Apple cannot afford to keep single carrier policy

Stan Beer
Friday, 01 February 2008 12:34

Opinion and Analysis

The consequences for Apple are clear. For instance, when Apple brings iPhone to Australia, the natural choice for an exclusive deal will be Telstra the historical incumbent monopoly and the largest single mobile network. That would give iPhone access to about 40% of the Australian market. However, Singtel Optus, Vodafone, 3 and Virgin Mobile together have the other 60%.

If those carriers are denied access to the iPhone, then what are they going to do? Naturally, they'll promote and push all the iPhone look-alikes they can find.

And what will be the reaction of consumers? In Australia, there will be many who will pass on the iPhone if it means they have to take a contract with Telstra. That's not to say Telstra is bad. It's just the nature of the business - wireless telecommunications is a competitive environment and consumers have their preferred carriers and carriers they don't like.

I cannot imagine that the experience is any different in the US, where consumers have complained that they can't get iPhone on Verizon or Sprint, or in the three largest countries of Europe, where in each case the exclusive iPhone carrier represents 40% or significantly less of the market.

Not all will simply pass on the iPhone of course. The past few months has shown that quite a few consumers will be prepared to forgo carrier specific features and unlock their iPhones. But that's also not a good outcome for Apple, which loses the lion's share of its revenue and profits from its cut of carrier contracts in such cases.

Now that the demand for iPhone worldwide is well established, it will be even harder to understand why Apple should choose to maintain exclusive carrier deals. Aside from alienating large sections of the mobile phone consumer communities who don't want to do business with a particular carrier, it pushes the snubbed carriers into the willing arms of iPhone competitors. For Apple, which should have no trouble at all forming non-exclusive partnerships with most major carriers, this simply doesn't make sense.

It would be hard to believe that any major wireless carrier really doesn't want to do business with Apple so they can offer the iPhone to their customers. Is there any good reason to wonder how  Apple can afford to deliberately limit its market reach? See also Garmin Nuviphone.