An iPhone World Without Verizon or AT&T?

According to John Stanton in an article on ITWorld referenced by Slashdot, Steve Jobs had plans to completely alter the landscape of mobile networks in the same way he conquered the music industry, by creating his own network that would use unlicensed spectrum rather than rely on mobile operators (i.e. Verizon and AT&T):

One of the more profound ways that the iPhone changed the mobile industry was the fact that it upended the relationship between the handset maker and the wireless carrier: Apple sells many of its phones directly to customers, and in general has much more of an upper hand with carriers than most phone manufacturers. But venture capitalist John Stanton, who was friends with Steve Jobs in the years when the iPhone was in development, said the Apple CEO’s initial vision was even more radical: he wanted Apple to build its own wireless network using unlicensed Wi-Fi spectrum, thus bypassing the carriers altogether.

People often miss the fact that beyond completely revolutionizing the smartphone industry, the iPhone triggered a pretty profound shift in the balance of power between device manufacturers and networks:

Companies like Apple and Google, which develops Android, sell a variety of software and services that capture revenue streams that might have otherwise gone to the operators. [Stanton] advised operators to take some chances with new phones and services rather than invest too heavily in established offerings. Sprint, for instance, has been criticized for making a $15.5 billion four-year deal with Apple to sell the iPhone. U.S. Cellular, however, has revealed that it decided that it would not be a good investment to similarly take on the iPhone.

This shift in power has allowed Apple’s production and sale of the iPhone to be immensely profitable:

As the above charts show, the profit share of the iPhone far outweighs its actual market share, meaning that Apple is keeping a bigger piece of the pie than other manufacturers for the devices they sell. One can only imagine how profitable the iPhone would be if Steve Jobs’ vision had become true and Apple had been able to cut out the networks altogether.

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One Response to “An iPhone World Without Verizon or AT&T?”

  1. hardin

    I suppose I should have included Sprint in the title too, but they’re a recent arrival to the party…


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