Hi. While this blog is a part of Seed Catalyst’s website, I realised over the initial few weeks that a lot of you are first introduced to the firm via the blog rather than our home page.
So to introduce myself - I’m a business consultant working with early stage technology firms to help streamline their strategy and go-to-market approach and support them for fund raising.
With this blog, I aim to capture key market trends that I see in the industry, the ecosystem and cross-plays in some of the more interesting and upcoming sectors, as well as cover interesting companies that I meet.
I will also be addressing vexing and interesting valuation and deal/term-sheet structures that would be of interest to technology start-ups at various stages of their growth.
Last week, I mentioned Apple and Gemalto in passing, with the promise to revisit the subject.
The word on the street is that Apple will be launching a future iPhone with an integrated SIM from Gemalto. The user can choose their mobile operator via the app store.
So what could the repercussions of such a move be?
First let’s take a brief historical look at the interplay between SIM vendors, handset providers and telecom operators. In developed markets, telecom operators have been the controllers of the supply chain – they provide the SIM card with the mobile number and pre-installed telco applications and services and they provide subsidised handsets with different voice and data packages.
The space is in a state of flux with reams written already on the demise of telco walled gardens. Handset vendors like Apple, Nokia, RIM, Samsung are trying to gain control of the applications and services component of customer interaction while telcos struggle against becoming dumb pipes.
At the same time SIM card vendors are also trying to augment their sphere of influence. Gemalto, in fact, has been very acquisitive – Trusted Logic, O3Sis, NXP, Netsize, Valimo, Xiring, Cinterion – in the last twelve months.
So, first, the questions:
Idea feasibility: How will Apple ensure openness of network operators to provision services on an ad-hoc basic?
I would seriously doubt operator interest in enabling a model where they lose complete control of the customer and eco-system to the handset and SIM vendor. In the proposed model, there would be no lock-in or possibility of roaming revenues. Similar attempts at this model haven’t fared too well.
Having said that, interested service providers could be MVNOs e.g. Virgin Mobile, Tesco Mobile, Carphone Warehouse in UK. Such a model might also help in the pick-up of mobile based payment services (thinking Tesco here of course) or similar cross-selling of services. I wonder who takes the network customer care calls?
New Services: Will security be enabled via Apple or Gemalto?
Most of Gemalto’s acquisitions over the last year have been centred on mobile security, authentication and payment services. Last year Mastercard certified Gemalto’s Trusted Service Manager (TSM) as well, further bridging the mobile payments gap between banks, operators and merchants. I would anticipate an increased pick-up in NFC based services with the Apple applications and payment platform and Gemalto SIM-level security.
Transferability: Will the SIM be interoperable with other handsets?
The million dollar question......considering its Apple, we can take that as a confirmed no go.
For the moment we wait and watch how further developments on the model pan out.
