February 17th, 2006

“Mobile Me” by Apple

I have been fielding quite a few calls about Apple’s filing of the “Mobile Me” patent. See story. Folks have been speculating about a phone from Apple for more than a year. Being that I am a wireless analyst, I don’t follow Apple as closely as others do. What I do know though, is that we are not likely to know until Apple wants us to know. They are pretty good at big surprises.

Do I think they are developing a phone?

Probably. Probably somewhere in their labs, there are prototypes of phones. Whether or not they bring one to market commercially is another story. Whether or not they will do so on their own is another open question. Hard to imagine carrier subsidies on a device unless there are revenues to be earned through downloaded services and content.

Apple designs and creates fabulous hardware and software. With operating systems, microprocessors, browsers, applications, large color screens, etc., cell phones are edging ever closer to a PC. Unlike PC’s though, people like cell phones that are free or heavily subsidized. They aren’t buying cell phones based on speed (which has more to do with the network than the phone anyway) or the software packages that go with them. Also, voice is the most important feature – not something that is within Apple’s core competencies when compared to a Nokia or Motorola. Apple could do a lot to up the ante on user interface though. Also, while most want a phone for free, Apple has a track record with building markets. They may create a $200 or $300 handset that becomes a fashion icon that everyone has to have. Selling 14 million ipods in one quarter says a lot.

Will Apple become and MVNO? Another portion of the speculation. I think this is less likely than their releasing a handset. Apple creates amazing hardware and software, but they don’t do a lot of business with services. They don’t have relationships with consumers that translate into monthly subscription fees like the cable operators. They don’t have content like ESPN or Disney. They could build a brand from scratch like Amp’ed. Not sure of the upside for them. Boost has been at it for a few years (and their parent is a wireless carrier) and they are just over a million subscribers.

All of that said, it would be great if Apple did release a phone. They do a great job in terms of user experience and integration. I imagine a phone that could be side-loaded with music, video and photos just like my iPod. Everything would work. I wouldn’t have to worry about DRM or which media player is on my phone. I imagine it synching with my contacts and calendar in the same way. I imagine it could link into my home computer remotely and stream/download any photos or music I may have forgotten to take with me. I can imagine the hardware, but not the services (e.g., games, dating applications). If they would sell services, I would hope that I can browse and buy online.

In the end, we are probably not going to know until they want us to know.

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