Ubercool

The iPhone Economy

June 9th, 2008

Last June, I lined up with about 500 other aficionados at San Francisco’s main Apple Store and picked up the much-anticipated iPhone. In its 10 months on the market, Apple has raised the bar for the mobile phone and the retail world. Now history is about to repeat itself. Apple is set to launch its highly anticipated “3G” model, which will be available on July 11.

The iPhone groundswell has swept over the smartphone market like a veritable tsunami. At the Worldwide Developers Conference, Apple reported that 6 million iPhones had been sold to date, more than half of its stated goal of 10 million by year end 2008.

Pandemonium in San Francisco. Harry Potter movie? Celebrity picture signing? No, it’s “iDay”: the Apple iPhone line on June 29, 2007. Expect a repeat performance this July.

While RIM now has more than 14 million BlackBerry users worldwide, its share of the U.S. smartphone market declined from 45% at the end of 2006 to 40% today. Most of that change was due to the 17% share the iPhone grabbed in its first six months.

The new BlackBerry 9000 will make the hearts of 14 million “CrackBerry” users pump faster. The BlackBerry cult, which has been responsible for such trends as “blirting” and the “BlackBerry prayer,” will positively swoon over the hi-res and high-speed 9000 or “BlackBerry Bold.”

AT&T will subsidize iPhone sales with a $200 rebate, lowering the price of entry to $199, which could result in a doubling of sales, if the 110-million-sold Motorola RAZR is any indication. Motorola saw RAZR sales rocket once its initial $500 asking price was cut to $150 in 2006 and $100 later.

The potential market is huge. Of the 2 billion mobile phones sold in 2007, about 125 million were smartphones — a number that analysts expect to soar. In fact, worldwide smartphone market shipments jumped 60% in the last three months of 2007 compared to a year earlier, according to IDC.

The iPhone is teaching consumers how to surf the Internet on their mobile phone. In February, Google reported to The Financial Times that iPhone users perform 50 times more searches than any other mobile handset.

The path to success for any programmable device is paved with developers, an area where Apple excels, with more experience than any other phone maker. More than 250,000 SDKs (Software Development Kit) have been downloaded since Apple released the iPhone SDK in March.

While R.I.M. opened the BlackBerry to outside Java developers in 2001, its add-ons have been simpler and more primitive than what is due to hit the iPhone. Even using the Safari browser interface that current developers are limited to, has resulted in some very cool applications, like Schmap.

That users are impressed with the iPhone’s pacesetting interface is underscored by a ChangeWave study of 3,600 professionals, which found that 72% of iPhone users said they were “very satisfied” with their devices, compared to 55% of BlackBerry users.

The ascendancy of Apple as a global consumer brand was underscored by the company’s dropping of “Computer” from its name. Not only has the iPhone become a major consumer retail hit since, but the company’s stores have also redefined retailing. From packaging to “Genius Bars” to roving sales associates who wirelessly ring up sales, Apple stores are a study in retail innovation.

Apple is not only revolutionizing the consumer electronics business but it is setting the standard in retailing and packaging too. The more than 170 Apple Stores, once dismissed as a flawed strategy, now ring up $4 billion in sales each year.

It’s evident that Apple is doing for the mobile phone what it did for computers, which will lead to a major shift in the way the Internet is accessed. By the early part of the next decade, mobile phones will double the size of the Internet, leading to yet another explosion in productivity. Now that’s worth getting in line for.

Ubertrends: Unwired, Digital Lifestyle
Value Propellants: Connectivity, Convenience, Convergence, Freedom, Speed

Entry Filed under: Mobile Phones