Google vs. iPhone vs. Asia vs. U.S. cellular providers

Kevin Delaney’s Wall Street Journal Online blog entry from May 31, 2007, on “The iPhone Needn’t Fear Google, Yet” points out that Google’s cell phone strategy is not to have a phone product per se, like the iPhone, but rather to evolve a services platform.

With the impending iPhone launch, anyone who’s been using cell phones in Asia the past several years has to wonder, as the Japanese technology business magazine ASCII did in February, what the big deal is. Browser phones without physical keyboards? That’s already been mainstream there for some time. Sliding screen content with your fingernail? Same deal. 2.5G connection speed using EDGE for wireless data? Are we missing something? 3G has been operational for some time in Japan. Why would you want Apple’s phone at three times the price of 2004 model web phones on eBay? Well, because it will have an apple logo on it. Still, probably at the top of the desired improvement list is 3G, according to Ben Charny’s “Apple Changes the iPhone, But Critics Want More Still,” June 18, 2007 WSJ Online.

On the other hand, Apple’s entry is great because it will help loosen the silo death grip of most senior management in U.S. cellular service providers. They know their business model will have to change, but nobody wants to blink first. Managers who aren’t getting paid to put the current business model at risk are actually letting themselves be quoted, according to the Wall Street Journal’s lead story on June 14, 2007, to the effect that they don’t want to blow owning the silo this time like they did with the Internet. Hello? Some large companies can survive forever without realizing what business they’re in. Verizon thinks they’re going to make money as content providers instead of as service providers?

Meanwhile, the Chinese and Indian cellular markets are rapidly becoming 5 times the size of the U.S. market. I kind of think that the market-driven model over there, where the handset, the service provider, and the services platforms act, sell, and interact with the customer quasi-independently and quasi-cooperatively, is what will eventually take hold in the U.S. as well. So in the Asian context, Apple’s handset is nothing new. But in the U.S. market, it’s the break in the dike.

Leave a Reply