Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
Due to what has become some of the worst scheduling ever (see below), my nearly worthless 2 cents of commentary on Apple’s annual unveiling of its latest iPhone model is even a bit more worthless this year. (Do they still make pennies?)
(As referenced above: Seriously CTIA, can’t you and Apple perhaps get together a bit ahead of time and figure out a way to not both be having an event the same week? There are what … 50 weeks of the year in which a trade show and a device launch can be hosted, and yet the two of you have to pick the same week?)
So, here we are now more than a week after Apple unveiled what is basically the same thing that it unveiled last year, but somehow enhanced in a way to cause hysteria. (Apple at its finest!) As such, I will forgo any sort of commentary on the actual device itself as I am wholly unqualified to speak on the importance of a new screen that requires me to meter out my finger pressure to get what I want, as well as to the importance of offering the device in a “pinkish” color. (Good?)
However, there were two very significant points that came out of the announcement that do require a cent or two of discussion.
First, the lack of actual newness in the latest Apple devices has shown that the time for these sort of unique events tied to the launch of mobile devices has come to an end. Seriously.
It’s only appropriate that Apple is the company to bring these events to a close as they were the ones to really kick off the genre. Sure, others have tried to emulate Apple’s launch model, all with varying levels of disastrous results, but as we have seen from the near sameness of recent device launches, making a big deal out of a new number or letter suffix has run its course.
Apple has even forgone the whole “one more thing” shtick that Steve Jobs perfected and Apple fans literally wet their pants over. In its prime, I think everyone who attended one of these Apple events ignored everything up to the point where Jobs uttered those words.
So, can we all agree that these events are no longer required and we can just go back to whatever it was we were doing before this nonsense began? (I’ll take your deafening silence as a yes.)
OK, now that that’s out of the way, let’s get to the second cent, which is perhaps of more importance to the carrier market.
Along with the new device announcement, Apple said it also plans to sell unlocked iPhone devices using a monthly payment model at its stores. This model is similar to what has become the preferred method from mobile operators of keeping a customer tied to that carrier without having to use that distasteful “contract” word.
Now, there are no laws against Apple selling a device it makes at a store it owns, but this decision could prove a bit of a challenge for mobile operators.
You see, mobile operators love Apple. Look at the homepage of any carrier’s website or go into any carrier store and you are going to quickly realize that carrier offers Apple products.
And Apple … well … Apple likes money. And not just some money. Apple likes all money. The more, the better. (And, if it can hide that money out of the reach of the taxman who wants to take some of that money, even better.)
I am not aware of pricing agreements between Apple and carriers, but figure Apple sells devices to carriers at a price based on the volume of devices purchased. Buy more devices from Apple, get a better price. And, with Apple basically dictating the retail price on those devices, it’s in the carriers’ favor to buy as many iPhones as possible.
For Apple, selling more devices should result in lower manufacturing costs per unit, and thus provides Apple with a greater profit per device. And while the iPhone continues to be a revenue juggernaut for Apple, I am guessing the company figures it can squeeze a bit more money from that model by selling directly.
Also, like many, I spent some of my younger days in the retail environment and realized that those establishments usually made only a pittance on the one item that drew consumers into the establishment, but made out like bandits on all the accessories that main item required. I see this as being the same motivation for Apple. Why not entice a few more people into those sterile white locations on the premise that they are just picking up a new device under a monthly payment model, when in fact they will be leaving that establishment with a bag full of profit-rich accessories.
The more troubling part of the deal is that Apple requires consumers who agree to its installment plan to turn their old devices back into the company, which could then feed Apple’s refurbished device program and allow the carrier to resell that device at a discount to consumers, but at a nice tidy profit to Apple. Remember what I said earlier about Apple liking all money?
Mobile carriers have been taking advantage of this model for some time as part of their offers to pay off a customer’s early termination fee or remaining payments on a device if they switch carriers. Much of that money forked over to get the customer is made up when the carrier moves that turned-in device through the refurb process.
This model is even more ingrained with the recent device leasing options that have consumers forking over those old devices at a predetermined time, thus allowing the carrier to work up a spreadsheet on the program. Heck, Sprint is taking the next step and looking at creating a whole new business that just handles the device transactions.
But, with Apple now looking to get a piece of that model, carriers could see what was just beginning to become a new revenue stream siphoned off by the same folks they are already paying to get those devices. And, while carriers have done an admirable job in updating the look and feel of their retail establishments, I am guessing people who buy Apple devices do so in part because they feel special walking out of an Apple store with an Apple product.
Many have noted that Apple’s move is not yet any cause for concern for mobile carriers, which is a stance also being taken by the carriers. And, I can agree with the “yet” part. But, as mentioned before, Apple likes money, and if there is a revenue stream here that Apple can get a piece of, I am going to assume Apple will drive as big of a siphon into that stream as possible.
Thanks for checking out this week’s Worst of the Week column. Here is a quick, but satisfying extra:
• My heart jumped this week when I received an e-mail with the subject line: “World Teleport Association Launches Teleport Certification Program” seeming to indicate that we were indeed on the precipice of teleportation services.
For those unaware, teleportation in my mind is the only real technology advancement mankind should be working on. All the smart people currently trying to figure out how to develop smartphone screens that require different levels of pressure to activate specific commands, need to stop that nonsense and get on teleportation.
Well, turns out this WTA is in no way affiliated with teleportation and instead is involved in satellite communications or something. I honestly became too depressed to read about what WTA really did once I found out it wasn’t teleportation.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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