

Steve, Please Buy Us A Carrier - siglesias
http://www.mondaynote.com/2011/08/14/steve-please-buy-us-a-carrier/

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Timothee
To be noted: this is written by Jean-Louis Gassée, former Apple executive and
founder of Be Incorporated, which was at some point very close to be bought by
Apple before Apple bought NeXT to get the foundation of what is now Mac OS X.
(which also brought Steve Jobs back to Apple…)

I'm bringing this up not to say that this is insider's information or that it
is thus more likely to happen, but just because in this case, the author is
more significant than some rambling from a random blogger. That theme is not
new, so it's interesting that _he_ would bring it up.

(<http://en.wikipedia.org/wiki/Jean-Louis_Gass%C3%A9e>)

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zdw
Fails the three primary market advantages that Apple always goes for:

\- Lots of opportunities to innovate (regulation and spectrum issues with the
FCC, patents on the major wireless technologies involved, all the
infrastructure equipment is produced/procured from 3rd parties)

\- Large profit margin (carriers aren't generally 40-60% margin operations
like the rest of Apple)

\- Low ongoing overhead (lots of maintenance on a large, nationwide physical
plant of towers)

Sounds to me like far more trouble than it's worth.

~~~
ary
You could make roughly the same points about the iTunes / record label
relationship. If it were enough of a strategic advantage it might happen. I
wouldn't cross your fingers though.

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omnipath
I'm sorry, but only two of those points are true. When iTunes came out, there
was nothing like it in the market. A great way to manage and buy new music all
at one place? Plenty of room for invention.

The proof that is was such a unique experience? The labels spent the next 2
years fighting tooth and nail for 'control' of their music catalogs back from
iTunes.

~~~
ary
That's hardly true. iTunes is/was based on SoundJam which Apple bought. Before
iTunes was available on Windows Apple recommended a third-party package (the
name of which escapes me) for using iPods on that platform. The iTunes Music
Store had (nascent) competition, and it arrived _after_ iTunes had been
released for a while.

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omnipath
You mean MusicMatch? Yeah, I had MusicMatch, and it was horrid for connecting
to ipods and other gadgets. Plus, the buying experience was a mess. I don't
remember SoundJam too well, but I don't seem to remember that you connect
devices to it to transfer music, and I'm completely certain you couldn't buy
music from the software itself.

Remember, this is back during the heydays of Napster, Audiogalaxy and the free
download craze for music. iTunes, along with mp3.com, made it completely easy
to download legit copies of music, which hadn't been possible before.

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gzp
Apple would be spending half its cash pile to acquire a domestic company.

Nearly two-thirds (62%) of the company's sales are international [1];
furthermore, I would guess that much of the company's growth is in
international markets, especially in Asia.

Unless Apple is seeking to improve its operational expertise in running
carriers in order to buy up carriers throughout the world, this acquisition
would be a very curious one.

[1] [http://www.apple.com/pr/library/2011/07/19Apple-Reports-
Thir...](http://www.apple.com/pr/library/2011/07/19Apple-Reports-Third-
Quarter-Results.html)

~~~
jonknee
There are plenty of reasons Apple won't buy a carrier (I think namely because
it wouldn't be approved without concessions that Steve Jobs would never live
with), but money isn't one of them. Interest rates are very near zero and
Apple isn't exactly a credit risk. Not to mention Apple's stock value...

~~~
adamtmca
If you are acquiring a 39+ billion dollar company, money is a factor.

Considering Apple's capital structure, interest rates aren't really a key
consideration here. "Apple's stock value" reflects the fact that they invest
in relatively high return projects and that investors expect them to continue
to do so. This type of acquisition would not be satisfactory.

[http://en.wikipedia.org/wiki/Weighted_average_cost_of_capita...](http://en.wikipedia.org/wiki/Weighted_average_cost_of_capital)

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jamesbkel
This brings up some good points, but the title and structure are a bit
misleading. For that who haven't read this yet, the middle section raises the
reasons for Apple to acquire a carrier (most of which I thought were poor
reasons, which almost caused me to stop reading). The author concludes with a
rather coherent detailing of why it would in fact be silly for Apple to
acquire a carrier (especially only US).

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epscylonb
It is a slightly whimisical what if? blog post. I didn't find it all that
misleading or confusing.

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mikesaraf
Apple went from being a company with niche product and small market share
(that I loved) to a worldwide juggernaut that many thought would save us from
the anti-consumer duopoly we have with AT&T and Verizon. While we did end up
with better phones and software, developers just answer to a new master. While
I find the closed model of iOS disagreeable and anti-consumer, what is worse
is that Apple is taking the closed model of iOS and spreading it like a virus
into the Mac. And since Apple, the company beloved by “all” can do it, it
clears the way for everyone else.

