Absurd Apple Rumors Revisited

August 5th, 2015

It’s rare that Apple denies a rumor, regardless of where it was published. But when stories were posted that the company was going to become a cell phone provider, specifically an MVNO, which stands for mobile virtual network operator, something had to give.

Just in case you’re wondering, an MVNO is a service that piggybacks or leases capacity from another provider, such as MetroPCS.

Specifically, Apple made a statement to CNBC that it has not discussed nor is it planning to become an MVNO. That stops the speculation in its tracks.

Such a rumor is dangerous, since Apple has carefully crafted distribution deals with hundreds of wireless carriers around the world. If Apple were to start its own service, even though it would be buying capacity from existing carriers, that would still put the company in competition with partners with which it has no such deals.

While Apple has had no compunction in doing that with third-party app developers by duplicating key features, Apple isn’t going to bite the hands that feed it. There would be no logic in that.

Remember that the iPhone lives and dies by the carrier networks that support it. If you cannot get an iPhone to work on the cell provider you want, you will be apt to buy a different product. Remember that Verizon Wireless was heavily invested in those Droids from HTC and Motorola before they got the iPhone. That Droids didn’t do as well as they hoped certainly helped push that deal forward.

Yes, I realize wireless companies don’t exactly get the love from customers. But Apple has a pretty good deal as it is. Unlike the competition, Apple controls device support and distribution of updates. The carriers have no say in how or when the latest iOS release will be distributed, and that’s very much why iOS 8, although perceived as less popular than iOS 7, is still on 85-89% of existing devices.

In contrast, the Google Android platform is a mess. The latest operating systems get tiny shares of the user base, critical security patches are not promptly distributed, and most times they are never distributed. That’s because the handset maker and the carrier have to approve and configure Google’s updates. But these companies would rather sell you new gear than support what you already bought. This is a problem that Google has never been able to resolve.

So as it stands, Apple’s best approach to the wireless industry is to essentially leave well enough alone. That doesn’t mean Apple can’t use its influence to encourage carriers to provide better support and service. There’s very little doubt that AT&T got far better after it became the first carrier to support and sell the iPhone, although it took a while.

I’m more interested in why these rumors appear, and who might be responsible.

In this case, it was a rumor that, although it seemed logical on the face of it because of Apple’s desire to control your experience as tightly as possible, it would have been very impractical. I suppose there might have been a possibility of such a venture when Steve Jobs was at the helm, Tim Cook is more inclusive in dealing with other companies. Consider that distribution and software development deal with IBM.

At one time, IBM was the enemy. The PowerPC deal that included Motorola changed that, of course, but Apple ditched those chips after IBM and Freescale (the Motorola chip spinoff) decided to concentrate on the embedded processor market at the expense of the Mac. So it was a surprise to see Apple and IBM come together yet again.

Now the original rumor about Apple becoming a wireless carrier appeared in BusinessInsider, which has a poor track record accurately covering the company. But that didn’t stop the story from spreading far and wide. At least Apple realized the rumor was important enough, with the added consequences to Apple’s existing partnerships, to nip it in the bud.

Of course, this doesn’t mean Apple wouldn’t consider going its own way, or offer its own customized wireless service as an alternative. But even a single move in that direction would be sufficient to freak the industry. It would create an unsavory precedent, and hurt Apple as it negotiates new deals. Yes, I suppose Apple could use the threat of rolling its own to bring recalcitrant carriers in line. “Work with us, or we’ll work without you.”

Indeed, word that Apple may have used such a negotiating tactic somewhere with a recalcitrant partner could have fueled this sort of speculation. But that assumes Apple would be that extreme in attempting to finalize a deal, and that’s by no means certain. Certainly Business Insider is not naming its sources.

For now, the Apple MVNO rumor joins a host of others about possible products and services that will likely never come to be. Anyone who held their breath awaiting an Apple smart TV set must be having respiratory problems by now, though I suppose it’s possible such a product was considered, and abandoned.

The same may be true for Apple Wireless, or whatever it might have been called. Right now, though, let’s just concern ourselves with things that might really happen.

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