When Apple finally convinced Verizon/AT&T to be the carrier for the iPhone, one of the biggest reasons to accept Steve Jobs’ terms was the notion that it would encourage more high-margin data usage. Not surprisingly, this has materialized as the NYT has a story that traffic to Google through the iPhone’s browser surged last month.
This say three things:
1. If you give mobile users a browser that works, they will use it. (Note: Given this reality, it continues to be a mystery why Research in Motion has done little to upgrade the browser experience on the Blackberry.)
2. Data has become the business for the carriers as voice becomes a cheap commodity. If you want to attract customers and boost ARPU, selling more data services such as Internet access is a no-brainer.
3. As a recent article in Wired magazine illustrated, the carriers are looking for well-designed, appealing phones so they can compete for consumers rather than using price promotions and subsidized hardware. In return, the hardware makers are going to demand a cut of the action – something RIM has been doing for many years, and something Apple embraced with the iPhone.
More: I like Paul Kedrosky’s explanation was the iPhone generated so much traffic: “Apple’s iPhone has the first mobile browser to genuinely not suck”.
2 Comments
Mark -
Looking for some clarification…
Isn’t the data service iPhone users get with ATT Wireless all-you-can-eat? At first blush this seems to contradict the argument that data delivery is high margin.
I agree that voice is becoming an increasingly commoditized service with margins trending toward zero, but frankly, I don’t see the Canadian carriers making significant revenue gains with their current(ridiculous)data/voice fee schedules.
Geoff,
You’re right, AT&T is offering a bucket plan for iPhone users in terms of minutes. The real action will come when carriers start offer all kinds of data services offered by third-parties as opposed to the walled garden approach they take now. If they can get a cut of that action, that’s how they will jump-start ARPU.