Telcos warned: beware the iPhone!

By Stuart Corner
Tuesday, 06 February 2007 01:46

IT Industry - Deals

ARCchart, a research and consulting firm focusing on wireless communications, says mobile operators are in danger of being reduced to "simple connectivity providers" by Apple's iPhone.

"Operators should be under no illusions of the impact which Apple and the iPhone will have on their business and the speed with which it will consign them to simple connectivity providers," ARCchart warns.

It argues that major mobile operators have, in recent years, gone to great lengths to have their brand and not that of the handset manufacturer the one that dominates customers' user-experience, and have put much effort into their own content portals: neither of which is likely to survive a marriage with Apple and the iPhone.

"iPhone users will be attracted to operators which can offer the cheapest data packages since there is unlikely be anything else the operator can offer which will improve or differentiate the iPhone experience, operators will be judged on their ability to act as an effective bit pipe," ARCchart predicts.

"Appreciating the intimacy between the consumer and their handset, Tier One operators have spent the past few years investing hugely in extending their brand presence onto the device itself, in many cases sitting equal or sometimes dominant to the handset manufacturer's brand."

This, ARCchart says, has been "a battle fought with blood and tears between operators and the major handset OEMs," and the operators won: "after all, they are the OEMs' biggest customers, each purchasing tens of millions of devices each year."

Apple on the other hand is not going to let its powerful brand be subsumed to that of its carrier partner for the iPhone. "While we don't yet know the level of branding which Cingular [Apple's first carrier partner for the iPhone] will get on the iPhone, I think it is safe to say that the probability of it getting any presence at all, let alone control over user interface theming, is fantastically unlikely," ARCchart predicts.

Another area that operators have invested heavily is in their content portals. "They've pieced together complex service delivery platforms and billing systems from a variety of vendors, and inked lofty content deals with some big name media giants. They've also experimented with a vast number of programs to achieve a level of interoperability on devices for gaming applications and ringtones."

And what will happen when the iPhone launches? "It does not take a visionary to foresee Apple soon adding ringtones and gaming media to its already wide portfolio of music, movie and TV downloads," ARCchart suggests. "The idea of an iPhone owner using Cingular's portal instead of iTunes to manage their mobile content experience is so absurd that even Cingular would have to admit that such an eventually is unlikely."

The full analysis is available on the ARCchart website