Monday, May 14, 2012

Why Apple does not need to become mobile operator

The idea that Apple would become a priority objective of mobile operator returns periodically, like bad herpes - except that it seems impossible to get rid of. It assumes that the Apple strategy is to vertically integrate all components of its business. This is very bad understanding of how the Cupertino than to believe, and therefore to imagine that the launch of an operator to either Apple tomorrow.

The principle: Apple wants to control everything

The idea that Apple is a company obsessed with absolute control over all aspects of its business comes from years 1990 and comparison with Microsoft hollow. Faced with a company whose operating system was a simple brick designed as a catalyst for innovation software and hardware, Apple's integrated approach appeared to be particularly mirrored closed.

This mirror is distorted, however: while Apple - NeXT and avatar - has continued to the time away from the "PC compatible" lingua franca of computer hardware and software components to interchangeable permitted by Microsoft. But Apple was not the exception but the rule itself: the tight integration of hardware and software, this philosophy so dear to Alan Kay, was nothing other than the normal operation of computer before the arrival of Microsoft and major contribution to the field: the invention of the software license. The Redmond was the exception, an exception allowing the democratization of the personal computer.

This is camping on its position that Apple has gone out of business, but it also allowed a revival of the computer, stifled by Microsoft. The processor tailored for the Newton? It gave birth to ARM architecture is now the basis for all smart phones and most tablets. The countless crazy ideas from NeXT UNIX foundation to its use of Objective-C through its innovative graphical interface? They were extensively reworked, but OS X and above iOS would not exist without them - and the web in its present form probably not more. 

 Today that Microsoft itself, like everything else in the industry of Moreover, returns to the model that Apple has never given up, should we say that all societies are obsessed with absolute control? Probably not: it is simply the model that works best. And especially since this integrated model has approached the unmarked pattern: everyone uses the same hardware or substantially all (AX Apple chips differ only very few chips Samsung equivalent), the difference is performing more and more about the software, increasingly personalized, optimized (could not be more different IOS, Android and Windows Phone 7).

The reality: Apple controls only the essential

In short, in a nutshell: Apple is not obsessed with absolute control over all aspects of its business. No, in this regard, Apple is pragmatic: it controls only the key aspects of its business, those that allow a domino effect of having on hand all the others. Tim Cook has aptly summarized this strategy in January 2009:

We believe in simplicity, not complexity. We believe that we own or control the primary technologies at the base of the products we make, and participate only in markets where we have a chance to make a significant contribution.

 "The primary technologies at the base of the products we make," not "full of technology products we make" the difference is subtle and often escapes the least attentive observer, but crucial. Apple is not a conglomerate Samsung in the manner of producing all of the components of its aircraft. Apple is not a giant research and development in the manner of Google or Microsoft, spending millions of dollars in basic research projects. Apple actually represents a middle ground: it invests in a much focused and very practical in key areas, usually at the dawn of their development cycle, ensuring a competitive edge and technological net. The examples can be multiplied to infinity. Apple is not such a manufacturer or SSD NAND flash memory. Yet it is deemed in the field: it was one of the first companies to use this technology on a large scale, and also one of the first to drop the format in favor of traditional disk arrays or chips soldered. IPhone to the iPad via the Mac, these technologies are indispensable, but it does not yet control the production capacity of SSD, nor research the basics of this type of stockage. Apple control something else: optimizing the software to read and write to this memory, and soon the controllers specific to these cycles of reading / writing, through the acquisition of Anobit. 

 Apple does not control all the elements surrounding the production of high-definition screens or highly optimized mobile processors. Apple jumped at the opportunity to expand the definition of its screens by being the first to adopt new technology manufacturers, which was enough to secure control of the domain: it is the classic technique of control by the order book (read: Touch screens: Apple's competitors are the iPad deadlocked). Co-founder of ARM, Apple knows the architecture of these chips, but now leaves the general implementation of its suppliers: they exercise their differences on some very specific details about the game and of microinstructions, reasons for acquisition of PA Semi and Intrinsity.

In general, moreover, Apple outsource most of its production equipment and components, and does not seem to do otherwise despite the numerous supply problems it has posed. Tim Cook, the logistics genius who led his company to new heights of profitability, was relieved when he arrived at Apple in 1998 of the most "inconvenient" for the industrial production of an operational point of view: possession of land and factories, and management of employees involved. Apple does not need to be Foxconn to control the production of its products: it is sufficient to control the machines that make them. And it is precisely his strategy: Foxconn today he can subcontract plant hire and hiring staff, while the machine tools are his property. Apple is now the largest single customer of the manufacturer of the machines required to achieve hulls unibody Macs, which explains why it was the only company to offer this type of construction for years.

