Tuesday, April 28, 2009
Apple made AT&T a pipe
There is a war the device manufacturers are waging against the carriers. A scary one for the mobile operators, in particular because they are attacked by Internet Portals as well, at the same time...It all started with RIM. They took over the relationship with the customer. The carrier disappeared. The only thing that reminds me of AT&T on my BlackBerry is a plastic sticker on the front. Nothing else. While I am roaming around the world, the BlackBerry still works and I do not even remember which carrier I am using. My email is synced with the BlackBerry Internet Service, AT&T is just a pipe.
RIM was not a big problem for carriers. They could manage it. It was a niche in the enterprise, and a very lucrative one (BlackBerry users do not mind paying big bucks). Then RIM started moving into the consumer market... Now they have more BIS users than BES users (70-30 ratio), so more consumers than enterprises. They are eating in the carriers plate.
Still, the carriers can take it. RIM is a small threat. Still a niche.
What is scary is Nokia with Ovi, in particular in Europe and Asia. In some countries, they have 50% and more of market share. They are just coming in and taking over. The operators are fighting back, but some are tempted by the shortcut ("I can make some money fast, let's launch Nokia Messaging and we'll see what happens later") and will commit suicide. The smart ones are resisting and looking at alternatives (I know one...). They still can fight.
Overall, Nokia is a risk, a very big one. But it has not materialized yet. They have not proved they can create data services that people use. As of now, they are just a device manufacturers. They do not know how to deal with services. Exactly as the carriers. They are a scary player to deal with, but not right now right here.
Then there is Apple. Same game as above, but a lot worst. They know services. They own music, the app store, MobileMe and more. They have proven they can do it, with one billion apps downloaded.
On my iPhone, AT&T is not even a sticker. Not even a physical object... It is a bunch of pixels on the top left. So virtual it can disappear in a second.
Want some proof?
Check the leak about Verizon and Apple talking. Who do you think leaked the news? I have my ideas... They did not leak it to a technology magazine, they went all the way, to a consumer outlet like USA Today!
It just puts an enormous pressure on AT&T, who needs to renew the contract with Apple. Best way to get a good deal? Work with the competition and let everyone know it.
The sad story: AT&T needs Apple way more than Apple needs AT&T. The Verizon leak is a living proof. They can walk away when they want. Why?
Because Apple OWNS their customers. They own the AT&T consumers...
Guess what? They have already made AT&T a pipe...
Posted by Fabrizio at 17:26
2 Comments:
Ken said...
The Problem with Verizon is their closed market. I cannot wait to leave Verizon when my contract expires because I refuse to pay to use every feature on my device. I have to pay to use GPS, pay to transfer data from my phone to PC via bluetooth, pay to sync my calendar, etc. On top of that the lack of an API and app store means they have very few useful applications. The cost of their control is having no developer ecosystem - so I no longer care or even look at apps for my Verizon phone. I can't wait to switch to ATT and the iphone where I can get many useful apps, use all the features on the phone and develop my own apps. Yes this turns ATT into a pipe--as does offering Skype . ATT needs to look at the TV networks for a way to survive in the pipe world - its all about content and how you can develop content that your users want. Yes they have tried this and failed so far, but they should look at motivating the huge developer base out there to help them create useful ATT specific content.
Comment Posted at 11:07
meedabyte said...
Dear Fabrizio
now you have device vendors trying to became vertical B2C vendors proposing products, services, and finally trying to cannibalize operators end users. What does it happen in the meanwhile? when an operator tries to resist to such killer business deals (like the iphone ones) suddenly it comes another one that says "yes" very proudly.
If you think about Italy (did you forget? ;) ) both the most powerful and important operators signed contracts with Apple while the others probably struggled to do this without succeeding. Now for example, on the Italian TV you can see a shared ad (across different Operators) where the operator appears for 1 second (near the end of the ad). How is it possible to not understand that you're playing the pipe role?
Do you think is there any chance for operators to avoid becoming bit pipes? what's the big difference between Internet ISPs and Mobile operators? It's just a network that is more expensive to be mantained, not much more.
Actually, what can be the answer? for example an operator could become a device manufactorer. Look and INQ or Vodafone-Huaweii cases. More in general I think that all the players, vendors and operators in particular, but not only them, must start to think about a more collaborative and distributed value chain across different players. Every player in the chain should be able to find revenues when "productizing" a product. But that's not easy since revenues are generally lowering.
That's globalization, competition and business commoditizazion. It happens!
I'm saing this since months (http://meedabyte.wordpress.com/2008/12/21/how-to-find-a-place-in-the-ecosystem-era/) and let me say that business commoditizazion is not limited to Mobile operators.
I think that during crisis a good management can be decisive when determining life or death to a company. Now it's a Management issue. Operators that are well managed will survive.
PS: Many compliments for your achievements with Funambol. We're proud of such Italians ;). I'ld be pleased to connect, have a look to my blog.
