You buy an iPhone with a special SIM card, and then you choose and activate your wireless carrier. According to news reports, Apple is working on such a potential game-changer for the European market.
First reported by Gigaom, the report quotes unnamed sources inside European telecommunications carriers, who say that the Cupertino, Calif.-based company is working with Gemalto, a SIM-card manufacturer, to develop the special card. The card would allow European customers to purchase the iPhone over the web or at a retailer, such as Apple's stores, and make the phone operational through Apple.
Carriers Become Commodities?
Using such a SIM card, which normally carries subscriber ID information used by carriers, would cut carriers out of the co-marketing picture. Instead of getting an iPhone through, say, T-Mobile in Germany, users would buy the iPhone and then decide on the carrier. The carrier selection could be done entirely through Apple, either at a brick-and-mortar store or its App Store.
According to Gigaom, the ROM area of the SIM card has all the software needed for network security, and lacks only information specific to the carrier. The flash memory would be able to write the carrier data, and Gemalto would provide the infrastructure for provisioning service and the phone number.
If accurate, this kind of scenario could dramatically reduce a carrier's role from selling the iPhone and a key customer-relationship partner to a commodity service based largely on price. It could also radically change the dynamic of subscriber loyalty, since the cost of moving from one carrier to another would not be tied to iPhone availability, but would be as simple as updating the SIM's flash memory.
Apple has already corralled the distribution of apps to its iPhone customers. Carriers are also trying to get into the app game, as are other smartphone manufacturers. Many observers see mobile devices' differentiation as being tied, at least in part, to the quality, range and number of apps available for that platform.
French Carriers to Cupertino
But while a customer could readily move an iPhone from one carrier to another, the opposite would not be true. The carrier could not easily be moved to another phone simply by updating the custom SIM card.
At the moment, it appears this approach would primarily target international GSM markets. GSM technology is more universally used by European carriers than American carriers. In the U.S., the activation would also have to accommodate CDMA technology or the rapidly growing LTE-based 4G networks.
The European mobile market is also more fluid than in the U.S. Customers frequently travel from the coverage area of one carrier to another, and long-term contracts with heavy penalties for canceling early are not as common.
One of the first European countries to undertake this new arrangement could be France. There are reports that representatives from several French carriers recently visited Apple's headquarters in Cupertino.