iPhone and Cell Phone Market Dynamics

[the Western zoo]

I hope there'll be an unlocked version in europe, cause if the phone is as good looking and easy to use as apple products usually are then I wanna get it, but I don't want to change carrier... Also i 6 month I may go study in another country for 6 months and want to be able to just pop a new sim card in my regualar cell phone...

 

[Object-X]

OS X Mobile

This concept, however, is less familiar in the U.S. and could introduce some confusion to the consumers.

If there ever was a company that can take something confusing to consumers and make it simple it's Apple. I think this is the model Apple will go for. It's a lot less complicated for them and it introduces little change to their iPod business model.

What will be interesting to see is how Apple markets the phone. I would expect it to be more than just an iPod that makes phone calls. An iPod phone would certainly be a significant evolution of the iPod. And if Apple were to introduce a model that competes with the Treo and Blackberry in terms of functionality, the iPod would have to become far more than just a music player.

So, will it be an iPod that happens to make phone calls? Or, will it be a whole new evolution of the iPod as a platform, with all the implications that go along with it? I hoping for the latter.

Can't wait to see OS X Mobile.

 

[Thataboy]

The thing is.... I would be interested in an Apple phone. However, I, like most others, are locked in contracts.

Therefore, the pool of interested buyers will be spread out over 2 years.

What they could do is offer a discount on the phone to people who have to buy out of their contracts. It would bite into some profits up front, but it'd be amazing marketing. How many people are dying to get out of their contracts? Well, Apple can say "come to us, and we'll get you out with no or reduced penalty".

Then they can build goodwill by having no contracts at all. It would shift the paradigm of cell phone service. Apple can say, "we are so confident you will love our product and service, that we will buy you out of your contract, and let you leave our service whenever you want... it's about freedom."

Maybe a bit risky, but it's going to take a ballsy move to get into this market.

 

[yg17]

I think it could cause a lot of confusion for consumers who don't care to know about the details of cell phone service.

"I want this phone".
"That'll be $300."
"ok, how many weekend minutes do I get?"
"Oh, this is just the phone, you have to pick a cell phone carrier somewhere else and tell them you want a SIM card for your unlocked phone. If the sales person doesn't know what you are talking about, ask to speak to customer service, they'll know how to get it done."

Depending on the dynamics w/ cell carries, I suppose Apple could bundle service with sale of the phone, letting the customer decide at the time of buying.

arn

The confusion will be even greater when it comes to GSM/CDMA/TDMA/iDEN, etc. Then once you pin down the technology, you have to make sure it supports the correct band. Say the phone is GSM, there are I believe 4 different frequencies that GSM uses and you have to make sure it's compatible with your carrier.

Despite the confusion, I want Apple to go the unlocked route. I think carriers subsiding it would be bad, the last thing I want is an Apple phone with my carrier's logo plastered all over it.

 

[Doctor Q]

An interesting historical note: People used to rent their phone instruments from the phone company rather than shopping for and buying them separately.

Just look at that handsome styling!

 

[kcmac]

I have used Verizon for the last 3-1/2 years. I signed up for a 2 year contract initially so I am now on a month to month basis. I love the fact that I could leave them at any minute but my phone is old, getting crappy and I would really like a new one. (But don't want to sign up for two more years).

I don't mind Verizon's coverage which for me is quite good. I travel across the country on business and never have any problems. But they may be the worst at crippling phones, offering a limited and crappy selection, etc.

While I don't hold any hope that Apple's new phone would work with Verizon, I have been waiting for it to come out to see the hardware and their business plan/solution.

Unlocking phones I think will lower the carrier costs and potentially make it easier to flip. This is a tricky industry and I do have confidence that Apple will shake it up and make some changes. Any change is good in my mind. It can't possibly get any worse or more frustrating than it already is.

