iPhone: The End of Apple Brand Loyalty?

Apple Computer continues to dominate mobile news despite doing a whole lot of nothing. With the consumer tech giant remaining tight-lipped on its much-rumored iPhone plans, it's up to the rest of the world to do the talking for them, and this week financial analyst firm UBS Research generated headlines by forecasting that Apple will license wholesale network capacity from Cingular Wireless and launch its own branded MVNO. On paper, the prospect makes a great deal of sense. After all, the MVNO model is in lockstep with Apple's recent emphasis on controlling the customer experience: The company could design its own handsets, sell them at Apple retail outlets, and supervise multimedia distribution through its existing iTunes content partnerships. Moreover, the Apple brand would signal a new era of mobile user-friendliness--its well-deserved reputation for simplifying complex technologies would serve as a notice to consumers that the wireless multimedia services and applications they've heard so much about are now literally at their fingertips.

Only one question remains: Why the hell would Apple want to destroy the consumer goodwill it's worked so hard to build by becoming an MVNO? The ugly truth is that subscribers despise their mobile carriers--dogcatchers and mimes have better reputations. Wireless customer satisfaction ratings are in the toilet. Consider this: It's an industry so desperate for positive buzz that carriers tout their services by promising fewer dropped calls than their rivals. That's like promoting a fast food chain by promising fewer E. coli outbreaks than Taco Bell.

Assuming Apple does launch an MVNO, it will no doubt do so with the absolute conviction that the value of its brand and the mass popularity of its iPod media player will be enough to make its service competitive right out of the gate. Of course, the ESPN brand is virtually synonymous with sports content, and yet ESPN Mobile didn't even last as long as the 2006 NASCAR season. But for me, the biggest sticking point is Apple's essential corporate orientation: products, not services.

The iPhone plays to its basic strengths; an MVNO does not. When calls drop and apps flop, consumers blame their service provider, not their handset maker. Should the line between those two sides blur, all bets are off.
-Jason

P.S. Check out this clever video of a fan's rendition (fake) of an iPhone commercial.