This is a guest post from Anjan Ghosal, CEO of Diametriq, who describes the effects that the iPhone has had on the telecoms industry.
On Jun 29, 2012 Apple celebrated the fifth anniversary of the iPhone, a remarkable event indeed. In these few years, the iPhone has generated an astounding US$143 billion in revenue – more than the GDP of New Zealand! Today, the annual revenue for this single product surpasses that of Coca Cola Company and Microsoft!
But while we raise our glasses to celebrate this veritable milestone, let us not forget to dedicate a moment of silence to mark the obituary of telecoms (as we knew it!).
In the late 1990’s, if you chanced to visit CTIA or Mobile World Congress, the biggest booth (and after show parties) belonged to Nortel, Siemens, Lucent, Ericsson, Nokia, Alcatel. All of them falling over each other to woo mobile operators with bulging wallets. Those that did not have a booth ferried the high rollers to their rented mega yachts parked overlooking the bay at Cannes – something that would put Las Vegas to shame.
Well, those days are gone. Nortel is no more. Alcatel and Lucent merged and have never been profitable since. Nokia-Siemens are no different. Ericsson and Huawei are locked in fierce competition with no breakout in sight. The mega yachts and fancy booths have been consigned to history!
The telecoms world today belongs to Apple, Google, Facebook and Microsoft (with Skype, Microsoft is the largest telecom operator in the world). And all this can be traced to the advent of the iPhone.
The iPhone is responsible for morphing the phone from a mere voice communication tool to our window to the world. (From someone who has never owned an iPhone it is quite a compliment!). It has changed how we live life (when is the last time you bought a map, or looked something up in the Yellow Pages?) and spawned a new multi-billion dollar industry around mobile applications, a trend continued by the iPad.
It has given rise to new acronyms like – OTT – “Over the Top” – whereby third parties make millions leveraging the mobile networks infrastructure to deliver applications to your device, yet not having to share any of the revenue with them. The net result has been an explosive growth of data traffic on operator networks but with an inability to monetize that growth.
Technologies like wif data offload and Long Term Evolution (LTE) are a direct response of the impact of the iPhone (and its ilk). And it is not only having an impact on the data capacity of the networks, but also the underlying signaling capabilities. Operators and vendors have to adjust to the “new normal” and have discovered that for them, an Apple a day can be fatal.