Greg's Bite: The Cellular Game, Spectrum and Money
TweetFollow Us on Twitter

Greg's Bite: The Cellular Game, Spectrum and Money

By Greg Mills

Apple has clearly revolutionized the cellular phone industry since the iPhone 1 was launched. In the past, the cellular carriers had all the power and the hardware manufacturers like Motorola, Nokia and RIM simply sold handsets to them and got the best deal they could. Cell phones were manufactured to please the networks first and then the customer who would use them. Exclusives on certain handset models were common.

Three companies pretty much owned the cellular handset business not that long ago. Now, all three of those giant handset makers are in a desperate race to catch up or die in the race to provide smartphones that can compete with the iPhone. The dumb phone market is collapsing rapidly as contracts expire on old cell phones or their batteries die. People want to move up to a smartphone.

The recently reveled make-or-break deal Apple made with Sprint shows how much things have changed. Apple simply doling out iPhones or withholding them is an economic power that nearly destroyed Sprint and hurt Verizon and T-Mobile in the US market.

As long as AT&T had an exclusive to sell iPhone, the other carriers were desperate to sell anything that even came close to the magical Apple device. Enter Android. Google was actually able to launch the Android OS into the market place in the void Apple left open with the lack of iPhone in the inventory of AT&T's competitors. This also played out around the world, until Apple finally got around to selling iPhone to additional carriers in each market.

The exclusive right to sell iPhone in a market came at a very dear price. Bargaining with the electronic Godfather, Steve Jobs, wasn't easy; he knew how much the other carriers desperately needed the iPhone. As Apple ramped up production of the iPhone and the hardware matured to enable an iPhone flavor that would work on any cellular radio network, the power to extract unbelievable concessions from the carriers didn't diminish; Sprint is recent proof. I have never heard what Verizon had to pay to get into the game. The current prices carriers pay is north of US $500 for a basic iPhone and more for the ones with more memory. Apple has a bill of materials of about $200 on the iPhone 4S, so to say it makes a tidy profit is an understatement.

Apple forced Sprint to agree to a deal worth twice the company's current market cap of about U$9 billion. Over the next four years Sprint has agreed to buy 30.5 million iPhones at a current valuation of about $20 billion. They must buy all those iPhones or default on the contract with Apple. Both Sprint and Apple certainly have confidence that selling iPhones will turn Sprint around. The point is, who else could force Sprint into such a make-or-break deal, who else has the handset that could make it work? No one else comes close, including any of the Androids.

While Apple has faced some criticism for holding to the exclusive cellular carrier marketing model for so long, it gave Google's Android an opening to fill the "I wish I could buy an iPhone but I will accept an Android instead" niche. That isn't any longer the case. I fully expect the Android numbers to fall dramatically soon due to four main factors.

First, the uncertainty factor. The previously free "open source" Android OS carries significant legal baggage in the form of Apple's lawsuits and lots of relevant patents that are causing uncertainty and hold major potential unknown costs for handset makers. Microsoft has cashed in recently and collects more in royalties on its patents covering its technology found in Android than it makes on Windows Mobile OS. It has been estimated that about $10 is the Microsoft "tax" on its patent license on each Android handset sold.

This does not factor in any potential damages Apple may collect for previous infringement. The legal baggage also includes the likely potential Apple will win and force a major revision in the Android OS that will orphan both hardware and apps. Then Oracle wants to force Google to pull Java out of the Android OS or license Java and comply with its standards. Building Android handsets and tablets that can't even be sold in entire markets is a major brand disaster. These terrible nightmares are not something the CEOs of the world's handset makers like to dream.

Secondly, the Android platform has some serious problems with the common piracy of apps, a severely fragmented app store infrastructure and various flavors of the Android OS that have some incompatibility issues. Apple avoids all these problems by fully controlling both the hardware and the software. The uncertainty the handset makers see in the Android OS will certainly open the door for the other platforms. Windows Mobile, Palm and other mobile OS platforms can only hope for a chance in the sun, should Android fail.

Thirdly, Google is sending mixed messages since they moved to buy Motorola. The rest of the Android handset makers rightly fear Google will try to follow Apple's lead of making both the hardware and writing the software for a better user experience and thus intentionally favor Motorola over them with Android innovation.

Finally, the exclusive iPhone market thing is over. Apple is about to really open the flood gates and sell iPhone just about everywhere. That drains the pond for the Android. Why buy an iPhone simulation when you can buy the real thing?

If I had the money I would go long on Apple and Sprint both. I figure Sprint is way down and, with their value due to sepctrum they own, either the iPhone will fix the company or it will go down and will be bought up by some company with the money to fix it. Or Apple will buy Sprint and fix it. Any way, Sprint investors win. I think the Android advantage is over and Apple is about ready to clean up.