 Apple uses the same strategy on the software side: during the release of the iPhone in 2007, control of map data was not necessary. Alone were crucial presentation and operation, which is why Apple has bothered to develop a native application integrating them into the system including the sensor location. Now that the smartphone is the most personal computers and most used, control of these data is crucial and can provide a competitive advantage: that's why Apple collects herself traffic data since April 2010, why she acquired Poly9, Placebase and C3 Technologies, and why it would be absolutely no surprise that it completely abandons Google Maps in iOS 6. Likewise, Apple does not control the bulk of its distribution network, but only some key points. The Cupertino company had identified a decade ago in which 100 critical locations to be present itself: it was the first 100 Apple Store, since joined by 200 more on Apple's key markets (North America megacities , Japan and Europe) and priority markets (China). But also mesh with its network of partners, sometimes without being the only brand presence in their shops: here it controls the precise appearance of its radius and the staging of products, the most important the "experience" distribution of Apple products. Increased partnerships increases the risk, but also the most pragmatic approach to build a presence dense and durable.

The conclusion: Apple does not need to become operator

This logic, which governs so the entire strategy of Apple, can be perfectly applied to the case of the hypothesis that the Cupertino Company would need to become mobile operator to control all of the "experience "iPhone users. Apple does not control the entire chain of production of its IOS devices, and that he has been playing tricks, Apple has no control operators providing connection its iOS devices, and this has played tricks on him, neither the other have prevented the iPhone to sell 218 million copies.

Apple does not control the cellular network which connects iPhone and iPad, but indirectly control operators by being proactive role. Despite the desire for independence, the operators eating into Apple's hand, and for good reason: if the cost of acquiring a subscriber iPhone is heavy, it also takes a more expensive package that years ago, and allows a return on investment spending. That the U.S. operator Verizon not put forward more Android smartphones since it distributes the iPhone is not a coincidence: the Apple phone attracts customers and keeps them coming back. Never mind that Verizon can not put its logo on the phone: just be the provider of an excellent service for a phone good enough to ensure him a good image. Apple control the other end of the chain, the operation of the connection. Control software was first: the development of adaptive streaming or optimization of the latency of the connection used to exploit the service provided by operators. This material is then: the antenna system of the iPhone 4, despite the setbacks he has known, and the dual antenna of the iPhone 4S are among the most advanced in the field - Apple is now a specialist thing, ensuring that the iPhone will have the best possible connection. SIM card, yet demonstrate the power of the operator on a phone since it bears his mark and the link with the network, is also controlled by Apple: it was the first to adopt the format micro-SIM, and proposal for a nano-size SIM has a good chance of being standardized.

The Cupertino therefore controls what is necessary: it ensures the best possible weapon with a recurring revenue for operators, the network is the best possible, and that the iPhone connects to it in the best conditions. And she is saving all that is not essential and would even be a weight on its business activities to deploy a network and manage daily, with labor costs that this implies. The analyst Whitey Bluestein has recently reactivated the assumption that Apple would become an operator through the back door, by becoming a virtual operator: it is certainly always spare network management, but would still not have physical control of the network, and should further parley now.

So we realized that Apple had no interest in becoming a trader, but that does not mean it always will be. The Cupertino Company knows better than any other company feel the market changes and adopt disruptive technologies ahead of competitors. But if Apple becomes operator, it will not be an operator in the traditional sense - as the Macintosh, iPod, iPhone and iPad were not computers, music players, smartphones and tablets in the traditional sense. A quote from John Stanton, a member of the board operators Clearwire and GCI and the clothing brand Columbia, can probably put us on track of what Apple could do:

[Steve Jobs] wanted to replace operators. We spent a lot of time [between 2005 and 2007] to discuss the possibility of setting up an operator using the Wi-Fi spectrum It was his vision.

If what Stanton said is true, Steve Jobs did not intend to become a mobile operator, but rather to destroy this business by adopting new technology to redefine the provision of a permanent connection to our devices. Apple will never mobile operator, but perhaps it will reinvent how to provide a permanent connection to our devices - it's not quite the same thing. A logic that can be applied to all the rumors about the Cupertino company: thus, the "Apple TV" will perhaps not a single enlarged Cinema Display with FaceTime and Siri ...

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