Apple Going Up Against Google?

It's been suggested that I've misread Cringley. By "joining Google in bidding" it's meant that Apple will also be bidding on the 700MHz spectrum—not that they will partner with Google in bidding for it.

In other words, this isn't a partnership—it's the two going head-to-head for something they both want.

While remotely possible, I can think of several reasons why it just doesn't make sense for Apple to do such a thing.

A few scenarios...

Let's play out a few scenarios and see where they lead.

1) Google bids, Google wins. Google allows any software and any device as per the rules that they suggested, "putting their money where their mouth is".

Result? Apple can put an iPhone or iPad or whatever on it without spending billions on spectrum or infrastructure.

2) Someone else wins, but Google bids up the price enough keep the "allow any software and any device" clause alive and kicking.

Result? Apple still has wholesale access to 700 MHz, without being out-of-pocket $10 billion or so.

3) Apple gets in the game, bids and loses to Google or someone else. Functionally the same end result as 1 and 2, only Apple now gets wholesale access from another player.

4) Apple bids, wins, and now has spend $10 billion of their available $30 on spectrum and building out a nationwide service. And all just so they can now allow competitors to buy access at wholesale prices?

Plus they now have to convince all of the stock analysts that they're not nuts, and that they can build out and compete in yet another new market with pretty entrenched competition. And all without dropping their stock price drastically in the process.

And not to mention that we're still in the midst of that exclusive five-year AT&T contract.

Sorry, but it just doesn't seem likely.

Worse case...

A worse case scenario is that Google backs out before the magic threshold is reached, Apple doesn't bid, and now neither they nor their devices will have wholesale access. And further, we also assume that they can't reach an agreement with whomever won.

At which point they're no worse off than they are now with AT&T.

Actually, I've also seen a bit of analysis recently that says that Google doesn't want to win the spectrum auction. Presumably, they're just in it so the bidding goes high enough to keep the "allow any software and any device" clause alive and kicking.

While plausible, I have my reservations about that one. Google's been expanding and building out data centers in too many markets. Something is going on there, and being in a position to immediately take advantage of a spectrum win would fill things in nicely.

But Apple? Doubtful.

Comments

[LetterRip]

It could also be a behind the scenes partnership that if Google wins, then Apple is going to guarantee a loan for Google or promises to purchase n amount of bandwidth from them, etc. Ie they can make it so that Google can go much higher much more comfortably than they otherwise might.