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Gemalto in a move to unsettle telcos

Week 44, 2010

At the same time, rumor has it that Gemalto would be working on a reconfigurable SIM card that would be integrated in an Apple iPhone in order to provide the end user with independence from the mobile network operator (cf. Focus). There is no doubt such a move is inline with Apple strategy to control the customer relationship. Apple, with its more than 160 million users registered on its App Store has already succeeded in keeping control of apps delivery, and reducing the mobile network operators to managing communication subscriptions. Now, with this move, the Cupertino company is even more taking control of the customer relationship by playing the role of a global MVNO. With this business model, a customer would buy an Apple iPhone, with its integrated non-removable SIM, and would establish temporary contracts with various MNOs to obtain the best contract at every time. Why not even having several contracts, and choosing the best option at each phone call? Network operators who have been struggling to bring added value to their customers, to manage the end user relationship, and to fight churn for years would hate such a situation. In addition to this hate, smartphone users are heavy consumers of bandwidth, and create bottleneck issues to carriers.

Gemalto, has undoubtedly the appropriate technology, both Flash based SIM cards and OTA platforms, to take part in this business model. This new mobile communication landscape may also pave the way for NFC developments managed by Apple with Gemalto support: hints abound that Apple is considering some NFC features in its products in the near future, along with a new business model. At the same time, Gemalto has developed its expertise in SIM delivered without operator relation thanks to its M2M positioning (both from in-house developments and from the acquisition of Cinterion), and a TSM (Trusted Service Management platform) to run independently from network operators.

But Gemalto is playing a dangerous game here: mobile communication accounts for more than half of the company’s sales, and even more of its gross margin. Gemalto can only attempt such a move if its certain that mobile network operators will find a way to keep their position on top of customers’ minds, and their SIM orders running.

Thierry Spanjaard

Chief Editor

Smart Insights