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Study: iPhone is a detriment to carriersThe iPhone is not a run-away success increasing profits for carriers -- or shareholders -- and reports of such are the product of Apple's "unique PR campaign" and uncritical media, according to the Danish consulting firm Strand Consult. The company debunks what it says are 10 myths about the iPhone, including the following: The iPhone drives data traffic into mobile operators networks; the iPhone helps operators attract new customers; and the iPhone is good business for mobile operators. In a newsletter summarizing the report "The Moment of Truth: a portrait of the iPhone" Strand says the data is based on CEO John Strand's "many workshops at CxO level for operators across the world that have requested qualified information on the future mobile market and how it will develop." One summary point reads: "When you examine the iPhone data consumption, you will see that iPhone customers use their browser to view ordinary Web sites and that they often choose not to view the websites in XHTML -- optimized for low bandwidth and mobile phone sized screens. In practice this results in that when an iPhone user browses a typical news site, an ordinary Web page will be around 1MB, while the mobile version of the same page will often be less than 100 Kb. It is significantly cheaper for an operator to produce 100 Kb data than it is to produce 1MB data and it is much more fun to deliver 100 KB rather than 1 MB when you are selling data at a flat rate." The report summary is also critical of Apple's policy regarding the iPhone. "Not only do they want a kick-back from the data traffic generated by the phone, but they also keep all revenue from the iPhone-generated sales of Apple's own applications and music. "Is it not fair to say that Apple is actually in the process of positioning the mobile operator as a dumb bit pipe that is spending subsidies on reducing the price of Apple's hardware, while at the same time letting Apple keep all the premium revenue streams generated by the product after the customer has purchased it?" And, despite Q1 and Q2 earnings reports of increased users and favorable demographics of iPhone users by AT&T, the exclusive carrier in the U.S., Strand claims the iPhone isn't healthy for operators' bottom line. "There are already a number of operators that have issued profit warnings related to their iPhone ventures and our research shows that there is not one single Apple partner in the world among the mobile operators that has increased their overall turnover, profit and market share due to the iPhone. So apart from the press coverage, what value has the iPhone actually created for the shareholders of the operators that have chosen to become Apple iPhone partners?," reads the newsletter. The report goes on to say that carriers are better serving their shareholders by skipping the iconic handset. "The conclusion is simple. This is not good business for shareholders of operators that are Apple and iPhone partners -- on the contrary it is far better business not been an Apple and iPhone partner. Operators that choose not to carry iPhone products have an increased probability of serving their shareholders interests over those that move their management's focus, subsidies, marketing and distribution power on a product that is as beautiful as Paris Hilton, but increases production costs and where there may not be a relationship between revenue and costs. "The fact that the iPhone is currently receiving so much attention from the press is probably due to an uncritical press that have allowed themselves to be seduced by Apple's unique PR machine -- and that have not analysed and examined the underlying business models and the financial success of the iPhone from an operator's point of view." By press time, Apple had not returned calls to comment. 0 TrackBacksListed below are links to blogs that reference this entry: Study: iPhone is a detriment to carriers. TrackBack URL for this entry: https://swarm.jupitermedia.com/mt-tb.cgi/8733 7 CommentsLeave a comment |
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Companies who focus on delivering results to shareholders instead of customers deserve what they get.
When I invest in a company, I want the company to provide a great product or service and get a reasonable return on their success in the form of dividends.
I also have no pity for mobile carriers who have a cartel-like hold on users in the United States who provide mediocre service, awful support, punish usage, and lock customers in with fine print and contracts.
Wireless frequency space should be owned by the people. Technically it is in the US, but has been pillaged by the FCC. These frequencies should be used to work for us, as a utility.
This does not surprise me at all. I have an iPhone I got basically for free from a friend. He had upgraded to a 3G and his first gen was sitting around. Free is an awfully good price, and the iPhone is an excellent piece of hardware. Let me tell you though that the instant ATT gets an Android I'm dumping the iPhone like a ton of bricks. The other carriers just don't have a compelling marketplace, and total operating system feel to their phones. It's coming soon, and I don't think Apple's sales are going to respond well when the Android hits.
"Is it not fair to say that Apple is actually in the process of positioning the mobile operator as a dumb bit pipe"
It's also probably fair to say that most _customers_ would like their mobile operator to position themselves as a dumb bit pipe and not impede access to the internet at large (including iTunes). The mobile operator that best serves their customers should, in theory, out compete their competitors also best serve their shareholders... except in a rigged market of course.
The iphone is unlikely to cause problems for operators- they're doing that to themselves already.
Like a child, John Strand wants attention. He is close to Euro phone manufacturers like Nokia, and has had an axe to grind with Apple from the beginning. He compared the iPhone to Paris Hilton, saying it was all pretty on the outside with no substance. He ridiculed the app store saying because of Apple's market share it was insignificant, "like a company making clothes for dwarves."
He came out with this theory LAST YEAR. Now he claims his "study" backs him up...what a shocker.
John Strand is rapidly becoming about as worthwhile a "consultant" as Rob Enderle...yet lazy journalists continue to flock to him looking for juicy quotes to garner readers.
Sounds like sour grapes to me. Teir 1 carriers have had exclusivity deals going on for items such as Moto RAZR's, Palm Pre's, etc, etc... This iPhone was the game changer. From now on, we can now look at all Teir 1 carriers as nothing more than data & phonecall pipes. Heck, it's not Apple's fault they were the only ones to do this, if any other company would've created just HALF the eco-system(s) that Apple employs with their: OSX Mac, iTunes, & iPods OR their iPhones, MAC/PC, & iTunes OR their iPods, MAC, & ITunes, on and on and on....
This study is an important reminder to all of us that public companies work for their shareholders. Customers are the commodity. Legally, public companies must keep their shareholders interests above everything else.
What a load of unmitigated crap. 25 million premium handsets, 65000 applications and a billion downloads is really just a product of Apple's imagination? Give it a rest. And every tech/web site centric I visit *has* a low bandwidth version of their site and several aggregators even have a free app to load stories in a low bandwidth version. Regardless, when did it become Apple's problem that there are still websites that don't have bandwidth optimised versions?Pushing those shitty, shitty text sites as an alternative is pathetic. If I wanted to browse the Internet as text, I would have stayed in 1991. Try banking on one of those miserable text sites. It's sad.
For a fact, Rogers and AT&T have added subscribers while others without the iPhone have lost clients. You can look it up. And making the telcos a "dumb bit pipe" is exactly the point. If your business model depends on a fantasy world where some types of data bits are worth a thousand times more than the exact same bits used for a different purpose (50 cents for an MMS), I can't wait for your business to collapse. Someone will take your place quite quickly.
Strand can't fabricate enough faux outrage to try to validate his pathetic whining except amongst those already predisposed to dislike Apple. The bandwidth problem is the only true issue identified and all telcos are scrambling to upgrade their networks to accomadate the future requirements. The rest is regurgitated anti-Apple screeds that were only potentially true before the iPhone was actually in consumers hands.