Fortune: Steve Jobs’ Apple ‘iPhone’ could upend entire US wireless distribution model

“If Steve Jobs’ Apple decides to build a wireless phone, as widely rumored, the company has the chance to shake up not just the wireless device business – an industry dominated by the likes of Motorola and Nokia – it also could upend the entire wireless distribution model in the United States,” Stephanie Mehta reports for Fortune.

Various sources wonder if Apple would seek to become a virtual phone company, and/or build a phone with built-in Wi-Fi service that would allow customers to make calls and download data and music from the free or cheap Wi-Fi networks proliferating in urban and suburban settings, bypassing traditional cellular networks, and/or do the traditional selling of its iPhone through the carriers. “Or Jobs could do something really experimental and sell devices in its stores completely independent of the service,” Mehta reports.

“But no matter how Apple decides to enter the wireless phone market, it is sure to change the status quo,” Mehta reports. “Here’s why: Today, phone companies heavily subsidize handsets in exchange for long-term commitments from customers. That Nokia phone you got for free from Cingular obviously cost the phone company something – probably hundreds of dollars – to buy from Nokia. Cingular, in the meantime, can make all kinds of demands of Nokia: It can ask for special packaging, prominent logo placement, etc. This system drives Nokia and other wireless device makers crazy.”

Mehta reports, “This is where Apple comes in – and why Nokia, Motorola (Charts), Samsung and LG might be secretly rooting for the iPhone to be a minor hit. Apple seems uniquely positioned to convince consumers to pay a premium – not demand a discount – for wirelessly connected devices, thus changing the economics of the wireless industry. Put another way: If a consumer is willing to pay $250 for an iPod Nano, why wouldn’t she pay even more for a Nano that can make phone calls?”

The excellent full article, highly recommended, with much more here.

Related articles:
RUMOR: Apple ‘iPhone’ may include JAJAH VoIP software – December 15, 2006
RUMOR: Apple ‘iPhone’ details surface as release date grows closer – December 15, 2006
Report: Skyworks selected to supply ‘Front-End Module to Apple’s new iPhone’ – December 15, 2006
Broadcom wins SoC bid in ‘upcoming stealth phone’ coming soon from ‘major consumer device company’ – December 15, 2006
Gizmodo guarantees ‘iPhone’ will be announced on Monday – December 14, 2006
Report: Apple expected to debut ‘iPhone’ – December 14, 2006
Analyst describes Apple ‘iPhone’ featuring metal case in multiple colors with virtual click-wheel – December 14, 2006
UBS analyst: Apple may launch MVNO, serve as own carrier for ‘iPhone’ – December 13, 2006
Apple using ‘iPhone’ as diversion? – December 11, 2006
Apple’s ‘iPhone’ silence drives rumor mill crazy – December 08, 2006
BusinessWeek: Wish List for Apple ‘iPhone’ – December 08, 2006
Apple ‘iPhone’ could cause Nokia, Palm, Motorola, and RIM to really start to sweat – December 07, 2006
Apple shares fall as CIBC sees ‘iPhone’ release delayed – December 07, 2006
Analyst expects 16GB flash-based Apple iPod video player, 4-8GB flash-based ‘iPhone’ models – December 07, 2006
Prudential: Apple ‘iPhone’ to sport iPod click wheel; video iPod by Q2 – December 06, 2006
RUMOR: Apple’s smart phone project to feature ‘extensive integration with Mac OS X’ – December 05, 2006
Apple begins ‘iPhone’ production – December 05, 2006
Apple needs to think different about data security for ‘iPhone’ – December 05, 2006
NVIDIA graphics chip for next-gen Apple video iPod delayed? – December 04, 2006
Kevin Rose: Dual-battery Apple ‘iPhone’ coming in January; $249 for 4GB, $449 for 8GB – December 03, 2006

33 Comments

  1. This is one of the best analytical pieces I’ve seen about the rumored phone in quite some time! It’s refreshing to see someone with some decent reasoning skills looking at the big picture instead of trying to guess when it will drop or what it will look like or feature!

  2. MY GOD!!! I have never seen such froth over a rumored Apple product since, I don’t know, the G5 Powerbook or maybe a Mac tablet. Nah, I think this tops it.

    Davey,
    With your choice of number, I think your subconscious is sending you signals. Time to get laid!

  3. All the analyst are calling this device a “phone.” I think that’s wrong. I think Apple will market the device as a wireless iPod. It will be the iPod that can be used to access the ‘net and email. Using that wireless connection and a direct link to the iTunes Store, it will be the first iPod (and first music player device other than “music phones”) that can be used without the need to own (and competently use) a fairly recent Mac or PC to get music on the device, opening the door to a huge untapped portable music player market.

    The phone capability will be the “oh, by the way” feature. A big deal, but not the central defining feature of the device.

  4. I much prefer the system in Europe, where you buy the phone independently of service and then just buy a SIM card from whatever service provider you want. You can even have multiple SIMs for different numbers (work, home etc) and change them at will. If the iPhone causes a shift towards this kind of system I’d be very happy.

  5. It’s true. And my erection is about to burst through my khakis from thinking about it.

    Any female MDN readers care to help R2 with his problem? 22/M/athletic build/college & part time at OfficeMax/8 robust inches.

  6. Hopefully it will be revolutionary and no just evolutionary for the cell phone industry. This phone will be proof of concept that vertical marketing is the best way for this business to work. Again, it will be hardware tightly integrated with software – genius!

  7. Surely it would be crazy for Apple to compete with the network providers. All they need to do is sell a iPod telephone where the purchaser takes the SIM card out of his mobile phone and puts it into the all singing and dancing iPhone. Or am I missing something?

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.