The iPhone effect: why Telstra resents Apple

The Apple iPhone has been a game-changer for Apple. Photo: David Paul MorrisHere is something incredible to think about today as you contemplate whether to upgrade your iPhone or buy one of those new giant iPads.
Nanjing Night Net

Just a decade ago, Australia’s very own Telstra, and US tech giant Apple, were neck and neck in terms of market value. Both companies were worth about $US43 billion.

Then in 2007, Apple began to pull away.

That year, Steve Jobs unveiled the original iPhone.

Consumers flocked to the device. Apple’s share price went on an incredible run, and its market valued soared to unprecedented levels, hitting a peak above $US760 billion this year.

It has since retreated, amid worries about China, but Apple is still worth roughly 13 Telstras.

In case you have not been paying attention to the news this morning, Apple announced a new version of the iPhone, plus a long awaited update to its Apple TV set top box and a larger, Surface style-iPad.

Today, telcos here and abroad will be scrambling to announce the best offers for these new devices, as they try to hang on to their existing customers and snare ones away from rivals.

But secretly they will be a bit resentful. Take this quote from Telstra’s highly regarded former CEO David Thodey, back in 2012:  “I wish I had bought more Apple shares as I feel like I am contributing to their success enormously”.

It perfectly encapsulates the love hate relationship that exists between telcos around the world and Apple. They love Apple because their customers love Apple.

But they hate Apple, because before the iPhone existed, the telcos controlled the mobile ecosystem completely. There was no iMessage, no FaceTime (even though this technology existed back then) or apps.

You might have been able to access the internet on your Nokia or Sony Ericsson phone, but typically through a stodgy, telco conceived portal.

Apple’s iTunes platform has been vastly more successful than the music and content offerings the telcos had. It’s set top box, the Apple TV, could dominate the living room in a similar way. That’s why Telstra, and others, are coming up with their own alternatives.

While carriers have undeniably benefited from the mass adoption of smartphones, most of the value from the smartphone era has been captured by Apple. The Wall Street Journal has described (paywall) this as “one of the greatest transfers of power and wealth in corporate history”.

So telcos remain envious, because in an alternative universe it could have been them, the original gatekeepers, who harnessed the full potential of smartphones and our increasingly connected lives.

This story Administrator ready to work first appeared on Nanjing Night Net.

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