The next Apple iPhone won't have a SIM card, Apple has reportedly assured untrusting European carriers that are worried such a development would damage their bottom lines.
Apple has told several European carriers that the iPhone 5, due out
in mid-2011, will not include a subscriber identity module, better
known as a SIM card, the Financial Times reported Nov. 22, citing "people close to the operators."
It was first reported by GigaOm in October that Apple was working with Gemalto, a manufacturer of SIM cards, to create a SIM for the iPhone.
An iPhone with a SIM, the carriers fear, would give Apple more power
and enable customers to switch between carriers more easily and
frequently-instead of agreeing to the two-year service contracts that
are now common. Currently, the carrier provides the SIM and activates
the phone, tying the SIM to the customer's information. If the iPhone
were to come directly from Apple with a SIM, it could result in a
situation where customers sign much shorter service contracts and hop
between carriers, or even enable Apple to act as MVNO (mobile virtual
network operator).
MVNOs, such as Virgin Mobile, offer mobile phone service but don't
have their own spectrum; they essentially "rent" spectrum from a
carrier that they offer under their brand. While Apple has apparently
worked to allay the carrier's fears, "people close to the operators say
they do not believe Apple has given up on introducing an embedded SIM
in the iPhone," FT reported.
Several carriers have warned Apple that if it were to include a SIM,
they would refuse to subsidize the device for customers, FT reported
Nov. 18. Carrier subsidies-which enable customers to pay closer to
$200, instead of Apple's $600 wholesale price-have been credited with
fast-paced rise of smartphone adoption and would certainly hurt sales
of the iPhone.
Reportedly, the United Kingdom's Vodafone, France Telecom and Spain's Telf??nica have concerns about an Apple-provided SIM.
"Operators in mature countries that subsidize the iPhone are in a
strong position to deter any potential moves by Apple to own the SIM
card," analyst Neil Mawston with Strategy Analytics told eWEEK, after
the Gemalto rumors.
Research firm ABI anticipates that the SIM market will grow 10
percent in 2010, approaching 3.8 billion shipments. Mobile operators,
it said in an Oct. 27 report, are evaluating which services to run on
SIM cards, in order to "combat the threat of third-party application
stores," which could limit their data revenue.
"SIM cards offer operators a direct presence with the end-user; it
makes sense that service providers will take advantage of the increased
level of functionality, performance and security," John Devlin, an ABI
principal analyst, said in the report. "With handset manufacturers and
companies such as Google offering their own portals and services
directly to end-users, operators need to be able to compete."
New business models are being proposed to carriers, in an effort to
grow demand for new applications and features, states the report,
adding, "SIM-based applications and browsers can give operators a
branded presence and allow customers easy access to targeted services.
It's not just within the smartphone sector that this is occurring;
innovative services are being delivered via SIM-based browsers in many
2G and developing markets."
Were Apple to move to a SIM-based model, say analysts, it would
incentivize carriers to give preference to others handset vendors,
particularly those with Android-running devices.
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.
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