iPhone Versus the Rest: More Evidence Smartphone Makers Are in Trouble 12 comments
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Priya Sanghvi wants an Apple iPhone from AT&T’s Cingular Wireless when it comes out in June, and she is already strategizing how to get it. Now a Verizon Wireless customer, she’s exploring a range of options, including trying to wrestle with Verizon to let her out of her contract early, using one of the new online swap services to dump the remaining months of the contract, or even just paying the $175 early-termination fee.
“I just switched from a Dell to an Apple laptop and love the Mac lifestyle,” says Sanghvi, 22, a recent graduate of New York University. “I never go anywhere without my iPod and cellphone. Now, I’ll only have to bring one device with me.”
Cingular will be the exclusive U.S. carrier for the iPhone. The multifunction device is expected to ship in June and cost $499 or $599 with a two-year contract. Part-iPod, part-smartphone, it is already one of the most eagerly anticipated gizmos of 2007.
Like Sanghvi, Atlanta software customer service manager Nate Mansfield is ready to dump his Verizon service with a year remaining on his contract, even though he’s perfectly satisfied with it.
He’s got iPhone fever, though he’s never seen the phone in person. He says that from what he’s read about it, he expects it to be a more productive tool for his business.
With potential buyers scheming months in advance on how to get hold of an iPhone, it’s a safe bet they won’t be buying a BlackBerry, Treo (PALM), Nokia (NOK), Motorola (MOT), or whatever. And yes, we know there will be some people who prefer the traditional models and continue to buy them. But many of them will also wait to check out the iPhone, just in case.
Throw in a consumer slowdown and it’s fairly easy to see why we bought those (RIMM) put options.
Disclosure: author owns RIMM put options.
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This article has 12 comments:
This Apple Nut's next purchase reminds me of the Iridium Satellite Phone debacle of 1999. The story goes that the wife of a Motorola executive was sitting on a beach in the Carribbean trying to use her US mobile phone without success. She discussed this problem with her husband and the rest , they say, is history. No one at Motorola bothered to think about the existing technology that might have have solved the wife's problem. It was called GSM and it was in use at the same time by Europe and most of Latin America, Asia and Africa.
Why is this relevant? Well, if Sanghvi and the rest of the followers of Steve (Korash) Jobs at the House of Apple haven't realised, there's a wealth of telephones out in the market that can play music and receive calls. For instance, the SE Walkman models are currently selling at a faster rate than the Ipods did at their same time in the product cycle.
"Yes", people with buy the IPhone in their droves. But "No", there not going to be a mass exodus from other manufacturers (including BlackBerry). I suspect Apple will create rather than steal market share.
PS: Somebody should tell Sanghvi his Dell/Apple choice is a trite binary.
People forget Apple has quite a legion of loyal users. These people are likely using other carriers now. They have been calling for an Apple phone for years. They will ditch their current phones. Moreover, they by merely using the phone in public will sell it to the masses.
Finally, it is silly to think Apple will not come out with other cheaper models as soon as the sales of the initial iPhone start to dwindle. That is how Apple did it for the iPod.
Well, there's a lot of contestants on "Dancing with the Stars", but there was only one Ginger Rogers. It ain't the silicon; it's the motion.....
The anecdotal student above does NOT sound like a so-called "cultist"; she sounds like someone who has come to realize that it's worth paying a wee bit more for a way better product.
For my part, I would LOVE to drop Verizon, but my wife won't let me. I hope Verizon drops it's brain-addled CEO so, maybe, the iPhone will come to that network.
As far as the "wealth of phones that can play music and receive calls," well that is also indicative of the intense competition, which will mean a real hurting if consumer spending slows further.
As you say there are by far many more phone/music players being sold than iPods. The phone market is much bigger. Why is it then that sales of iPod haven't dropped. Why would anyone who's got an mp3 player in his phone buy an iPod too? The answer is iTunes. How do you know people who have got one of those phones all use them to listen to music?
Regarding Sanghvi: So anyone who switches from a Dell to a Mac and is happy with his/her choice is a Mac nut? You must be a regular Rush Limbaugh listener.
Just recall what a lot of people like you were saying about the iPod in the first two years after it came out. Apple's market share is almost 10 times that of the number 2 seller, Sandisk. And those two own almost 90% of the market.
These sort of elementary holes make this attempt at analysis not very credible
Or $0 for the Nokia N95 which has 5mp camera, GPS mapping, up to 2GB of changeable memory, smaller and lighter than the iPhone, and 3G?
The iPhone may look better and will probably have a better interface. But if that's all I cared about then I'd be happy to put up with a worse interface considering everything else you get with the N95. And I'd spend the $500 I saved on a Hugo Boss suit or coat to make me look cool.
Money money money. That's what it's all about. The iPod is successful because not only is it the best but it's also damn good value for money. It's isn't infinitely more expensive than it's rivals where as the iPhone is.
Some people say a phone is just a phone. Well then save your $500 to!
The key feature on a phone now a days is the camera which is why the iPhone is poor. But the key features of the near term future are mp3 playback capability and internet access. The iPhone may be fine with one but it's not with the other. It can't access iTunes on the move? That is a big advantage to the competition because they have already set up agreements to provide music downloads on the move as part of the contract.
I'll take Palm's smartphone revenues for 500, Alex! Hmmm, maybe those treos, which are some of the bulkier smartphones, aren't poised for distruction as this analysis would have you think.
Maybe it was the guidance? $400-$410 marks a sequential decline and a midpoint growth rate of 0.5% over last year's $403.1 million. Oh, and the consensus estimate was $416.
If it weren't for buyout rumors there is no way they would be selling at 21x trailing earnings.
That sure contradicts my thesis. Not.