Sometimes, even enemies can form partnerships. And in the smartphone market, there's no bigger rivalry than the one between iPhone-maker Apple (NASDAQ:AAPL) and Galaxy-vendor Samsung (NASDAQOTH:SSNLF). Although legal battles and challenges between the two have slowed considerably, the competition between the two brands continues in the high-end smartphone market, with Apple pulling firmly ahead in the all-important profit race.
But that doesn't mean there are no areas of agreement. By being in the same business, there are natural industrywide issues that both agree on. And if the newest report from The Financial Times is correct, it appears Apple and Samsung will embrace the feigned frenemy smile, as they are in talks with the GSM Association to bring an electronic SIM card to market.
This should be good for consumers
For the end users, electronic SIM cards are a good thing. If you're unfamiliar with the technology, the SIM, or subscriber identification module, is essentially your mobile phone's fingerprint to the network. Without it, your phone simply can't work.
For phones running on the global GSM standard -- which includes those on the AT&T (NYSE:T) and T-Mobile (NASDAQ:TMUS) networks in the U.S. -- that SIM must be on a card inserted in the phone like in the picture above.
In order to change phones from one GSM carrier to another, like from AT&T to T-Mobile, users need to either change the SIM -- which is not brain surgery, but does require specialized tools and knowledge -- or visit a store and have a representative do it. This is a natural barrier to changing carriers, even if it benefits you to do so due to cost or coverage issues.
For an electronic SIM, however, these aforementioned steps are not required. Phones could be switched quickly from one GSM carrier to another, eliminating the switching frictions from changing carriers. The end result should be that unlocked iPhone and Galaxy users can switch carriers instantly and save money, thus lessening carrier dependence.
Apple's attempted this before... and it hasn't gone well
Oddly enough, it appears GSM carriers and its powerful organization are on board here, so this change should eventually happen. But this isn't Apple's first foray into SIM-related changes, and the early changes have not gone well.
Apple already has a carrier-agnostic Apple SIM card in its newer 4G iPads. GSM carriers AT&T and T-Mobile decided to lock down any SIM cards activated on their networks, essentially taking away the benefit of a carrier-agnostic SIM-card. But at least that was better than CDMA carrier Verizon -- it essentially replaced Apple's SIM with its own before selling the iPads.
AT&T's and T-Mobile's earlier hostility to Apple's SIM may appear incompatible with the Financial Times' report of Apple working with the GSM Association on an electronic SIM. Early rumors are that Apple is looking to use the carrier-agnostic SIM in the next version of its iPhone, creating a much bigger problem than a SIM card used only in Apple's smaller base of 4G iPads. Perhaps this is an attempt of shaping collaboration, when an organization works with a partner to "shape" a potential negative event.
For AT&T, this could be a smart move. Unlike Apple's carrier-agnostic SIM, which allows iPhones and iPads to go from GSM to CDMA, essentially working with any carrier, this newest SIM appears to be only GSM-compatible. If so, this eliminates market-leading Verizon -- AT&T's biggest competitor -- from contention. Of course, T-Mobile has been scrappy on the price front, but its coverage trails AT&T and Verizon. So both would benefit more from a GSM SIM rather than a truly carrier-agnostic one.
For Apple and Samsung, however, the competition continues. And while their work together on this issue is admirable, it's certainly not a Kumbaya moment. Look for the two to continue their fierce competition.
Jamal Carnette owns shares of Apple and AT&T. The Motley Fool recommends Apple and Verizon Communications. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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