Apple's iPad Reaffirms The Changing Mobile Operator Business

In the firestorm of speculation leading up to Apple's debut of its iPad device was a strong thread regarding the company's ability to further accelerate tectonic shifts in the media industry, especially the print industry. Now, following its unveiling, some have pointed to the structure of the relationship between Apple and AT&T and posed similar questions regarding the mobile industry and in particular operators' business models. The iPad deal is just evidence of changes that have been accelerating for the past several years. These changes include:
  • New pricing models. As the U.S. market has saturated operators have reassessed prepaid, elevating it beyond the 'choice of last resort' for consumers, and introducing unlimited voice, data, and messaging plans like Boost Unlimited. They have also enabled prepaid for laptop and netbook data connections — which plans the iPad will exploit. European operators have gone further and introduced session-based pricing, such as per day or week. Devices like Amazon's Kindle rely on a wholesale model to make the cost of transport invisible to consumers (for books and the like, at least).
  • New organizations. Operators have traditionally maintained wholesale or machine-to-machine (M2M) divisions that were responsible for extracting value from excess capacity and/or addressing wacky devices like Coke machines that businesses were interested in connecting. These divisions have now morphed into new organizations, like AT&T's Emerging Devices Organization led by Glenn Lurie, tasked with delivering new value to partners by enabling connectivity into all manner of gizmos (some still wacky).
  • New relationships. Bringing new devices onto mobile networks involves a great deal more complexity than figuring out how to shoehorn a wireless module into an existing hardware design. Among the additional challenges are testing and certification, making the activation and provisioning seamless across a variety of retail channels, and managing the devices once they're active. Carriers have established partnerships with vendors like Jasper Wireless who can solve most of these problems; Verizon Wireless established the nPhase joint venture with Qualcomm to address these challenges.
  • New networks. Way back in 2001 we wrote that mobile operators should exploit nascent Wi-Fi networks and knit them together into a seamless connection experience. T-Mobile was the first to step down this path with their acquisition of the assets of MobileStar, and other carriers followed. But it took the iPhone's taxing capacity demand for AT&T to take the real integration step, and carriers increasingly treat Wi-Fi networks (including those in their customers' homes) as an integrated piece of their network.

With these ongoing changes as context, we can see the iPad connection offering clearly as Apple extending its partnership with AT&T by exploiting capabilities that AT&T have invested in to enable partners to more easily bring connected products to market.

For consumer product strategy professionals who seek to add connectivity to devices, introduce new categories of devices that rely on constant connectivity, or extend existing products' uses outside their usual environment, this is all good news. Mobile operators are more open to your ideas than ever before provided you can deliver a model that is profitable for both of you.