Ask HN: Why hasn't Apple bought a cell carrier like AT&T or Verizon?

In addition to anti-trust problems, why would Apple want a capital intensive, low-margin, commodity business? Verizon has a net profit margin of about 13%, Apple is currently about twice that. Furthermore, Apple makes computers (the iPhone being a pocket computer using the cell network instead of wired or Wi-fi). Managing millions of cell towers would be diluting their focus into a low-margin, commodity business, away from their high-margin luxury hardware/software engineering business. In fact, Apple commodified the cell networks into dumb pipes for data. Apple benefits by being on any/all networks. (See: commodify your complement [1])

(The rumored Apple self-driving car, if true, was also a silly idea. Aside from self-driving cars being an order of magnitude or two more difficult than popularly expected, building cars is not something Apple has any experience with, and is a capital-intensive business with little barrier to entry [besides capital]. Buffett noted that totaled since their beginning until now, car companies and airlines have, on net, lost money for their investors.)

[1] https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/

Wireless carriers are a low-margin, increasingly commoditized business. Apple is only interested in expanding into high-margin businesses like services (iCloud, Apple Music, Apple TV, etc.) where they can offer unique value (e.g. privacy) compared to their competitors. Apple keeps so much cash on hand because they have more money than worthwhile ways to invest it.

Like many others have pointed out, Apple is obsessed with avoiding antitrust scrutiny. A fun (edit: incorrect) example: they are fine owning the device you use to connect to their own streaming service to watch their own produced TV shows, but appear to strictly avoid showing their products in those shows.

EDIT: I stand corrected! Multiple "Apple Original Series" contain Apple products, such as in Ted Lasso and (I think implied) in For All Mankind, as people pointed out below. Shows what I know about TV.

I wonder why some Apple Original Series have Apple products, and some don't. I would love to see if there's any correlation between the number of shows which feature a specific product and that product's market share in the show's region or demographic.

The carriers are their biggest sales channels and eat all of the t&c and concessions that large customers demand.

I oversaw a big org that had like 50k iPhones. We would never come to agreement with Apple’s terms, and they’d never give us the price concessions.

Those 50k phones never cost more than $15,000 annually. I paid more for charging cables than iPhones. Apple can’t do that, as the feds have most favored nation status for procurement. Carrier also accept liability for the App Store, which Apple will flip the bird about.

No device manufacturer would ever be permitted to own a national carrier like that, nor vice-versa. It gives too many opportunities for monopolizing the customer -- like there aren't enough of those already!

This would be like cutting off their nose to spite their face.

Apple profits from phone sales. The more distribution channels, the more phones they can sell, and more organizations spending the money to advertise iPhones.

If Apple bought a cell carrier, they would be in direct competition with the other carriers. Worst-case, they would likely get dropped from the other's lineups. The less worse case, they wouldn't get advertising/promotion from their competition.

They’re investing heavily in satellite communications.

https://www.mobileworldlive.com/apple/globalstar-apple-super...

You’re a bit late to that, in the sense that they actually considered it but ultimately gave up given the US carrier landscape and AT&T’s dominance. At the time there were no MVNOs to speak of…

Instead of worshipping company growth, perhaps you should think of your interests as a potential customer and remember competition is good when you're buying...

The only reason I could see for Apple to do this, is the same reason I assume that the DoJ would break them up.

Why hasn’t Apple entered the medical devices business (glucose monitors etc)? Isn’t that a lot easier than spending hundreds of billions into buying a carrier?

Why would Apple, the incredibly profitable, cash-happy company that could arguably be called the most successful business in the world, choose to take on billions of dollars in debt and the responsibilities of physical infrastructure maintenance?

Apple is "hitting walls" expanding their business because they have captured nearly the entirety of their potential customer base. They don't need to keep expanding.

why would they?

It's already a fully integrated end-to-end communication device.

They don't know how to operate it, they don't care about millions of people complaining about shitty network, they don't have to handle internationalization and they would position themselves against whoever carrier is before/after at&t, Verizon and T-Mobile.

They make huge margins by making hardware. This type of margin is not happening at carriers.

And no just because companies like Verizon do have daughters in other countries they are not global. So apple would also need to expand to all countries.

I only see a lot of downsides and not a single upside.

Antitrust; antitrust; antitrust; but also, debt, debt, and more debt. Verizon? $115 billion of it. T-mobile? $78 billion. AT&T? $126 billion. It gets even better when 6G networks start knocking!

So let's make the case to shareholders: We buy Verizon, with a $180 billion market cap, for a substantial premium; assume $115 billion of their debt; there's an investment into 6G on the horizon; this hopefully won't anger any major players in the Android market (e.g. Samsung) from abandoning the network; and this will somehow magically reach the break-even point. Obviously, absurd.

Because privatized carriers are low-margin, high-cost, and with an uncertain future. Let’s take two different paths as an example of why it’s a bad idea.

PATH 1: Privatized Carriers are the Forever Norm

In this scenario, private carriers (cellular, wireline, satellite, fiber, etc) don’t get nationalized or regulated (so now, but forever). The market forces there are all about consolidation since these are low-margin businesses, and fewer competitors means higher prices, more revenues, and more customers. If Apple entered this arena, they’d be exposing themselves to the predatory maneuvers of companies like BT or AT&T, who generally enjoy screwing their competitors over and locking customers in. Now these telecoms would have justification for blocking Apple devices or functionality (like some did to FaceTime), and deliberately choosing radios the iPhone doesn’t support so as to force Apple to spend more money on expansion of their network or adopting new radios for said networks. It generally exposes Apple to a world of pain and misery for nothing in terms of growth, and hinders their technological progress by forcing them to invest exponentially more money to support new standards or products across their network.

PATH 2: Carriers are Nationalized, with Telecom treated as a Utility

This is a more likely outcome given the importance of the internet to the functioning of a society. As a general rule, if your country NEEDS something in order to succeed, that thing is cheaper and more scalable if you own it yourself - provided you have a functioning government apparatus that invests in its modernization and maintenance (so, not America). In this case, Apple would’ve started their own carrier only to see control taken from them for the public good, wasting money they could’ve invested in other R&D or product lines. That’s likely the long game they foresaw back in the 2000s, and is likely why they never started their own MVNO or carrier.

Ultimately, Apple benefits more from building products on internationally standardized communications systems than building said systems themselves. It keeps their costs low, lets others absorb R&D and upkeep costs, while also driving the market and infrastructure adoption through new products themselves.

Infrastructure is rarely directly profitable to private enterprise, and when it is, it’s often taken away once it becomes necessary for the survival of a country.

Apple's grift is convincing consumers they are buying into superior technology. Iphones are the best phones, Macs are the best PCs, iGoggles are the best headset. Despite substantial limitations on all these products, they create the mystique of superiority.

If Apple bought a carrier, they'd need to sink insane capital into making it noticeably better (than others and itself before acquisition). And if they did, how noticeable is a little extra bandwidth? Not very considering everyone is offloading to wifi anyway.