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Thursday, 21 April 2005 |
US
mobile carriers shun iTunes
Register -
London,England,UK
Analysis Apple's early lead in music downloads is costing it potentially
more lucrative wins with the mobile carriers. Business Week reports that the
carriers have ganged up on Apple, with Sprint PCS and Verizon among the networks
who have passed up the opportunity to carry Motorola's iTunes phone.
This hardly counts as the most surprising news we'll hear all year. But looking
at the long term, there's upside for both parties far beyond what the current
market can deliver.
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The mobile market is maturing, which means there are fewer new customers to woo.
Operators want to avoid the fate of becoming commoditized networks, or in the
unforgiving jargon of the business, "dumb bit pipes". Which is why they pay so
much for branding in the form of costly high street stores, and ensuring you use
that network for your transactions, whether they're phone related or not.
Apple's ability to punch above its weight - it's one of the world's most
recognized brands - leaves the carriers with some anxiety. Cingular alone pulled
in $8.2bn in the quarter it reported yesterday. Verizon, which has a coherent
network strategy encompassing wireless and wireline, pulled in almost $15bn in
Q4 2004. Compare that to Apple's $3.2bn quarter. So the networks reason that
they hold the upper hand, and can dictate the terms of the deal.
However some of the reasons given by Business Week for their cold shoulder to
Cupertino aren't as important as the magazine suggests, although they're already
solidifying into the Conventional Wisdom.
Let's have a look each one.
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