That is Greg's Bite for today.

 

Community Search:
MacTech Search:

Software Updates via MacUpdate

Coda 2.6 - One-window Web development su...
Coda is a powerful Web editor that puts everything in one place. An editor. Terminal. CSS. Files. With Coda 2, we went beyond expectations. With loads of new, much-requested features, a few surprises... Read more
File Juicer 4.51 - Extract images, video...
File Juicer is a drag-and-drop can opener and data archaeologist. Its specialty is to find and extract images, video, audio, or text from files which are hard to open in other ways. In computer... Read more
PDFpenPro 8.3 - $124.95
PDFpenPro allows users to edit PDF's easily. Add text, images and signatures. Fill out PDF forms. Merge or split PDF documents. Reorder and delete pages. Create fillable forms and tables of content... Read more
PDFpen 8.3 - $74.95
PDFpen allows users to easily edit PDF's. Add text, images and signatures. Fill out PDF forms. Merge or split PDF documents. Reorder and delete pages. Even correct text and edit graphics! Features... Read more
BetterTouchTool 1.963 - Customize Multi-...
BetterTouchTool adds many new, fully customizable gestures to the Magic Mouse, Multi-Touch MacBook trackpad, and Magic Trackpad. These gestures are customizable: Magic Mouse: Pinch in / out (zoom... Read more
iFFmpeg 6.2.2 - Convert multimedia files...
iFFmpeg is a comprehensive media tool to convert movie, audio and media files between formats. The FFmpeg command line instructions can be very hard to master/understand, so iFFmpeg does all the hard... Read more
ForeverSave 2.1.6 - Universal auto-save...
ForeverSave auto-saves all documents you're working on while simultaneously doing backup versioning in the background. Lost data can be quickly restored at any time. Define your preferred time... Read more
NTFS 14.3.318 - $19.95
This latest version supports the new macOS 10.12 Sierra! NTFS breaks down the barriers between Windows and OS X. Paragon NTFS effectively solves the communication problems between the Mac system and... Read more
BetterTouchTool 1.961 - Customize Multi-...
BetterTouchTool adds many new, fully customizable gestures to the Magic Mouse, Multi-Touch MacBook trackpad, and Magic Trackpad. These gestures are customizable: Magic Mouse: Pinch in / out (zoom... Read more
NTFS 14.3.318 - $19.95
This latest version supports the new macOS 10.12 Sierra! NTFS breaks down the barriers between Windows and OS X. Paragon NTFS effectively solves the communication problems between the Mac system and... Read more

Latest Forum Discussions

See All

Clash of Clans is getting its own animat...
Riding on its unending wave of fame and success, Clash of Clans is getting an animated web series based on its Clash-A-Rama animated shorts.As opposed to the current shorts' 60 second run time, the new and improved Clash-A-Rama will be comprised of... | Read more »
Leaks hint at Pokémon GO and Starbucks C...
Leaked images from a hub for Starbucks employees suggests that a big Pokémon GO event with the coffee giant could begin this very week. The images appeared on Reddit and hint at some exciting new things to come for Niantic's smash hit game. | Read more »
Silent Depth Submarine Simulation (Game...
Silent Depth Submarine Simulation 1.0 Device: iOS Universal Category: Games Price: $7.99, Version: 1.0 (iTunes) Description: | Read more »
Enneas Saga lets you lead your own demon...
Defend the land of Enneas Continent from the forces of evil in the new fantasy MMORPG from Lyto Mobi: Enneas Saga. Can’t wait? No problem. It’s available to download now on Android devices. | Read more »
Great zombie games in the spirit of Dead...
Dead Rising 4 arrives tomorrow, giving enthusiasts a fresh chance to take selfies with zombies and get up to other ridiculous end-of-the-world shenanigans. To really get into the spirit of things, we've gone and gathered the best zombie games that... | Read more »
Amateur Surgeon 4 Guide: Advanced tips a...
Amateur Surgeon 4 is still tackling the competition at the top of the App Store charts, so if you haven't tried it out yet, you should probably do that right away. If you've been at it for a while, though, perhaps you're ready to start expanding... | Read more »
Amateur Surgeon 4 Guide: Become the worl...
It's time to wield your trusty pizza cutter again, as Amateur Surgeon has returned with a whole fresh set of challenges (and some old, familiar ones, too). Starting anew isn't easy, especially when all you have at your disposal is a lighter, the... | Read more »
Le Parker: Sous Chef Extraordinaire (Ga...
Le Parker: Sous Chef Extraordinaire 1.0 Device: iOS Universal Category: Games Price: $2.99, Version: 1.0 (iTunes) Description: | Read more »
Telltale Games really is working on a Gu...
Telltale Games' next episodic adventure is indeed Guardians of the Galaxy. A document tied to the voice actors strike suggested that the project was in the work, but now we have direct confirmation following an announcement at the Game Awards that... | Read more »
Amateur Surgeon returns to iOS and Andro...
Amateur Surgeon and its two sequels disappeared from the App Store some time and it was sad days for all. But now, just in time for the holidays, the Adult Swim favorite makes its joyous return in the shape of Amateur Surgeon 4, a remake with... | Read more »