So no, as bad as the current duopoly is, I don’t think Apple becoming a
carrier will make it any better.

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jamesaguilar
It's interesting, but I have not had too many issues with ATT coverage
recently. It's almost like they fixed things. Maybe it's just my area (Bay
Area - Peninsula), but I wonder if everyone else is still regularly
experiencing the claimed problems with AT&T.

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protomyth
Given the length of time it takes to put up new towers, it is probably that
the money they spent is finally showing some results. In ND they are in the
middle of a transition from a local carrier they bought to themselves. It did
not go smooth (total loss of network for a period and double billing
customers), but the coverage is now getting better.

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otterley
Apple had every opportunity to sell the iPhone standalone, without any
participation from the carriers. Given the iPhone's obvious lure, especially
when first released, Apple might have succeeded in upsetting the long-lamented
model where devices are locked to and subsidized by carriers. They could have
easily directed customers to purchase the iPhone and direct customers to
purchase service separately.

Why didn't they?

~~~
zdw
The original iPhone wasn't carrier subsidized - you could walk into the store
and buy one, without a contract. You'd set up the contract when you got home,
through iTunes.

It was locked to Cingular/AT&T, but that was, as the other commenter said,
more of a Visual VM thing than anything else.

I'm thinking this started because Apple wanted to change the way phones were
sold, but changed because selling a $599 (or $399 after the price drop) phone
wasn't tenable in the US market.

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kalleboo
The problem with selling a $599 phone in the U.S. market was that unlike in
other countries where an unsubsidized phone will get you a cheaper plan (thus
making it cheaper in the long run), IIRC the iPhone plans were actually more
expensive.

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SoftwareMaven
The title and intro is really unfortunate, because this article does a good
job discussing why Apple won't buy us a carrier.

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modeless
To me, the reason to do this has nothing to do with the business of actually
running the carrier. The reason to do this would be to put pressure on the
other carriers by providing data plans with reasonable pricing and terms. The
terms of service for every wireless data plan out there today are completely
ridiculous and terrible, and since wireless is an oligopoly there's no way
that's going to change until a tech company that actually understands the
internet buys a wireless carrier and _makes_ them change.

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jallmann
I honestly doubt that would make things any better. The carriers are terrified
of becoming dumb pipes between you and your content. Apple's latest strategy
is to wedge itself in the middle as a distributor (iTunes, iBooks).

Considering Apple's control obsession, a telecom buyout is more likely to make
things even worse. Wireless spectrum is a public good, what we need is a
company that has zero interest vested in the bits going down the pipe.

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knowtheory
:D

Given the news last week that Apple's market cap was larger than the federal
government's cash on hand, i thought this was going to be a request for an
aircraft carrier.

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lucianof
Would it be possible for a carrier (Apple) to "serve one type of phone", as
the article suggests? I guess the regulator would not allow that, requiring
the use of standards (GSM, LTE,..)? On the other hand we do have SIM-locking
already..

Second thought: Would a phone that doesn't support native apps, but HTML5,
really be called a 'dumbphone'? Running Javascript even requires a faster CPU
for the same experience.

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protomyth
I am with you. I don't see how you could call it a dumb phone at that point.

It is still a foolish idea. To keep costs down, you would probably use the
same chip as your other iPhone / iPod Touch or the previous generation chip.
You might have less flash, but the commodity chips have increased in size. The
biggest cost savings would be to use the original iPhone LCD resolution. No
significant cost savings for Apple comes from just having a browser phone.
Plus, it would annoy app developers, increase support costs, and cost Apple
their 30% cut. I see it as a no go.

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av500
Apple has no reason to buy a carrier as it has no reason to buy a power
company in a country with frequent power outages.

Unless they have a magic way to make 3G/4g work for everybody and everywhere,
they will just pick up all the consumer rage that at the moment AT&T and the
likes are shielding away from them.

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latch
The risk to the apple brand/reputation is too great.

Not to mention the antitrust issues.

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jonknee
If Apple wants to get in the carrier game, it would make much more sense to
become an MVNO so that they can just sell the iPhone and not get into
regulatory trouble. They could also do this globally and get rid of things
like roaming.

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darksaga
T-Mobile is a third rate carrier as it is. They can barely compete with AT&T
Verizon at this point. The only reason wireless carriers buy each other is for
infrastructure and customers to boost its bottom line. Apple has neither. To
buy a wireless carrier would be suicide for Apple.

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stretchwithme
Other carriers aren't going to push devices made by their competition.

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cicatrix_manet
and here i thought Apple was gonna buy an _Aircraft_ Carrier...

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