Saturday, June 9, 2007

iPhone prediction department

Wrapping up my LA GMR coverage before heading off to my next conference.

A week ago I presented my paper with Mike Mace on the impact of the iPhone. The conclusions should be surprising for those who’ve read my previous thoughts (or Mike’s). And some of the predictions have been overtaken by events.

For the record, here are the slides as presented on the afternoon of June 2 in Marina Del Rey. A few highlights:

Our Premise
The iPhone could change the mobile phone industry:
  • Nature of devices
  • Vendor-consumer relationships
  • Vendor-operator relationships
  • Value and use of content
Of course, there are limits to drawing inferences based on vaporware
The first three relate to the power of Apple’s brand and consumer marketing, and how it’s tried to assert that power to bypass AT&T. The comment about content wasn’t there when I drove down to LA, but it was quite clear reflecting on the first day of the conference that ease of use is a big concern for getting people to use mobile phone content, and obviously the iPhone will have ease of use.

As the June 29 ship date approaches, it is clear that Apple will be creating the first-day hype that it has done with some of its other products (and others have done with videogame consoles) — fanatics camped out by stores, lines around the block, etc. etc. If Apple can get a line for a new retail store, then certainly they can get one for their first cellphone. For those not in the U.S., they’ve been ramping up the TV advertising, demonstrating the iPhone as what a mobile phone web browser was meant to be (I guess assuming it already has the iTunes customers in the bag).

I want to quote one other slide:
Help or Hurt Rivals?
Apple could take away sales
  • Unique content ecosystem
  • Systems competition vs. point products
  • Marketing visibility
  • “Sex appeal”
Or could create openings
  • Exclusive carrier in US, Europe, ?
  • Rival carriers will promote other phones
  • Effectively grow the category?
Our point as technology strategists — without any inside information — is that Verizon & Sprint won’t standstill as Apple promotes the iPhone, but will sell their own competing products: I used the example of the LG Prada, the Samsung UpStage and the Samsung KE850.

Sure enough, on Thursday morning, the Wall Street Journal published an article (registration required) about rival US carriers’ plans to compete with the iPhone. They listed the the Prada, the UpStage and the HTC Touch (a Windows Mobile iPhone knock-off). They also implausible listed the Nokia N95 — Nokia’s top of the line smartphone, but clearly ignorant of Mike’s point that there are different mobile phone segments. (see our slide #14 for an updated diagram showing the iPhone and N95/9500 segmentation).

The one new tidbit is that at least Verizon is smart enough to swarm the iPhone in adjacent segments rather than competing directly:
Denny Strigl, president of Verizon Communications Inc., which co-owns Verizon Wireless with the United Kingdom's Vodafone Group PLC, says the carrier doesn't want to go head to head against iPhone with any single device. Instead, it plans to rely on a broader set of mobile services and phones to win over customers. "With what we have as an overall product line, I'm confident we won't lose [market] share to the iPhone," Mr. Strigl says.
However, the picture changed dramatically on Thursday afternoon with Qualcomm’s latest loss to Broadcom. While Qualcomm is mounting an aggressive appeal, as it sits Qualcomm’s chip customers can’t import new phones into the US. That will shut down innovation on the CDMA phone side (where Qualcomm holds 95+% share), including new LG or Samsung phones to Verizon and Sprint. So — in a break for AT&T and Apple — iPhone rivals could very well be delayed until Qualcomm comes up with a solution (work around, court victory, or a settlement).

Technorati Tags: ,

No comments: