Would Apple Want to Buy Sprint?

With the news that Sprint has agreed to buy $20 billion worth of Apple iPhones, and with Sprint having a market capitalization of about $6 billion, speculation will begin that it is well within Apple's potential to simply buy all of Sprint. 

That would cause Apple enormous channel conflict of course. In fact, Apple would not avoid much channel conflict even if it opted to create "iNet" using wholesale capacity leased from Sprint. 

Would Apple Buy Sprint?

Apple "Owns" Sprint

In a move that some believe could be a make-or-break move for Sprint, the company has committed to buy at least 30.5 million iPhones, even though it would likely lose money on the deal until 2014, according to the Wall Street Journal. The deal could represent a commitment of $20 billion at current rates, and Sprint has to buy the devices, whether or not it can sell them.

Apple was paid $632, on average, for each iPhone sold to mobile service providers  in its most recent quarter, according to Credit Suisse. Customers who are not happy with contract plans that allow mobile service providers to recoup the device subsidies can decide, and do decide, that a contract is a better value than paying full price for a new iPhone and avoiding a contract.

To sell that many iPhones, Sprint would have to double its rolls of contract customers, convert all of them to the Apple device or a combination of the two, the Wall Street Journal notes. 

Sprint virtually has to take some big risks as it attempts to get itself back on a growth track. As one of my sons would say, "Apple owns Sprint."

Inside Sprint's Bet on Apple's iPhone

What is Twitter, Really?

What is Twitter? Sure, it is a "social network," but lots of people also say blogs are social networks. Initially, the idea was that Twitter was Facebook in 140 characters. These days, most observers would tend to agree that Twitter is something different, which only raises the question of "what" Twitter actually is.

These days, some would say, Twitter might be seen less as a social network on the Facebook model, but something that is as much broadcast network as a "social network." Of course, these days all social networks seem to be "media" as well as the digital equivalent of any real world place where people casually hang out and talk.

These days, the term "information network" seems to be the accepted term. Dick Costolo, Twitter CEO, says “there’s this huge opportunity for us to surface all this great content.” The difference might be subtle, but it's a bit like the difference between "what you doing right now?" and "what's happening right now?"

The former is an example of personal communication. The latter is "media."

Will Twitter Become Profitable?

Social Media ROI is Tough to Measure

Return on social media investment is tough to measure, which should hardly be surprising. Any firm using multiple marketing and sales channels will have a tough time determining the relative impact of any single one of the channels, for example. 


Practitioners also measure what can be measured, which is not the same thing as a direct measurement of return, but only a proxy for such returns. It's still partly art, not fully science. But all marketing is equal parts art and science. 

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Digital Monopolies?

A "digital monopoly" can be a strange thing. An application, whether Facebook or PayPal or Google or iTunes can have external characteristics that resemble what might have been seen as monopolies in other earlier contexts.

But they are odd sorts of monopolies. They can be used "for free," so price gouging is hard to discern. There are other alternatives for all applications and devices, over time, so lack of choices is likewise hard to discern.

But in some quarters there is concern over such application "monopolies," even when traditional tests of consumer harm are virtually impossible to prove.

The rise of the digital monopolies

Should Amazon Buy Palm?

Amazon is rumored to be in “serious negotiations to buy Palm assets from HP. Some will question whether this makes sense for Amazon. Palm's webOS has been highly regarded, but has failed to get market traction.

Whether Amazon could do better, or whether it should not simply continue to use Android, are legitimate questions. But some might argue most of the value is in Palm's intellectual property portfolio.

And that could be important if Amazon believes it will, in the future, be competing with Apple, not with Barnes & Noble or eBay. As recent events have shown, IP ownership is crucial in the new mobile business.

Amazon's interest in Palm

Advertising is Revenue Model for Most Social Networks, So Far

Observers used to worry about how social networks such as Facebook, LinkedIn, Twitter and now Google+ would create a sustainable revenue model. So far, the answer has turned out to be "advertising." But there are some additional questions that arise from such asnwers. 


Sometimes it is hard to precisely figure out what business social networks are part of. 


Sure, at a high level, every business has the primary task of creating a customer. At a fundamental level, that's the "business" every business must master, with profits being the price of continuing to create and sustain those relationships. Beyond that, every discrete business can be categorized by its products, revenue models, technology approaches, geographies served, revenue and customer segments, among other potential taxonomic approaches. 


Google is a hard firm to characterize, for example. It makes its money from advertising. Normally, if you ask what sort of company makes its money that way, the answer is "media." But Google always says it is a technology company, not a media company.


There are reasons. Valuations of media companies carry lower multiples than technology companies. The content Google wants to index comes from content and media companies that aren't comfortable with the idea that Google is a competitor. So Google has a couple of good financial reasons for positioning itself as a technology company, not a media company. 


But Google is the biggest technology company you've ever heard of that makes its money from advertising rather than hardware or software. It's just hard to categorize. The issue isn't exclusive to Google. Is Apple a media company because it sells music, video and games? 


Is Amazon "just" a retailer now that it creates and sells Kindles, and sells magazine, newspaper, book, music and video content? 


Back to the original question, what is a social network? Social networks make their money on advertising. And what sorts of companies historically do that? Media companies. 

Social media revenue