The iPhone will be launched, there's no doubt about that. Leaving aside its yet unsure price and full features list, a big
question remains: how will Apple distribute its phone? Obviously, they could partner with some of the existing carriers - just like everybody else does - or simply launch their own ones in order to buy minutes from someone else and reselling them, becoming an MVNO. Apple - a mobile virtual network operator?
Up to this day, there haven't been recording many successful MVNOs, and some attempts such as ESPN Mobile, failed. UBS telecom analyst John Hodulik thinks that Apple is going to start an MVNO by buying wholesale capacity from Cingular. By doing this, Apple will enter two battlefields at once - handsets and wireless services - and Hodulik mentioned aspects of the industry that will work against iPhone's creators.
First of all, most of the iPod consumers are paying an average of only 10$ a month for phone service, and they will be unlikely to move to a higher cost plan and an expensive handset, and let's not forget about the stores. Apple's main future competitors have between 1,200 (T-Mobile) and 2,100 stores (Cingular and Verizon), while Apple has only 174, and having fewer stores is a disadvantage, considering the fact that subscribers usually go to fix or upgrade their handsets, as well as pay their bills.
At last, the analyst underlined the fact that "the economics of being an MVNO are not favorable". "While we believe Apple has been able to negotiate an attractive deal with Cingular, we do not know whether it will be attractive enough to allow it to compete for high volume users and still make money on the phone services (if that is its intention at all.)", concluded John Hodulik.
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