Tuesday, June 10, 2008

iPhone - Its Not Just About Looks

Last year Apple redefined mobile phones with its iconic iPhone. In doing so, the move not only exceeding user expectations but set a new bar for others to chase. Todate it has sold some 4 to 5 million units (who’s counting) and that is despite it not having 3G capabilities and being tethered to exclusive network arrangements. Today the market has moved on and others have raised their game, repackage their offers and we are down to round two.

Yesterday saw two contrasting opening salvos. Steve Jobs announced a new version of the iPhone and Nokia the world's largest maker, announced its E-series (enterprise handsets) and the launch of the top-of-the-range N96.

N96 will come with 16 gigabytes of internal memory and is expected to retail around $870.

The new iPhone in contrast will at last have 3G, 3rd party applications, a slimmer design, run faster over the networks loading internet pages 2.8 times faster than before, have 8 gigabytes of memory but importantly it will have a lower price of $199.There will be a higher model with 16 gigabytes will cost $299.

Wireless network companies will no longer pay Apple part of the subscription fees they get from iPhone users, but instead will subsidize the devices up front to make them cheaper. Importantly this move effectively buries the iPhone’s expensive tag and moves it into the commodity pricing bracket. The development of web applications and ‘Mobile Me’ clearly sets up Apple against Google, Microsoft and most importantly Nokia. They now target to sell 10 million units by the end of 2008!

What we are seeing is both a significant business model and pricing shift plus further logical development and this will certainly unsettle others. $199 is a classic price point for what is still a classic mobile.

No comments: