Might Apple Copy Xiaomi for a Change? (AAPL)

Xiaomi has become one of the most valuable private companies in the world by essentially being a copycat of Apple (AAPL) products.

Might Apple Copy Xiaomi for a Change? (AAPL)
Source: Apple

For a short time early last year, it looked as though Xiaomi’s cheap Android-based Apple product lookalikes could be a threat to the world’s most valuable company, but since then, Apple’s growth has accelerated and Xiaomi has hit a growth wall.

That said, Xiaomi is trying something different — something rather innovating — and for the first time, AAPL might want to consider following in Xiaomi’s footsteps.

What Xiaomi’s doing is launching its own wireless carrier, Mi Mobile.

This news came with the launch of Xiaomi’s latest phone, the Mi 4c, which — to no one’s surprise — looks a lot like the Apple iPhone 6S. Mi Mobile will act as a mobile virtual network operator, or MVNO, which means it will rent network capacity from the likes of China Mobile (CHL) and China Unicom (CHU) and then sell plans to Mi 4c smartphone owners.

The advantage to such an approach is that Xiaomi can piggyback multiple networks, using whichever works best, and create additional revenue from the sale of those plans.

AAPL to follow Xiaomi’s lead?

Rumors first spread last year and returned again earlier this year — including a report in Business Insider that AAPL is also interested in becoming an MVNO in the U.S. and in Europe. Apple has not confirmed any such news, but in this case, it would make perfect sense for the tech giant.

With the iPad Air 2 and latest iPad Mini, AAPL included a new technology called the Apple Sim. This allows owners of those devices to shop carriers, including data packages, by comparing prices. Theoretically, an iPad Air 2 owner could select Sprint’s (S) data service and then switch to AT&T (T) if they were not satisfied with the service.

Seeing as how Apple has the technology in place to switch back and forth between carriers, it would certainly make sense for Apple to follow in Xiaomi’s footsteps and become an MVNO. This would make Apple a wireless carrier, selling text, voice and data packages that it leases from other carriers.

This would be great for Apple, but horrible for those wireless carriers. T-Mobile (TMUS), Sprint and AT&T already support the Apple Sim, with Verizon (VZ) as the only carrier to have rejected it. As a result, AAPL could partner with all of the carriers except Verizon as an MVNO.

Bottom Line

We all know that wireless companies own different blocks of spectrum and are superior in different areas of the country. Apple’s wireless service could use whichever network was best in a particular area, and then jump back and forth between the carriers participating in its MVNO program.

In other words, Apple would not have to worry about the up-front costs associated with building a wireless network, but would just rent existing networks. The fact that it already launched the Apple SIM card and just recently announced its own leasing program, which was very carrier-like, suggests the company is headed in this direction.

For Apple, this would mean increased growth and a more complete iOS ecosystem, and for carriers it means losing customers and gaining a new competitor.

All in all, this is a move that AAPL shareholders should expect, one that will be very good for Apple stock.

As of this writing, Brian Nichols owned shares of AT&T and Apple stock

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Article printed from InvestorPlace Media, https://investorplace.com/2015/09/apple-stock-xiaomi-aapl/.

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