Right then. Pay close attention to this one.
The apocalyptic nightmare scenario for much of the mobile industry is an Apple iPhone Nano.
I can’t underline enough just how much of a problem this scenario is.
Talk to the right person in each global operator and chances are, they’ve got a document stored somewhere about just how bad life could be for them in an iPhone Nano world. I know. I’ve written and contributed to some of them. The documents outline the catastrophic effect of a $79, $99 or $199 unsubsidised Nano could have on their ecosystem and explore an array of scenarios in terms of pricing, distribution, bandwidth requirements and so on. Some of the key concerns? The power it would foist to Apple. The global consumer riot to get hold of one. Scaling the network to meet the demand. The possibility of just what would happen when 100 million Chinese and 100m Indian people walk out and buy one on launch day. The middle classes of both China (and to a lesser extent, India) are already blowing wads of cash on iPhone 4s right now. What would a larger market do with a keenly priced iPhone Nano?
The even bigger worry for many of the operators is this: At what point does Apple say, ‘enough, Mr Operator, you are now in our way.’
(By the way this could apply to Google, too).
At what point would Apple, with $60 odd billion in cash decide that the global mobile operator industry is done. That, instead of being a tolerable delivery mechanism, it’s now a serious barrier to the company’s ability to transact significantly higher volumes of revenue?
And at what point would one of the global operator companies — Voda, Telefonica, France Telecom, Deutsche, to name a few — buckle. At what point would one of them say, ‘Okokokokok, what do you need?’ and, in the face of a billion dollar guaranteed deal from Apple, bend to simple carrier status?
When you start thinking big — the way they do in Silicon Valley — and when you start recognising that, fundamentally, the carrier role is already ultra-commodified (relegated in the UK, for example, to simply providing finance subsidy and a network connection), it’s easy to see how things could get interesting very quickly.
Of course, there’s thinking big, in macro terms, then there’s day to day reality. You do need to pull yourself back to the ground.
A $200 iPhone Nano (or, more likely, a $199 iPhone Nano) would certainly cause a lot of problems for the industry. I think it would be very successful too. It starts to get rather exciting when you explore what would happen to the market at price ranges of $149, $99 and so on.
Here’s the news as reported by Bloomberg via BGR.
The announcement timing is, by the way, highly convenient. A day before Nokia’s ‘wake up and smell the coffee’ event. The week ahead of MWC. If you thought Apple was happy occupying the $800 high ground, think again.