Apple didn’t just unveil its new iPads on Thursday — it announced a separate, less advertised product that could mean trouble for wireless carriers.
With its new iPad Air 2, Apple customers will have the option of buying a cellular version loaded with the company’s new “Apple SIM” card, as Dan Frommer at Quartz points out. A SIM card is that tiny piece of plastic in your phone that allow you to connect to a carrier’s wireless network.
Typically, a SIM card is programmed to work with one specific carrier. So, if you buy a phone on a two-year contract from AT&T, it will come with an AT&T SIM card inside. If you wanted to use that same phone on Verizon, you would have to buy a SIM card from Verizon and put it in that phone.
But Apple wants to change how that model works. Apple’s SIM card works with multiple carriers, so you wouldn’t have to purchase an iPad or SIM card from a carrier. To be clear, this isn’t like simply buying an AT&T SIM card directly from Apple instead of AT&T. With Apple’s SIM card, you can switch carriers whenever you please without having to commit to a two-year contract or make any purchases directly through the carrier.
Here’s how Apple explains it on its website:
The new Apple SIM is preinstalled on iPad Air 2 with Wi-Fi + Cellular models. The Apple SIM gives you the flexibility to choose from a variety of short-term plans from select carriers in the U.S. and UK right on your iPad. So whenever you need it, you can choose the plan that works best for you — with no long-term commitments. And when you travel, you may also be able to choose a data plan from a local carrier for the duration of your trip.
With a device like the iPad, the impact on carriers likely won’t be that significant. Many users opt for the Wi-Fi only version of the iPad, and tablets aren’t as heavily subsidized as phones on a two-year contract. For example, an iPhone 6 through AT&T on a two-year contract starts at $US199, which is substantially less than the full price of $US649. AT&T only cuts $US100 off the iPad when you commit to a two-year contract, which isn’t that much of a difference compared to the iPad’s full price.
If Apple rolls this SIM card out for the iPhone, however, it could mean trouble for carriers. Consumers may begin to pay the full price of a new iPhone in order to save money on data and switch between carriers that offer cheaper competing plans whenever they please. Carriers may have to offer other perks besides cheaper prices to convince consumers they should keep buying iPhones from them instead of Apple.
It’s even possible that one day you could turn on your iPhone, then have options for which carrier you want to use. And those carriers would compete against each other to offer you the best deal.
There is going to be a lot of push back from carriers, and it’s unlikely that ever really happens. But this is an interesting move from Apple that holds long term promise, and short-term intrigue.
Business Insider Emails & Alerts
Site highlights each day to your inbox.