 

[joeshell383]

Unlocked phones are not confusing in the slightest. Buy a mobile, stick a bit of plastic from your old phone under the battery, or buy a new SIM for like £1 from your chosen network, and forget about it. Honestly - consumers aren't stupid.

t's not about stupidity, it's about being unfamiliar with that business model. Most American consumers are used to going to the carrier of their choice, choosing a heavily subsidized phone, signing a contract, and walking out. Honestly, I think Apple will have a tough time if they sell at full retail.

 

[joeshell383]

I like the current U.S. model...

I actually like the U.S. model because a phone can only be used when it has service, so there is nothing wrong with getting a heavily reduced price on a phone and tying it with a service which would be required for use anyway.

I am open to change if it works well, but there is nothing wrong with the current model.

 

[Surreal]

i think this will work. the first people wo buy may be people like us. on this site. i SOUGHT OUT an unlocked phone, precisely because i coudl not stand the idea fo losing features in a phone that i paid for in someway. it is "free" but not performing to spec.

i have a w810i and i paid 250 for it . there are enough people who would buy initially to give apple a foothold. just like the ipod. i didnt have the money for an ipod then. some people did.

after a while, it will become popular enough for american consumers to educate themselves just the little bit needed to "make" an unlocked phone work.

 

[Surreal]

I actually like the U.S. model because a phone can only be used when it has service, so there is nothing wrong with getting a heavily reduced price on a phone and tying it with a service which would be required for use anyway.

I am open to change if it works well, but there is nothing wrong with the current model.

but, depending on the locking methods, you cant use the phone with any OTHER service. this is to stop competition, i know, but what about if i leave the country. GSM as a standard works because you can use it so many places. but the US model breaks that.

 

[digitalbiker]

So how do you get service for an unlocked phone in the US?

t's not about stupidity, it's about being unfamiliar with that business model. Most American consumers are used to going to the carrier of their choice, choosing a heavily subsidized phone, signing a contract, and walking out. Honestly, I think Apple will have a tough time if they sell at full retail.

I think it is a lot more complicated than just IQ of user.

Currently the only way to get service in the US is to buy a contract which includes a subsidized locked phone. So if I buy an an unlocked and un-subsidized Apple phone, how do I get service for it?

None of the major carriers will support it in the US because it is not under contract. If I buy a contract from a carrier it includes an elevated rate to cover the cost of a phone. Will the major carriers all of a sudden change the way they sell service so that I can buy cell time direct without a contract or a forced choice of locked phones. I don't think so. They don't want me to able to chnge my service provider any time I want.

Plus we have the issue of CDMA and GSM networks. Not many consumers are aware of which service provider uses which technolgy because currently the service provider also provides the correct phone. If Apple just sells an unlocked GSM phone, many consumers will be uncertain as to how to obtain service and as to who can provide the right service for their area.

 

[nptski]

Right Company, right time, please the right phone!

Apple is known far and wide for their inovation and quality. There could be no better company to shift the market to an unbundled model. The Apple culture is almost cult-like, this site is a testament to that. I love God and read the bible daily but only after MacRumors. The world is too small to lock yourself into anything and as cell phones become more and more primary the sophistication is following. Being in real estate and using 6,000 minutes plus a month plus email my Treo is my office and I see more and more agents using their cell as a primary contact vehicle. I have made a lot of clients for life because I am available, voicemail and long silly "I'm not in the office, I may be...blah, blah, blah" answer messages lose clients fast.

Apple can dovetail into the phone and music market via the iPod coatails and branch off into a whole new line of portable products and so is the integration into the strengthening computer line. The market is salivating for a truly smart smart-phone, not the least of which is me. With tablet (Newton was ahead of its time) technology under the current radar but there, there is a whole new world for Apple. I have some Apple stock @ $20.00, even at $88.50, it's a buy now...

 

[wnurse]

There's nothing to stop a carrier from offering a discount on the plan itself instead of the phone:

Bring an iPhone & Cingular (or Verizon or whomever) will give you a $200 discount on a 2-year plan commitment.

Isn't that a more rational plan than hiding the cost of the hardware? It's just like discounting the plan for comitting to more minutes in advance of using them.

