Those Pesky Apple MVNO Rumors

Steve JobsRumors about Apple are the bread and butter of the tech industry at the moment, from the iTunes phone to the ViPod (video iPod) pundits have been wondering when Apple will release certain products and what they will look like. One rumor that’s beginning to peter out after finding very little support amongst analysts is the Apple MVNO rumor.
The Register put up a piece on the topic (followed by Wal-Mart MVNO rumors and news of consolidation in the Scandinavian MVNO market) which pointed out that “successful MVNOs tend to be those with a well recognized brand that appeals to a well defined customer base, such as Virgin Mobile. Apple iTunes would certainly fall into this category and a music-oriented mobile service incorporating mobile versions of the popular download service would undoubtedly attract high volumes of uptake”. The article goes on to point out that Apple would be able to bring its considerable style conciousness to the creation of handsets and is already in partnership with Nokia to create an open source mobile browser…”the type of control over branding, user interface and device design that the major cellcos crave”. Further, the article cites that “an Apple MVNO would certainly present various threats to the incumbent mobile carriers. It would throw the operators’ own download services and other music-oriented activities into the shade, at a time when music is seen as one of the key growth drivers for cellco revenue in the next few years”.
So yes, Steve Jobs could do it, the real question is would he want to? Personally, I don’t think so. From what I see Apple has always been a hardware vendor. It creates a lot of software, but mostly to support its hardware. Take the iPod as an example — the profit from Apple’s music business comes from selling iPods and the ‘halo’ effect of PC-using iPod owners switching to Macs, not from people downloading songs from its iTunes store. Apple recently passed the 500 million songs sold mark, but at 4c profit for each song that’s just $20 million…pocket change compared to the money received from selling iPods. It’s true that iPods are one-off sales while the song downloads are continuous, but I think the money driver will continue to be hardware for a long time to come…and mobile operators tend to subsidize handsets. For Apple to compete effectively it would have to either subsidize the handset (which would go against its current business plan) or produce an iPod-enabled phone that is good enough to do the work of an iPod and a phone and still be reasonably priced. Very tricky.
Related stories:
Analyst Dismisses Apple MVNO Rumors
iPod Not Going Away
Rumors of iTunes Debut In UK

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