Apple, Operator War Averted (for now)

We've seen the VOIP skirmishes over the past year. With the introduction of the new Apple Inc. (Nasdaq: AAPL) iPod range, however, there was one notable feature missing from the lineup that would have been indicative of a tectonic shift in Apple’s mobile strategy and a declaration of war on the operators: a microphone capability for the iPod touch.

Why focus on the microphone? Because with a microphone in the iPod touch, users could reap most of the benefits of the iPhone – downloadable games, video, music, the ability to leverage their contacts and email – but without a carrier in the loop.

Why would this change have been huge? Because Apple’s early strategy was to share in the data revenue with operators, a strategy that has shifted with the introduction of the 3G iPhone to expanding distribution, launching new operators, and selling applications from the Apps Store.

With a microphone in the iPod Touch, Apple sells the hardware, Apple sells the apps, Apple brings itself even closer to the customer – and the operator gets relegated to second-class citizen. But wait, you say, an iPod Touch with a microphone would just work with WiFi, which would be really limiting in real-world use. Not so fast there, bucko.

I’m a multiple device kinda guy – not everyone is, but it seems there are plenty of my type out there. I’ve seen a bunch of articles, especially focused on the business crowd, where folks use their iPhone as their “pocket computer” and use a phone and/or BlackBerry as their primary communications device. As an owner of an iPod touch (one of my small armada of iPods), and having downloaded apps from the Apps Store to my iPod Touch, the potential power of the missing microphone becomes apparent. I’d rather do my email (even Exchange based) and browse on an iPod Touch than on a phone any day.

However, even without Apple’s support, folks may find, cracks are appearing, indicating the war of the future. If you have a Series 60 phone – like the Nokia Corp. (NYSE: NOK) N or E Series – you can download an application like Joikuspot, which allows your 3G Symbian device to be used as a hotspot. Then, if you Google “iPod Touch Mic” you can see there are a bunch of third parties looking to create microphone/VOIP solutions for the iPod touch and numerous YouTube Inc. videos showing users how to make them work.

I like the concept, as it seems that one could get the majority of the utility of the iPhone out of an iPod touch, without the current headaches, and without an expensive monthly subscription. Assuming, that is, Apple doesn’t try to actively kill any VOIP apps that might want to be downloaded to an iPod Touch.

Because, in my view, an iPhone 3G is not simply “twice as fast, and half the cost,” but yet another device locking people into multiyear contracts with a two-year cost of ownership of over $1,500 for a device with 8 or 16 GBytes of storage, which in reality doesn’t cut it for music and video, versus $399 for a 32-GB iPod Touch. Ouch.

As I’ve written several times in the past few months, if a policy or approach to a market is whacked, and if there are ways that a rational consumer can navigate alternatives, they will.

But – for now at least – by leaving the microphone out of the iPod Touch, Apple has averted its war with the operators.

— Jeff Belk is a principal at ICT168 Capital LLC, focused on developing and guiding global growth opportunities in the Information and Communication Technology space. He can be reached at [email protected]. Special to Unstrung

jamiec 12/5/2012 | 3:32:23 PM
re: Apple, Operator War Averted (for now) In your article you state that "there was one notable feature missing from the lineup that would have been indicative of a tectonic shift in AppleGăÍs mobile strategy and a declaration of war on the operators: a microphone capability for the iPod touch."

This is incorrect; Apple slipped under the radar a new headset with built-in microphone that works with the new iPod touch. The microphone capability is a new feature -- the headset is not compatible with the previous-generation iPod touch.

The microphone is currently being marketed for the purpose of "voice memos." Somehow, I suspect that isn't all they had in mind.

the newly-announced Apple iPod Touch
IPobserver 12/5/2012 | 3:32:22 PM
re: Apple, Operator War Averted (for now) Joikuspot and Walking Hotpost G㢠both are good for S60 devices
jkbelk 12/5/2012 | 3:32:22 PM
re: Apple, Operator War Averted (for now) Jamie, good catch on the headset. Another $79 for apple, and very limited in capability...there is still not a "microphone" in the iPod Touch. I just picked my 32GB iPod Touch up yesterday...great piece of kit, no microphone built in. A mike would be pennies to tens of cents adder to product cost, and little 'real estate' on the circuit boards in the product, especially given the physical similarities between 'touch' and 'phone'. It's exclusion is clearly "apple strategy" in my opinion, and that's the point I'm trying to make. In my view, Apple will do it, but on their terms, and on their timeframe.

Again, good catch and thanks. I'm going to be getting a Symbian phone shortly, and will be testing the other side of my comments...running the iPod touch off the WiFi capability of a 3G connected Smartphone...more to come

From Apples Site: "The control capsule located on the cable of the right earpiece includes a microphone and three buttons. With this convenient remote, you can adjust the volume, control music or video playback Gă÷ including play/pause and next/previous Gă÷ and record voice memos. (See compatibility information below.)"