Wednesday, July 18, 2012

Apple (and others) need to find a way around cell phone carriers…or risk their entire business

Once again we are seeing in the news that a cell phone carrier, in this case AT&T, is controlling (and possibly charging) for special features being built into the new iPhone. (See AT&T Poised to Charge Premium for Facetime Over Cellular? from Broadband Reports).

If a cell phone carrier can charge over and over for services that are a main function of the phone and continue to control what features you may or may not use, phone manufacturers are risking their entire business. It matters not what whiz-bang features get built into the handset if customers cannot use it without incurring horrendous overage charges or being "nickel and dimed" for each new feature.

As I mentioned back in March 2012 in Apple (and other smartphone makers) have a big problem on their hands - carriers, if I can't make use of new features in the phone I will simply stop buying them. Like buying a Bugatti Veyron while living in Los Angeles, high performance devices are less than worthless when you can't use them to their full potential. The de facto monopoly of 2 large cell phone providers means that any phone manufacturer today may have to face that fact that without cheaper, and less controlling alternatives for service, many people will simply stop buying these smartphone "sports cars" and opt for the cheaper, if more cumbersome WiFi networking to get their work done.

Apple's clearest path here is to build its own cell phone infrastructure through acquisition and building whatever infrastructure they need to serve their devices in the near future. To rely on AT&T to serve their clients could leave them wondering where their phenomonal iPhone sales went. So much of the cellular industry is ripe for disruption and the deep pockets of Apple and Google (who developed and champion the Android operating system) could lead us into a new, more open, more useful and less ursurious smartphone future. If they don't they could be sacrificing their own profitability in the smartphone market.

 

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