August 5, 2015
Apple (AAPL) emphatically denied an earlier report that it’s mulling launching a mobile virtual network operator service (MVNO) of its own in the U.S. and Europe.
“We have not discussed nor do we have any plans to launch an MVNO,” an Apple spokesperson said in a statement on Tuesday, Reuters reported.
CNBC also reported Apple’s MVNO denial.
Business Insider reported the vendor, whose MVNO interest dates back at least to 2006 when it initially filed for a related patent that it updated in 2011, already is testing a MVNO service of its own in the U.S. and also discussing the prospects of launching a similar effort with telecom operators in Europe.
In Apple’s MVNO model, the report said, users would pay the iPhone maker directly for texts, calls and data use. Last year, the vendor offered its own-branded Apple SIM card for its iPad Air 2 and iPad Mini 3 but not the iPhone. The Apple SIM card enables users to switch services between network operators.
Earlier this year, Google (GOOG) kicked off its own MVNO called Project Fi built on Sprint’s (S) and T-Mobile’s (TMUS) networks with a market twist by adopting a consumption models that allows users to pay only for data used each month.
The Washington Post, in a blog post, suggested that while an MVNO is a “tantalizing idea” for Apple, it’s “actually a terrible business idea.”
Why? It’s just too much work for too little profit. Were Apple to elect to lease network service from large telecoms, as has Google, it still would require significant investments to do so, the Post said. And, to make money off the venture, the vendor would have to invest in producing original content such as TV shows, music and movies.
“Unlike Google, Apple isn’t much of a data company,” the blog post said. “It doesn’t have a great track record building Web- or cloud-based products. It makes the vast majority of its money from selling hardware. That doesn’t preclude Apple from wanting to diversify by getting into other businesses. But if that’s really the goal, Apple could find better industries to expand into. Automobiles, for instance, which Apple is said to be exploring aggressively.”
Ok, that’s fair enough. Still, on the other hand, it’s not like Apple lacks the cash to make such an investment, and with an Apple TV set top box rumored for a September release along with a new Internet service to follow perhaps a few months later, the vendor hasn’t exactly looked the other way at producing and underwriting original content.
The Post’s conclusion? “Launching a cell service is one of the best things Apple could do from a PR perspective; it’d bolster the impression that Apple is still hard at work innovating. But as exciting as it might be to imagine Apple disrupting the wireless industry as a new competitor, it would take a whole lot of work to produce even a minimal amount of payoff. And meanwhile, Apple would be distracting itself from doing what it does best — making awesome machines.”
So, by this reasoning, Apple won’t get in the MVNO business because it’s too much work, it’s too disruptive and costs to much in upfront capital expenditures for the payoff?
A reasonable conclusion as to what’s going on behind closed doors in Cupertino on the MVNO idea is that it’s been kicked around some internally, given Google’s similar scheme, but at this point there’s nothing sketched out on the drawing board. No plans, just talk, but that’s just a guess.
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