iPad and the Challenge for Mobile Operators

Image by Getty Images via Daylife

The ‘iSlate’ hubbub increased with the official launch (although not yet for sale) of Apple‘s iPad device in San Francisco yesterday. It is looking very much like an upscaled iPhone, although its eBook reader and store – iBook – is a new take on the e-reader-craze which seems to be gathering steam. Lack of multi-tasking and the usual Apple lock-ins on certain media formats (lack of Flash, video codes support etc), will probably not hold it back and the price tag is very amenable, putting the device back within the realms of subsidised SIM / contract deals offered by mobile providers. But therein lies the rub.

The blogosphere seems even-handed about the new device – celebrated twitterer and blogger, Stephen Fry, is being wined and dined as a new expert, having attended the SF launch and blogged his charming review. It will be a hit, without doubt. However, the mobile providers face a significant conundrum. The iPhone was very much a winner for the exclusivity afforded to the likes of O2 and AT&T – drawing huge numbers of new mobile subscribers and allowing Telefonica/O2 to breeze past Vodafone for the top provider spot in the UK. It was not without its difficulties, though. O2 struggled to adapt its provisioning and customer service infrastructures to meet expectations and volumes but moreso, their underlying data network has woefully underperformed (with a similar story for the Yanks via AT&T). This prompted O2 to block free tethering when it was provided by Apple under OS 3.0. The real problem for them was that the iPhone generated a (reported) five fold increase in data traffic which their network was simply not built to support. A complex mix of EDGE and HSDPA/3G infrastructure, O2 has had to manage data use through marketing and technological traps to avoid saturation. My point is that the iPad represents another huge leap in data demands for any mobile network. Nagging users to switch to WiFi wherever possible or penalising those that draw more data through the air than others ain’t gonna cut it.

So the iPad looks wonderful and raises the already impressive App Store game that Apple have pioneered so beautifully. I feel it hammers a few more nails in Microsoft’s coffin but, my prejudices aside, the real challenge will be for the mobile operators that jump at the chance to market the new device with an airtime contract. Will their networks be able to cope with the coming of the iPad ? Can those providers with weak capacity growth, legacy pre-3G radio or just not enough IP transport be able to resist the marketing allure and customer draw that the new device represents ? I am of course making the assumption that the iPad will be marketed predominantly as a mobile smartphone under customer-retaining long term contracts – seems likely. There must be a few large network operators sweating with glee (if such a thing is possible) 🙂

Stop Press: If you actually make your way through the Steve Jobs’ launch video (link above) then he does announce that Apple has already cut an airtime deal with AT&T for the iPad in the USA (jump to 1 hour and about 12 mins into the vid). The deal looks pretty good – with an Unlimited usage package for $29.99 a month. (Other country deals to be announced by June / July. Hopefully a UK network deal will be similarly priced but – based on my arguments above – I would not bet on it.). I am not sure how practical the iPad is as a telephone; I doubt it is intended to replace the iPhone in any sense. I assume therefore that the AT&T deal is data-only. It includes unlimited use of AT&T’s WiFi network in the USA – similar to the deal in the UK by O2 whereby they included tie-ins with The Cloud and other WiFi aggregators in order to persuade users to offload data traffic from the core 3G network.

Another significant announcement is that individual apps in the iWorks Suite will be available from the App Store for $9.99 each. I have not used these apps on my Mac but the presentation was impressive. Assuming the iPad can become a serious business tool then Microsoft could be severely under threat – iWorks making Office look decidedly dated, slow and lacking in user-friendliness.

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SimonFebruary 19th, 2010 at 11:16 am

More on the glut of bandwidth-consuming apps in this mis-guided article from PC Pro; they are shooting at Google whilst giving net-time to Vodafone’s CEO in warning about bandwidth shortages on mobile networks. Of course, it is the consumer that will end up paying or suffering whilst the networks milk their ageing investment in infrastructure. Google has absolutely nothing to do with it but presumably PC Pro fancy using them as a whipping boy to keep Microsoft happy ?