This week Apple staged their annual September showcase, and as expected it was full of whistles and bells reflecting the momentum that comes from the only handset Company making money or growing profitable share.
It was also transformative for the wireless industry as they surrendered territory to Apple without a whimper or pin.
Wireless carriers were once a license to print money. They had unprecedented demand for cell phones and then smartphones and they used their power to feed their customer base unbreakable contracts attached to locked phones. They reaped the profits from low-hanging fruit that included selling dial tones, charging outrageous tariffs for text messaging and data plans.
This started to change in 2007 when a new sheriff named Apple showed up. From day one they took a bite out of their business. Their handsets were superbly designed but the most material element difference was their strategy. Instead of being one of many providers of handsets, they focused instead on being an enabler, on improving the life of consumers and the livelihood of business owners. In doing so they commanded a premium price, unprecedented attention and recurring by monetizing apps and content.
Apple looked into the future and saw people bringing the world they covet within arms reach of their desire. Wireless Carriers who owned the customer relationship remained in the past. Instead of harnessing their global partnerships that allowed voice to be effortlessly moved around the world, and investing in RCS technology where they could dominate Smart Messaging, Health, Homes, Sharing etc, they focused on feeding their shareholders appetite for cash without risk. There were exceptions but few acted on a global stage. Instead, they viewed other carriers as their competitors when in reality it was Apple, Google and Samsung that were the Trojan Horses. Each subsequent launch from Apple and other content, handset and app creators added to this Great Divide and lost relevance for the carrier.
This month's announcement by Apple was different. This was no longer death from a thousand penknives; this was Apple wielding a machete, and taking full control of the customer and the marketplace. Apple announced a plan where customers could pay $32 a month and get a new unlocked phone each year. Not through their carrier but directly from Apple. Your old phone would be returned, repurposed and resold by Apple who would be fully in control of global supply and demand. Carriers were not invited to this party.
If that wasn't enough, the wireless carriers might soon be off another guest list regarding customer relationships.
Apple announced that their iPads have SIM trays and that customers can buy data packages through iTunes. When they extend this technology to their iPhones the reality is that carriers will be forced to sell their data and voice packages to Apple, not the end customer.
My prediction on how the marketplace will transform over the course of the next few months and years is that Apple might buy 'pipe' at firesale prices to make even more margin. If not then I have the Wireless Carriers' future business plan already drafted.
“He who sells it cheapest to Apple wins, sort of.”
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