Apple plans to crush carriers and offer direct mobile service, expert says

Apple to crush carriers

Apple’s next huge move isn’t into the television or banking industries according to one expert. Instead, Apple will take on carriers like AT&T and Verizon Wireless by becoming a direct mobile service provider. Veteran wireless industry strategist Whitey Bluestein, who has managed strategic deals for the likes of AT&T, Intel, T-Mobile, Verizon, Microsoft, Nokia and Best Buy, says Apple will soon begin to offer wireless service directly to iPhone and iPad users. Apple has the distribution channels, digital content portfolio and customer base to make the move, Bluestein says, and it also has more than 250 million credit cards on file for iTunes users who could be billed directly for wireless service.

“The battleground is set, but Apple will be the first mover,” Bluestein said while speaking at the Informa MVNO Industry Summit in Barcelona. “Google will have to scramble because it lacks retail distribution, experience with subscriber services and the iTunes ecosystem of content. iTunes and the iTunes Store provide Apple with one-click buying and customer care. Google can acquire most of these capabilities, as it has before, but it is not a core competency of the company.”

Bluestein also notes that Apple has patent-pending network architecture, with patents filed in 2006, that will empower its move into the mobile service provider industry. Apple’s biggest barrier thus far has been the large subsidies carriers pay to keep end-user iPhone pricing affordable, however Apple’s huge cash reserves could be used to remove that road block completely.

“What has been holding Apple back from becoming a wireless provider already, according to Bluestein, are the enormous handset subsidies paid by mobile operators (AT&T, VZW and Sprint in the US), which amount to about $381 for each iPhone sold today,” Bluestein noted. “That has been a short-term stumbling block for Apple, but the company has its well-known cash reserves and could seize the initiative at any point.”

Such a move could help Apple avoid a potential threat from wireless carriers, though Apple CEO Tim Cook said his company is not concerned with the possibility of carrier’s squeezing subsidies.

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