nan | 楠木

Apple’s stocks have taken such a plummet as of late (from 200 to 130, in a month of trading), that once again many people are fiercely debating the company and its latest star, the Jesus Phone. Fortune has another article on this today, which raises a few interesting issues that I would like to talk about.

The key dilemma that Apple faces, in my opinion, is how to enforce its revenue sharing plan with carriers across the world. As it has already encountered in Europe, it is illegal for Apple to have an exclusive relationship with a carrier and force users to be locked in. Unlocked versions of the iPhone have to be offered. And so they were, though a lot more expensive of course.

The revenue sharing plan is a game-changing play, and something that every telco should be instinctively against – since it turns them into the dumb pipe that they have perpetually feared. But somehow AT&T was lured in – which in a way makes sense, since the consumer pull of Apple is great for AT&T to churn away competitors’ users.

But then again, negotiating such a plan with big carriers is extremely hard to pull off. Frankly I see it as near impossible for Apple to pull off such a plan with the likes of China Mobile (as recent news/rumors have indicated) – for a carrier that has a few hundred million subscribers (and which signs on a few million every month), it does not make sense to open the dreaded gates of revenue sharing just to gain at most a few million premium users. The doubt on China Mobile’s mind must be that once it allows revenue sharing, then all vendors (esp. Nokia) will sooner or later start knocking on their doors asking for a slice of the action. Which is something no carrier wants to see.

Sure, even if those users are premium users, and even if it’s good brand building for the carrier, I don’t see in any way how it makes sense economically at the end of the day. Because the thing is, China Mobile is a much much bigger company than Apple, and much more is at stake for Apple instead of for China Mobile (the vast China market for Apple vs. incremental premium users and higher data revenues). If Apple goes to China Unicom, well, congratulations to Unicom (they will finally have something to cheer about), but that will just make the iPhone a very marginal product (and impact sales), since everyone knows, esp. all serious business users, that China Mobile is a much better service provider than Unicom.

So at the end of the day, I have to say that while it’s a bold thing for Apple to try revenue sharing, it’s probably going to restrict them from entering markets like China, which in the end limits their hardware sales. Of course, in terms of profitability, their current model is good.