October 28, 2014
I HATE TO SAY ‘I TOLD YOU SO’, BUT…
Predicting the future is a funny thing. Sometimes, I am entirely useless at it (I’m looking at you, lottery picks and sporting events), and sometimes I’m right in a way that is so unusual, I may as well have been wrong. In the last post, I suggested that reports of the SIM card’s death at the hands of Apple might be a bit premature, and in fact that they might have a bit of a struggle on their hands in the coming months. Well, I was incorrect - they couldn’t even make it a week without things starting to go wrong.
First to break was the news that AT&T have decided not to play nice with Apple’s network-hopping SIM. The SIM is designed to allow users to change networks whenever they want. So, say for example, a customer on T-Mobile in the US is headed to a region where coverage is not that great, or is travelling across the Atlantic to the UK (where providers EE have signed up as well). Not a problem for the Apple SIM, you can just switch networks. A fantastic idea in theory, but it seems that the US providers were not quite as on board as everyone thought. For example, if you register on AT&T with the Apple SIM, you immediately receive a message that states: “Once activation completes, this Apple SIM can only be used with AT&T. You will need a new Apple SIM if you change carriers in the future.” Oh dear.
Controversial T-Mobile CEO John Legere provided further evidence that all was not quite as it should be with the new SIM. His victorious tweet this weekend showed evidence that AT&T were locking SIMs so that they could only be used on AT&T, attempts to contact on Sprint were leading to an error message, and Verizon were missing altogether – leaving T-Mobile as the only network able to demonstrate that things were working as they should. It is, however, a small victory – if the Apple SIM only works as advertised with one provider, then you may as well just use that one provider’s SIM in the first place. (UPDATE: Legere has gone on to explain further in one of his 'tweetstorms')
There was more bad news to come. Back in September, Apple announced another revolutionary feature, Apple Pay. Using NFC (Near Field Communication) technology, users could store credit card details on their phone and use it to make payments. Once you are at the till with your purchase, you simply wave your iPhone at the scanner, and the payment is processed. It’s attractive to customers because it makes life easier, and attractive to retailers because it avoids the extra fees that credit card companies levy on purchases using their cards. This sort of advancement that makes so much sense, you start to wonder why no one else had thought of it until now. It turns out that actually, they had.
Several major retailers in the US are already starting to disable the NFC features on their terminals, including Wal-Mart and Best Buy, in a deliberate attempt to stop Apple Pay. This is because they, along with over 100,000 other US retailers, are already signed up to a similar initiative known as CurrentC, and there are other such payment systems planned and appearing all over the world. Unfortunately for the US, CurrentC is not due to be launched until 2015, which means that everyone loses out in the meantime.
So what does it all mean? Have Apple underestimated the market, or are they so confident in their brand and market power that they believe that the other guys will blink first in this epic game of corporate chicken? Do Apple care that a few US companies are resisting them (after all, they have twice the number of retailers happy to use their systems), or do they have greater global ambitions? I’m certainly ruling myself out of the prediction game after this, but I think attempting to guess at how things will pan out is missing the point. What we should be asking are questions like: do we really need to be tied to SIM cards for mobile calls, or is this merely the networks attempting to retain control? And is it right that credit card companies charge 2% to retailers per transaction, or is there a better way of doing things? This is part of why Apple are as successful as they are – they ask the hard questions and their innovations force all of us to consider the future.