Apple's iPhone casts big shadow on cell industry

If the device—a melding of phone, Web browser and music and video player—is a hit, analysts say it will cut into market share of major phonemakers, including Schaumburg-based Motorola

As if struggling cell phone-maker Motorola Inc. doesn't have enough to worry about: Here comes the iPhone, heir to the mighty iPod, brainchild of tech golden boy Steve Jobs—and riding a tidal wave of hype to boot.

Due in U.S. stores Friday, the iPhone promises to stir up the mobile phone business. Apple Inc.'s first phone isn't expected to take much business from Schaumburg-based Motorola or anyone else in the short term, but it will change the industry landscape nonetheless, analysts say.

"It will not be a financial disrupter, but it will be a psychological disrupter, a research and development disrupter," said Roger Entner, senior vice president of IAG Research's communications sector. "That's because everybody will say [to competitors like Motorola], 'Why can't you do that?' " More>>

iPhone set to ring up strong results for Apple

NO CONSUMER device has stirred the worldwide interest to match Apple's iPhone, due to go on sale in the US on June 29.

Sony's PlayStation and Microsoft's Xbox 360 pale beside it. Even the phenomenally successful iPod did not gain celebrity status for at least a year after it was launched in October 2001.

To judge by the furore, iPhone is the most desired device on the planet, even though its $US500 ($A590) price tag is about five times more than average US mobile phone prices.

Even in Australia, which is not expected to see the iPhone on sale until late next year or early 2009, interest is keen.

A lot of iPod technology and design is in the iPhone, which may account for the fever of interest surrounding it because in the music-player market it is most desired, works well and is seen as a symbol of coolness.

The fact that Apple has not until now ventured into the highly competitive mobile phone market and, in that sense has no experience in this area, has no bearing on the issue; nor that Apple expects to sell only 10 million iPhones where Nokia, Ericsson and Motorola each probably will sell 300 million of their phones this year.

Expectations of success have galvanised US sharemarkets and Apple's stock is now at a high of $US127, having stacked on more than $US25 in the past month.

Gene Munster, of US analyst firm, Piper Jaffray, says Apple's share price could go to $US160 and that, with European sales beginning at the end of next year, the company will sell 45 million iPhones in 2009.

So what makes the iPhone so sexy?

It is a highly innovative touch-screen mobile phone, media player and wireless internet gadget using 802.11g technology, otherwise called wi-fi and available in thousands of areas all over the world.

Other phones have similar features, but none have quite the finesse of the iPhone. Even the touch-screen is different, and the device uses the Macintosh computer operating system.

It is beautiful to see and great fun to use. I have had one in my hand and made a call on it; to Steve Jobs, Apple's CEO (but he did not answer).

Munster estimates iPhone's price will halve in a year and then capture about 7 per cent of the North American handset market and about 3 per cent of the world mobile phone market.

Motorola's RAZR phone, one of the most popular of recent models, sold 65 million in 12 months after its launch in 2004.

Other analysts, including Jonathan Hoopes, of ThinkEquity Partners, points to the sales curve of the iPod. It sold 187,000 units in its first six months, from October 2001 to April 2002. It did nearly half a million in the next 12 months and 2.18 million the following year. Apple expects to ship 40 million iPhones in 2009.

Forrester Research analyst Charles Golvin expects Apple will continue to develop the iPhone, expanding its memory from 4 gigabyte and adding other technology, including, possibly, WiMAX that would improve wireless internet access.

The other sales-promoting aspect is that the iPhone incorporates what amounts to an iPod nano. Thus, if you add the cost of a mobile to the cost of an iPod, you get roughly the price of an iPhone, plus internet access.

Apple’s iPhone pricing: too high or too low?

"Apple iPhone followers got two conflicting pieces of data regarding its $499 price point. In one survey done by an online shopping firm Compete as reported by MacWorld UK, only one percent of the consumers who said they were likely to buy an iPhone said they would pay $500 for it," Carl Howe writes for Blackfriars' Marketing. "Sounds bad right?"

Online market research firm Compete surveyed 379 people in the US, most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device to produce the uncommissioned report. The iPhone is a combined music player and cell phone that Apple plans to start selling in the US in June and in Europe by the end of the year.

Among the 26 per cent of respondents who said they're likely to buy an iPhone, only 1 per cent said they'd pay $500 for it. When Apple introduced the iPhone in January, it said it would cost $500 on the low end.

Forty-two per cent of those who said they're likely to buy the phone said they'd pay $200 to $299.

Howe writes, "Now here, you have to actually wonder about that result and how they asked the question, especially when 42% said they'd buy one for $200 to $299. Did Compete ask those questions serially, or did they simply put the question up as follows:

What is the most you would pay for an iPhone?
• $500 or more
• $400 to $499
• $300 to $399
• $200 to $299
• less than $200

Howe writes, "Since this was an online survey, this format is quite likely. And it will give quite poor data. Why? Because it causes the reader to believe that there will be alternative prices for the iPhone that are lower than $500! And if Apple sticks to its mass-market luxury item strategy, there simply won't be other prices available. The result: some of the people who said they'd only pay $200 to $299 will still buy the iPhone at $499 anyway [and], by the time Christmas of 2008 rolls around, Moore's Law says that the price of the electronics in the iPhone will be half what they are now. Don't be surprised if those 46% of consumers get their $299 iPhone then; they just have to wait eighteen months before it makes business sense for Apple to sell it at that price."

Cisco Allows Apple Use 'iPhone' Name

Cisco Systems and Apple Computer have finally called a truce, and will share the 'iPhone' name in exchange for exploring 'interoperability' between the companies' products in areas such as security, consumer, and business communication.

Both Apple and Cisco have said they will dismiss any pending legal actions regarding the 'iPhone' trademark, but continue to remain tight-lipped about future products that might come out of the 'interoperability' deal. On Jan 10, 2007, just a day after Apple CEO, Steve Jobs, unveiled the company's much awaited iPhone, Cisco slapped a suit against Apple, alleging that the latter's use of the 'iPhone' name constituted a 'willful and malicious' violation of a trademark Cisco has owned since 2000.

And, Cisco's Linksys division has been using the 'iPhone' trademark for a series of phones that make free long distance calls over the Internet, using Voice over Internet Protocol (VoIP).

In its lawsuit, Cisco said that in an era of 'convergence', the two companies' phones could eventually take on different features and end up competing head-to-head. Cisco said this would result in confusion, mistake, and deception for consumers.

Apple dubbed the suit 'silly' initially, arguing that it was entitled to use the 'iPhone' name as the phones belonging to the two companies operate over different networks, and as such, would never compete with each other.

Meanwhile, analysts say the settlement will help both companies strengthen their positions in the increasing competition to deliver video and other applications via the network direct to consumers' homes.

One network infrastructure analyst with the Yankee Group, Zeus Kerravala, voiced the view that there are ample opportunities for the two companies to dream up collaborative projects to win over consumers.

He cited one possibility as the creation of a Linksys device that users could call into to record podcasts, which could then be uploaded onto iTunes automatically.

Kerravala said that if the two companies could actually find common ground and work together, the combination would be a formidable one unlike that in which both are continually at loggerheads with each other.

Kerravala pointed out that after all, there's no company out there that understands network service like Cisco, and no other company that quite understands user experience like Apple Computer.