Apple May Shake Up Mobile Phone Market Again

Oct 29, 2010

By George Anderson

Apple’s introduction of the iPhone shook up the mobile phone
market and now it appears as though Steve Jobs and company are getting ready
to do it again. According to a report by GigaOM, Apple is working with
Gemalto, a European chip manufacturer, to develop a SIM card for the iPhone
that will enable it to work with any cell phone service directly out of the

If the report is correct, those purchasing an iPhone would no longer be
tied to one or two carriers, therefore opening up the market to greater competition
for consumer dollars.

An analysis on the Apple Insider website said there
is another aspect to this report that could have a major implications for retail,
as well. Apple and Gemalto are both working with near field communications
(NFC) technologies to enable contactless transactions of various types using
radio frequency identification (RFID).

Discussion Questions: What do you see as the implications for the mobile
phone and retail markets should the GigaOM report prove correct? What will
have the greater impact: the iPhone being opened up to multiple carriers or
as a device to engage in contactless transactions?

Please practice The RetailWire Golden Rule when submitting your comments.

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9 Comments on "Apple May Shake Up Mobile Phone Market Again"

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David Biernbaum
11 years 6 months ago

If Apple and Gemalto (European chip manufacturer) are able to develop a SIM card for the iPhone that will enable it to work with any cell phone service directly out of the box, than the iPhone will score a huge touchdown and have a windfall of new sales. This will be a big deal!

Steve Montgomery
11 years 6 months ago

I agree with David; this could be huge for Apple and for the cell phone industry. Should this happen, it would be a game changer for the industry. Would it change the way cell phone are sold, i.e. discounted based on a contract with a particular carrier? It will be interesting to watch. Certainly for AT&T and Verizon, their Apple sales would be impacted.

Ben Ball
11 years 6 months ago

In assessing the overall impact of this development on iPhone sales, I don’t think we can assume that Apple will hold a technological advantage for very long. Other phone manufacturers will duplicate via “parallel invention” and eventually we can expect the market to stabilize on a single platform. (Think VHS vs. Betamax; Blu-ray vs HD-DVD; etc.)

The net effect should be a wonderful world of truly open choice for consumers. No longer will we need to buy “bundles” and “contracts” — nor will we have to wait for our biannual upgrade to secure the latest technology at a reasonable price. We will simply buy the device and the service that we want independently.

The industry will likely mimic the Rx companies in claiming that they can’t afford to innovate if they don’t have the margins provided by the current system. I won’t bore you with the examples. We all know how that one turns out.

Joan Treistman
11 years 6 months ago

My thoughts are in line with Ben’s comments. As quickly as iPod establishes an advantage, other phones and services will establish their own comparable or improved (nah!) version.

The world of technology we live in is fluid. And importantly it’s no longer limited to technology companies. For companies to be part of their own competitive landscape they have to constantly monitor what is going on and try to envision the future ramifications. Importantly, they have to develop their own scenario planning processes so they can jump on new opportunities quickly and with limited risk.

What’s left out of the above opinion is a suggestion for most companies to build their own and have R&D capabilities. There aren’t too many, maybe no organizations that can effectively outmaneuver or pre-empt Apple. I would suggest that it can be sufficient and profitable to have a piece of the pie that others create and introduce. But you have to be ready with the ingredients and distribution capability.

Mel Kleiman
11 years 6 months ago

This will not be an evolutionary step for the cell phone industry and Apple but it will be a revolutionary development.

User will be free at last to choose carriers and to switch them at will. Additional technology will also help to move the cell phone into the payment system everyone is projecting it can become.

Paula Rosenblum
11 years 6 months ago

It would be a beautiful thing. No question. But as noted above, Apple better hurry. The phone won’t hold its edge forever.

Joel Rubinson
11 years 6 months ago

There is no question in my mind that being exclusive to AT&T is holding back iPhone sales for two reasons: 1) perceived problems with the AT&T network; 2) contracts and preferences that people have for other networks for whatever reason.

It is really like % ACV as a modeling variable in new product forecasting. It is very hard for a product with 30% ACV (like only AT&T) to match sales for a product with 80% ACV (like Droid). (Percentages are illustrative of the point as I don’t have the carrier shares handy….)

Robert Heiblim
Robert Heiblim
11 years 6 months ago
This development will be most important in international markets. This is due to the fact that in the EU and Asia consumers are used to actually paying for phones. As a data point, in China the average consumer buys a new phone every six months. Part of this is driven by law. In these markets merchants must advertise the full unlocked price of the phone and offer it as such. With a SIM card as proposed this is good for that consumer allowing them to switch plans as often as competition provides reason. However, in the US ALL phones are sold in bundles with pricing “hidden” as such. So in the EU, consumers see that the iPhone is $800-1000 unlocked but also can compare plan costs to determine what is the right deal for them. That is not an easy comparison in the US where we saw Google fail with a Nexus phone that cost over $600. Most consumers just saw high price and retreated. Considering that over 75% of consumers are locked to contracts… Read more »
Max Goldberg
11 years 6 months ago

This could be a significant technological breakthrough, but it could mean significantly higher phone prices for consumers. Without exclusivity will service providers be willing to subsidize the cost of the phones, as they do now? Without those subsidies, the cost of an iPhone could rise hundreds of dollars. Some consumers may be willing to pay a premium to not be tied to a carrier, but many are willing to put on the carrier’s handcuffs to save that money.


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