Apple’s unprecedented, almost unbelievable iPhone business model: hassle-free MVNO

“The iPhone user interface is extraordinary, but the business model Apple has concocted for the iPhone is unprecedented and almost unbelievable. Here’s how it works: Apple sells iPhone hardware at a tidy profit and maintains complete control of its margins across its product line as Apple sets pricing itself without the confusion of carrier subsidies and rebates. Apple gets a cut of the service revenue the hardware generates. Apple maintains a separate billing relationship with the customer and uses that to sell content to users (music, movies and ringtones now, with games almost certainly coming soon) and takes a cut of that revenue as well,” Avi Greengar, Principal Analyst, Mobile Devices at Current Analysis Inc., writes for RCR Wireless News.

“However, like an MVNO [Mobile Virtual Network Operator], Apple doesn’t have to deal with any of the hassles of buying spectrum, building out networks, or maintaining them. Unlike an MVNO, Apple doesn’t even have to worry about managing billing for voice and data, or managing customer service. Apple also gets to piggyback on top of the carrier’s retail distribution network and advertising instead of competing with them. Apple’s model includes all the benefits of being an MVNO without any of the risk, and all the benefits of being a high-margin hardware vendor without many of the usual carrier constraints,” Greengar writes.

Full article here.

29 Comments

  1. This is the same for the carrier…..it might take a bit more to get it setup, as far as negotiations and possible less profit per “sale”. But its just more money in ATT or O2…etc… pocket.

  2. And the rest of the competition let them sneak up on ’em and had absolutely nothing to respond with. And alot of people are not gonna switch until their contract runs out. Not only is the slice of pie getting bigger for Apple, it is getting bigger at the expense of its competition. The CEO of Blackberry and Verizon need a decent response.
    They can ignore it, but eventually they will be forced to acknowledge the iPhone. Since they can’t respond with hardware, they have to respond with price cuts…which benefits the consumers.

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