Price Scanner via MacPrices.net

Back in stock! 13-inch 2.7GHz Retina MacBook...
Apple has Apple Certified Refurbished 2015 13″ 2.7GHz/128GB Retina MacBook Pros (MF839LL/A) available again for $1099 including free shipping. That’s $200 off MSRP, and it’s the lowest price... Read more
Slate Tablet Market Share to Fall Below 75% i...
After two years of decline, the tablet market is showing signs of new life as productivity trumps entertainment, and tablets become cost-effective computing devices for both entertainment and... Read more
Yostand Launches Indigogo campaign for iStand...
China-based startup Yostand (meaning ‘your stand’), has announced the launch of its Indigogo campaign for their newly awaited iStand7. This product is a one of a kind iPhone battery case that offers... Read more
Green App – Budget Forecasting Now Available...
Indianapolis, Indiana based CoopToons has announced the release of Green – Budget Forecasting 1.5, an update to their personal budgeting app developed exclusively for iOS devices. Green aims to be a... Read more
New 2016 13-inch 2.0GHz MacBook Pros in stock...
Overstock.com has the non-Touch Bar 13″ MacBook Pros in stock today for $150 off MSRP. Shipping is free: - 13″ 2.0GHz MacBook Pro Space Gray (MLL42LL/A): $1349.99 $150 off MSRP - 13″ 2.0GHz MacBook... Read more
15-inch 2.6GHz Silver Touch Bar MacBook Pro o...
Adorama has the new 2016 15″ 2.6GHz Silver Touch Bar MacBook Pro (MLW72LL/A) in stock and available for $2349 including free shipping. Adorama charges sales tax in NY & NJ only. Their price is $... Read more
13-inch MacBook Airs on sale for up to $180 o...
Overstock.com has 13″ MacBook Airs on sale for up to $180 off MSRP including free shipping: - 13″ 1.6GHz/128GB MacBook Air (MMGF2LL/A): $869.99 $130 off MSRP - 13″ 1.6GHz/256GB MacBook Air (sku... Read more
13-inch 2.5GHz MacBook Pro (Apple refurbished...
Apple has Certified Refurbished 13″ 2.5GHz MacBook Pros (MD101LL/A) available for $829, or $270 off original MSRP. Apple’s one-year warranty is standard, and shipping is free: - 13″ 2.5GHz MacBook... Read more
Monday roundup of Holiday Mac sales: Up to $3...
Take up to $300 off MSRP on the price of a new Apple Mac at B&H Photo today as part of their Holiday sale. Shipping is free, and B&H charges NY sales tax only. Touch Bar MacBook Pros are in... Read more
12-inch WiFi Apple iPad Pros on sale for up t...
B&H Photo has 12″ WiFi Apple iPad Pros on sale for up to $50 off MSRP, each including free shipping. B&H charges sales tax in NY only: - 12″ Space Gray 32GB WiFi iPad Pro: $749 $50 off MSRP... Read more

Jobs Board

*Apple* Retail - Multiple Positions - Apple,...
Job Description: Sales Specialist - Retail Customer Service and Sales Transform Apple Store visitors into loyal Apple customers. When customers enter the store, Read more
Lead *Apple* Solutions Consultant - Apple (...
# Lead Apple Solutions Consultant Job Number: 53586123 Pittsburgh, Pennsylvania, United States Posted: Nov. 28, 2016 Weekly Hours: 40.00 **Job Summary** The Lead ASC Read more
*Apple* Retail - Multiple Positions- Plano,...
Job Description: Sales Specialist - Retail Customer Service and Sales Transform Apple Store visitors into loyal Apple customers. When customers enter the store, Read more
*Apple* Retail - Multiple Positions- Kansas...
Job Description:SalesSpecialist - Retail Customer Service and SalesTransform Apple Store visitors into loyal Apple customers. When customers enter the store, Read more
*Apple* Retail - Multiple Positions- Chicago...
Job Description: Sales Specialist - Retail Customer Service and Sales Transform Apple Store visitors into loyal Apple customers. When customers enter the store, Read more
All contents are Copyright 1984-2011 by Xplain Corporation. All rights reserved. Theme designed by Icreon.