Friday, October 17, 2014

What happens when Apple makes it easy to switch between carriers?

Price competition should become fierce.

A preinstalled data-only SIM card has been inserted into the $499 iPad Air 2, and allows users to change carriers at the tap of a finger. It's available in the U.S. on AT&T (NYSE:T), Sprint(NYSE:S) and T Mobile (TMUS), and in the U.K. on EE. Consumers can buy short-term data plans and can switch between the carriers to find the best deal.

5 comments:

  1. Competition among cellular data providers is nothing new. It has however became stronger over the past few years. An example of this can be seen in the changing structure of cellular phone contracts. Phones have become more expensive to produce therefore it has become less profitable for carriers to offer subsidies on new phones every year. The new model is to subsidize two year contracts or to have customers pay a lowered monthly access fee along with a partial payment of the full retail price of a phone.

    The ability to switch between carriers is a threat to the cellular service industry but a better playing field for consumers. For the longest time consumers have been tied to long term contracts and forced to pay rates that varied slightly among carriers. New technology and change in industry structure has forced carriers to now position themselves more aggressively in order to maintain market share.

    Take for instance a company such as T-Mobile. Once thought as a small fish in a big pond, their efforts to payoff contract termination agreements and better pricing has stolen customers away from AT&T as well as Verizon. Apple's effort to increase competition is needed within the cellular provider space as well as the technology industry. Apple is showing that they can adapt to the latest industry trends and also be the catalyst for change.

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  2. This is a smart idea by apple. With the price wars that are heating up between the wireless cellular and data service providers people are switching companies more than ever before. Where people may have felt hesitant to spend the money on not only a phone but an ipad on a certain service is quite an expensive commitment. And that just it, it’s a huge commitment when most of can’t even commit to one flavor of ice cream. By offering their product with no ties people will be more likely to invest in the product, because they no longer have to commit to a company as well. In addition if they start offering this on all their products they will no longer have to sell through service providers. Furthermore it will continue to fuel the fire of wireless price wars among cellular companies. But not just that is they are the first company to offer this they will improve apple’s outside options and will decrease those of competitors such as Samsung.

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  3. These are pretty expensive stuff to work with. I believe we should be careful with these things; I do Forex trading where I sometimes work on these things, so it is always interesting reading about things. I am working with OctaFX and with them, I am able to get daily market news and analysis update, it is making things easier for me and allows me to work nicely which always get me rewards and I am able to work easily.

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  4. “The back-and-forth on Apple SIM underscores the differing priorities between Apple and the carriers. Apple wants to make the process of purchasing and choosing an iPad and carrier partner as easy as possible, while the carriers want to maintain some control over the customer” (Rubin, 2014).

    As it turns out, the initiative for a data-only SIM card that would allow users to change carriers at the click of a button was short-lived. An article released in October 2014 stated “So much for a universal Apple SIM. AT&T and T-Mobile both lock down new iPad SIM cards in their stores. The difference is a T-Mobile iPad purchased at an Apple store will remain open” (Rubin, 2014). Although AT&T, T-Mobile and Sprint were listed as part of Apple’s SIM program which boasted a single SIM would handle all three carriers, two out of three of the companies have started selling iPads with cards locked to their specific company. To me, it seems this may have started as a simultaneous move game where each player decided on their strategy without knowing the decision of the other players (given this information Verizon opted out at the beginning). While the article does not state which company pushed the carrier locked SIM card first, this likely encouraged the second to do the same, suggesting it turned into a sequential move game.

    Rubin, B. F. & Cheng, R. (2014 October 24). Got a new iPad and want to switch carriers? Turns out it's not so easy. Retrieved from http://www.cnet.com/news/at-t-t-mobile-both-lock-down-new-ipad-sims-in-their-stores/

    ReplyDelete
  5. “The back-and-forth on Apple SIM underscores the differing priorities between Apple and the carriers. Apple wants to make the process of purchasing and choosing an iPad and carrier partner as easy as possible, while the carriers want to maintain some control over the customer” (Rubin, 2014).

    As it turns out, the initiative for a data-only SIM card that would allow users to change carriers at the click of a button was short-lived. An article released in October 2014 stated “So much for a universal Apple SIM. AT&T and T-Mobile both lock down new iPad SIM cards in their stores. The difference is a T-Mobile iPad purchased at an Apple store will remain open” (Rubin, 2014). Although AT&T, T-Mobile and Sprint were listed as part of Apple’s SIM program which boasted a single SIM would handle all three carriers, two out of three of the companies have started selling iPads with cards locked to their specific company. To me, it seems this may have started as a simultaneous move game where each player decided on their strategy without knowing the decision of the other players (given this information Verizon opted out at the beginning). While the article does not state which company pushed the carrier locked SIM card first, this likely encouraged the second to do the same, suggesting it turned into a sequential move game.

    Rubin, B. F. & Cheng, R. (2014 October 24). Got a new iPad and want to switch carriers? Turns out it's not so easy. Retrieved from http://www.cnet.com/news/at-t-t-mobile-both-lock-down-new-ipad-sims-in-their-stores/

    ReplyDelete