This post makes no sense. You are saying that cingular would give you a discount on phone service for a phone you bought elsewhere?. why?. I can understand if they give you a discount if you bought the phone from them but why would they discount the service to you if you bought the phone somewhere else?. Where do they make the money?. Not on the phone since you bought it somewhere else and not on the service since they are discounting it to you. Where do you think you live, in the soviet union?. Nothing is free in a capitalist society.

 

[wnurse]

Unlocked phones are not confusing in the slightest. Buy a mobile, stick a bit of plastic from your old phone under the battery, or buy a new SIM for like £1 from your chosen network, and forget about it. Honestly - consumers aren't stupid.

Well it's good you are not confused but the plans are confusing. Many carriers do not make their plans easy to compare. Some of them have different fcc charges, line charges, tax etc. Some charge different for text messaging. Also, not all services are compatible to all phones, even if same type. Example, person A GSM phone may get more serices than person B GSM phones (perhaps one phone can do TV, the other cannot, etc).

Like I said, it is a great thing that every geek in this forum seems to think choosing service is elementary but not everyone out there have an incredibly high IQ like you geeks. For the regular folk, this causes a bit confusion. I think the analyst was talking about the average person. I'm sure he was aware that there are uber geeks where this all makes sense.

 

[dlastmango]

I love God and read the bible daily but only after MacRumors.

Can I get an AMEN?

That is the best quote I have ever heard...

 

[emotion]

...and if they do do an MVNO - watch them bundle it with .mac subscriptions

A possibility. What is certain is that .mac needs a major overhaul. I'd love to get it to sync my multiple machines etc but not at that price...

 

[kroko]

talking about locked/unlocked
The concept of an "unlocked" phone is more popular in Europe
concept of an unlocked phone? more popular? lol. it's just NORMAL to use a Phone. and then buy a service. 90% does so.
yesh, there are sh** phones, that are locked to some provider. i've never used a locked phone and can't imagine doing that.
i've seen some cryings here, that 'my service/hardware is locked to this, and i cant do that...'. one to blame is yourself. buy a cell phone and then buy a service! dont like the service- switch to other!

 

[ready2switch]

My apologies to all, but I am one of those who think Americans will be resistant to an unlocked phone. From my observations, the people around me tend to look at what comes out of their pockets NOW, not the big picture of what they spend over 2 years time. The people around me also don't want to take apart a phone they spent $300+ on to stick a SIM card in it, for fear they'll "break" something in the process, no matter how easy it really is.

For this to be truly successful, I think it does have to be unlocked, but I also think that the marketing will have to be superb. Offer a comparison of what you spend outright vs. what you spend on your contract (and on the 4k rollover minutes I currently have and will NEVER use). Show exactly how easy placing your SIM card of choice in the thing can be, and maybe, just maybe, you will get some real success in the American market.

 

[arn]

buy a cell phone and then buy a service! dont like the service- switch to other!

I think you miss the point that its not even an option in the U.S for most people.

Where are you going to buy the service from? So I buy a phone and go to Verizon... but wait, they don't offer SIM cards/GSM network.

Can I even buy service without a phone from T-Mobile? Maybe... I've never tried it. I probably just have to buy a free phone (with 1 year service agreement) and swap the SIM card.

It's not a question of stupidity. it's a question of support. You and I might be able to figure it out without problems... but I'm certainly not going walk through with my mom how to install a SIM card into her unlocked-phone that she needs to get service from a provider which doesn't typically offer that service. I'll just tell her to get a phone from a carrier where she can walk out the door with service, and a single bill.

arn

 

[ictiosapiens]

I'm sorry, but I don't see how it would benefit consumers to now have to pay for the actual phone when you can get it for free... I don't see how the phone could be so superior that it would make people choose it over a contract that will guarrantee you a new free phone every 12 or 18 months plus a bundle of free minutes... Chat??? sling support??? mp3??? Three are offering all this things with a subsidised phone and a crap load of minutes for les than £20 pounds...

