IPod Touch Raises Predictions Of Doom For Telcos

topics

IPod Touch Raises Predictions Of Doom For Telcos

Apple’s recent launch of the iPod touch is being heralded in some quarters as an attack—directly or indirectly—at the mobile industry. It’s an interesting intepretation considering the device is a glorified iPod, although the WiFi connection is something people have been clamouring for for a while now. PC Mag writes that Steve Jobs must hate the mobile phone industry: “I read a serious undercurrent of bare thinly veiled passive-aggressiveness in Wednesday’s launch of the iPod Touch, stemming from the frustrations Apple (NSDQ: AAPL) has had with the ground-breaking iPhone”...and goes on to point out that no carrier will get any revenue from sales of the iPod touch, which is an odd point to stress since the carriers don’t get a slice of the revenue from many consumer electronic devices and don’t seem put out by it. However, he does make a very good point about Apple’s overseas expansions: “The foreign carriers may be choking on Apple’s revenue-sharing demands; it’s less clear why Apple seems to be so cataclysmically afraid of releasing an unlocked iPhone.” If the device isn’t going to be subsidized through carriers anyway why not sell it direct? If Apple doesn’t like dealing with the orifices that are telcos why not strike a deal with Carphone Warehouse, for example? The only answer is that it really wants that extra and on-going revenue from the telco service that it is getting through AT&T (NYSE: T), and thinks that is worth selling fewer devices…

Meanwhile, Fortune argues that the launch of the iPod touch could sap sales of the iPhone, although that would account for people seeking a cool gadget rather than people seeking a converged device. The article goes on to argue that it’s the WiFi capabilities in the iPod touch (and some other handsets) which pose the big problem to telcos…the old argument that WiFi plus VoIP equals death of mobile networks. Of course, WiFi would have to become a lot more ubiquitous and a lot more easy to use before that scenario plays out. It’s also worth remembering that the most likely operators of the WiFi networks will be telcos—Starbucks hotspots are via T-Mobile, and the long-promised national WiMAX network will be by Sprint (NYSE: S). So the iPod touch is nothing for telcos to worry about except as part of an overall trend that started long ago and would keep going with or without Apple—the mobile networks becoming less closed off and more like the general internet.

James Quintana Pearce Sep 6, 2007 7:36 PM ET

Posted In: Gadgets, Companies, Apple

latest headlines

MIke Kiely

finally someone actually understands that elephants don't actually mate with mice.The Telecos control the one ingrediant that ALL PERIPHERIAL PLAYERS WANT and that is the publics purse strings. Without legislative assurance that the internet and Telecommunications are free to the highest bidder, most companies cannot afford to annoy the elephants in thge room with threats of boycotts or end running the networks in terms of user fee and access level billing. All consumers want is cheap or free and cool the retailers feed on this and the cable and telecos make it happen in the broader arena with loads of tax dollars slipped into the fray to keep them all happy. Our next big thing is connected enterprise access with paid usage servers and content providers restricting access to only certified or trusted clientele who have packet level encryption and subscribe by Hydro/utility subscription with time of use and smart device billing systems embedded in every residence and business. This is actually big brother and he really does exist at this level.