Everybody In The Pool - Forbes.com

Everybody In The Pool - Forbes.com

APPLE COMPUTER: PHONE COMPANY!

David M. Ewalt writes about the cell phone industry for Forbes magazine. He recently wrote about the new phone services offered by Disney (including ESPN for sports nuts and Disney for families). Now he suggest that Apple is about to get into the act.

Earlier, MOT and Apple jointly developed an iPod-cell phone. Carriers refused to offer it to their customers. Carriers want a big piece of song down-load revenue. The way around this drag is for Apple to provide service as an MNVO provider. Wal-Mart may offer a prepaid service similar to the service offered by 7-Eleven.

I believe the big winner will be FON! FON should be able to increase market share through these various deals. FON has the infrastructure built. The marginal cost to provide service to another cell phone user is minimal. Disney, ESPN, APPLE and others have content to offer. It behoves them to market cell phone service as another way to distribute their content. FON cares less if it is Disney, APPLE, 7-Eleven or any other firm that is paying the wholesale rate. The marginal revenue will provide FON with the economy of scale to add to its nationwide network.

Should Wal-Mart, APPLE, NIKE or any other firm decide to launch service as an MNVO, it is a relatively easy task. These companies need to know little about the cell phone business. They simply pay the wholesale rate for time and resell it to customers for a profit. FON may see a few customers drop Sprint when they select an MNVO as their carrier but offering multiple channels of distribution should allow FON to take away more customers from VZ and Cingular than it loses to the MNVOs.

has announced the rolling out of high speed data service. This premium service converts Sprint Cell Phone Service to access to the internet. It is interesting that Best Buy stays sold out of Treo phones. I have been to Best Buy twice in two weeks and they can't get enough of these popular phones.

PalmOne announce a great quarter. Early adopters have already acquired mobile high speed internet access. The masses are now more than ready to buy. The next few years, high speed mobile internet access will move rapidly along the product cycle S-curve. Investors should take advantage of these developments.

My favorite plays include FON!, MOT, TXN and QCOM. I plan to take a look at PalmOne and RIMM.

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