I'm sorry, but if apple wants to charge for the phone, its going to have tu run MAC OS or they'll truly have to pull some sort of magic trick. Otherwise the only people who are going to end up buying it are going to be the fanboys...

 

[Loge]

An interesting historical note: People used to rent their phone instruments from the phone company rather than shopping for and buying them separately.

This is true. However the amount paid for the phone rental was separately identified on the bill, so you knew what you were paying for the phone and what you were paying for line rental and calls.

Of course, in those days one phone was very much like another apart from the colours.

 

[dmelgar]

This post makes no sense...
Where do they make the money?. Not on the phone since you bought it somewhere else and not on the service since they are discounting it to you.

It is on the phone service. Why would the mobile phone company care if you bought the phone from them or someone else? They've giving you a discount in either case. Why do you think they have early termination fees? If it were a discount on the phone, they wouldn't care because they already made their money.
They make their money on the monthly phone service and want to lock you in to guarantee their return on the investment which was the original discount to lock you in.

This could go a variety of ways. Its possible that Apple would sell the phone and Cingular would give you a discount to sign up for 2yrs of service. They could conceivably also offer service without a discount on the phone for a lower monthly rate, but the phone companies are very accustomed to locking customers in and would be nervous to offer that.

On the other hand, folks talk about Apple offering an iPhone without service as if there's no downside. Consumers are accustomed in this country to get free phones, or $59 phones. What will they think when they walk into an Apple store and see a $399 or $499 phone? How many people will actually spend that much on a phone that can be easily lost, stolen, broken. They'd have to think about it for a while. If Cingular gives them $150 to sign up for a 2yr commitment, lowers it to $250. Then if they figure they would have bought a $200 iPod anyway to get that functionality, then $50 for having a phone in addition to the iPod is pretty cheap (assuming the price for the iPhone isn't even higher).

I wonder how big a market there is. Given that most folks already have cell service and are locked in for some amount of time. And given that most people who want an iPod probably already have one, I wonder how many folks will plunk down that much money to switch.

I have a potential $600 early termination fee and just bought an iPod nano, but I hate Sprint and would consider switching or at least trying Cingular (we don't have T-mobile in my area).

 

[emotion]

but I'm certainly not going walk through with my mom how to install a SIM card into her unlocked-phone that she needs to get service from a provider which doesn't directly offer that service.

See the problem us Europeans are having here is that it's very common for mums and everyone else to do this kind of thing. People who do pay as you go do this a lot.

-----

As for the price. I think it would be possible for Apple to make an ok phone (1.3mp camera, maybe not even 3G), have a superslick interface and a way of syncing to .mac etc and sell it for say 70 quid over the price of an ipod nano 8GB (£250) and still manage to do it.

That's despite people thinking an se k800i or a n73 is free.

I can't wait to see how this unfolds esp. if Apple go the MVNO route (with bundled wifi perhaps where direct connection for your laptop exists too). I hope they'll do something bold.

 

[arn]

See the problem us Europeans are having here is that it's very common for mums and everyone else to do this kind of thing. People who do pay as you go do this a lot.

Right... no one's saying its hard to do... but its simply now how this system works.

For example, if your mom (in Europe) goes to phone provider and says, "I want a cell phone from Apple and buy service here", I'm sure they'll be people who can answer her every question and set that up.

Here, if my mom walked into T-Mobile, I'm not convinced the support people could do the same. That's not to say it can't change... but Apple has to make the process seamless if they go that route.

arn

 

[emotion]

Right... no one's saying its hard to do... but its simply now how this system works.

For example, if your mom (in Europe) goes to phone provider and says, "I want a cell phone from Apple and buy service here", I'm sure they'll be people who can answer her every question and set that up.

Here, if my mom walked into T-Mobile, I'm not convinced the support people could do the same. That's not to say it can't change... but Apple has to make the process seamless if they go that route.

I agree. If anyone can do it I'd like to see Apple give it a go.