to say, AT&T would lose its exclusivity, and Apple would lose its financial benefit they get from the exclusivity. Apple would hurt, but they wold hurt less than AT&T. They might even enjoy a temporary increase in sales from the small number of people who held out on buying an iPhone because they didn't want become AT&T customers.
So stop holding your breath and stop listening to the rumor mongers. It's not going to happen anytime soon. Apples doing a very good job serving their intended market which they understand in exquisite detail.
By the way, I don't own any Apple products but I DO own apple stock :-)
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