Apple the Wireless Carrier?

Sure, it's good friends with AT&T now, but don't rule out a go-it-alone strategy down the road.
Publish date:


(AAPL) - Get Report

partnership with carrier


(T) - Get Report

to launch the iPhone is expected to be a game-changer in the cellular phone business -- along with having the potential to generate gobs of cash for both sides.

The debut has been preceded by critical praise, and the prospect of a mammoth launch is likely sending shivers down the spines of competing wireless carriers such as


(S) - Get Report



(VZ) - Get Report

. But maybe AT&T should watch its back, too.

Apple CEO Steve Jobs plays a take-no-prisoners (or business partners) game, and there's little doubt that the company has it in mind to take a bite out of the wireless business in much the same way it took on the media player space with iTunes.

So don't be surprised if Apple launches its own competing wireless platform or decides to create a mobile virtual network operator (MVNO) -- essentially piggybacking off an existing service provider and branding it as its own.

Seem far-flung? Consider this: Jobs is one of the savviest, most innovative CEOs in the world, and he knows full well that having a wireless platform would allow Apple to better control all aspects of the revenue stream from the iPhone.

The company's AT&T contract still gives it a great deal of control -- Apple provides customer service and most of the phones will be sold through Apple stores. But it's hard to believe there's not sufficient wiggle room in the arrangement to give Apple an out.

Going the MVNO route, similar to what


(DIS) - Get Report

has done in providing cell phones for kids, saves money and time, because it's essentially renting bandwidth from another carrier.

To watch Farnoosh Torabi's video interview with Mark DeCambre, click here


In theory, it might not be beyond Jobs to form a wireless carrier platform outright.

Even if the initial iPhone sales manage to fall a bit short of the hype that's preceding the device, that's not necessarily cause for alarm. Early on, the iPod wasn't the giant hit it later became. Sales of the devices, which managed to lure nearly three-quarters of the music player market, didn't get into full swing until Apple rolled out iTunes.

The online music sales outlet allows Apple to gain a direct connection with the customers and manage the user experience. It now sells music, movies and television shows and has changed all the rules in visual and audio media.

You think it can't do the same in the phone business?

For Jobs, this isn't just the launch of a novel device with a bunch of cool bells and whistles; this is another chance to break into a market that every phone provider has aspired to: combining an all-purpose music device with the "cool factor" that Apple gadgets bring.

Now, cracking the wireless carrier world isn't the same as taking on the music player market. The mobile phone space is crowded and competitive. But one advantage for Apple is that it's largely disparate, given the number of different devices and providers out there.