Informa UK Limited: Christmas comes but twice a year for the iPhone
(M2 PressWIRE Via Acquire Media NewsEdge)
The launch of Apple's eagerly awaited iPhone 3G has attracted hot
interest from consumers as it went on sale in operator and Apple stores
in 22 countries today. By end 2008 this will be expanded to over 70
countries, including Brazil and India. In London, Apple's Regent Street
store had 150 eager customers queuing before 8am, while other central
London operator outlets reported queues of between 20 and 70.
Although called the iPhone 3G, it uses a technology called HSDPA which
is at least twice as fast as WCDMA 3G devices which first went on sale
five years ago. What it delivers is faster internet access and faster
downloading, delivering a true mobile broadband experience.
Global demand for advanced applications and high speed internet access
is now significant. The iPhone 3G clearly delivers on that point. But
many markets have had 3G or faster devices for a number of years. The
sophisticated subscribers in these markets are well attuned to what
high-end smartphones and their myriad associated applications can
offer. Only now is Apple's iPhone 3G providing this level of
technology, and a marked increase in available applications. But has it
arrived too late?
Already Apple has surrendered its attempts to change the game and had
to adopt the mobile handset industry's subsidized pricing model. But
has it done enough to attract this wider band of subscribers other than
On the face of it, Apple's decisions to sell the "twice as fast" iPhone
3G for "half the price" of last year's model and to no longer offer
exclusivity deals should help Apple to meet, if not surpass, its oft
stated target of ten million iPhones by the end of the year. Despite
predictions that this estimate may be undercooked, the company has been
consistently maintaining this target each quarter.
Yes, Apple now has access to an enormous distribution channel selling
through some of the largest mobile operators on the planet, excluding
China for the time being. Based on all the announced operators this
will give the iPhone access to over 480 million subscribers by
end-2008. However only 4% of these currently subscribe to HSDPA plans.
How many of this addressable market will succumb to the charms of Steve
Jobs' latest baby?
Present current economic circumstances may also see many baulk at the
thought of parting with around $1,000 a year for at least two years for
the device plus mobile contract, as available from AT&T. The price for
the device may have lowered but it would appear that anyone signing up
for a new iPhone 3G contract will actually be paying more over the life
of the service contract than the original 2.5G model.
However, the appeal of the iPhone 3G is such that Apple's main
challenge may not be with demand or distribution but in fact with its
capacity to supply. This may be the fundamental reason why, for the
time being at least, Apple is sticking to its target of 10m units for
2008. In its short life in the mobile phone industry, has the company
built the scale, sourced the components and signed the contracts to
produce 15m phones or more in less than 12 months?
Whilst it is highly probable, and perhaps even desirable for Apple,
that demand will outstrip supply the company will want to secure a
high-margin for its new device whilst generating economies of scale. It
may have additional suppliers lined up to deliver capacity in addition
to its principal Taiwanese manufacturer Hon Hai. In addition, it is
believed that Apple has invested in on its own CNC tooling machines
perhaps as a means to ensure stringent quality control.
With Christmas expected to come twice this year for Apple, sales should
be buoyant to year end, with expectations from Informa Telecoms & Media
that sales of its iPhone 3G will pass the 12m mark in 2008. Added to
the estimated 2.2 million 2.5G versions sold in 2008, this brings a
cumulative total of 14.4m for the year. The signs are good for 2009,
particularly if Apple can secure deals to Chinese and Russian operators
before the end of 2008, but Informa Telecoms & Media believes next
year's iPhone 3G sales will not exceed 20m at best.
The iPhone is not alone in the handsets market. It has sparked a number
of competing touchscreen products and indeed been the catalyst for
creating a new class of device called mobile internet devices (MIDs).
It will face stiff competition before the end of the year with
heavyweight me-too offerings soon appearing on the market from top
handset vendors, including Samsung's Omnia, Sony Ericsson's Xperia,
LG's Dare, not forgetting Nokia's Tube' and the N96.
Furthermore, openness is becoming a key feature in the mobile market.
While the forthcoming Google Android and next version of Nokia S60 will
be open enabling users to access to a large number of innovative
applications, the number of iPhone applications remains limited.
Meanwhile the iPhone 3G's lack of support for Java and Flash may prove
As with any mobile handset, Apple's iPhone 3G will, in time, need to be
updated. It remains to be seen whether the next iPhones will be further
re-inventions of itself year-after-year, extending its product
lifecycle, or whether Apple will segment its portfolio to move into
lower tier devices. iPhone nano anyone?
About Mobile Broadband Devices:
Opportunities for mobile handsets, MIDs, UMPCs and notebooks
Mobile Broadband Devices examines the technology and business drivers
shaping this nascent market and evaluates the likely outcomes for its
diverse device segments.
KEY COVERAGE INCLUDES:
*Analysis and forecasts of network evolution for 3G, 3.5G and 4G
technologies 2007 - 2013
*Detailed subscriber forecasts by network technology 2007 - 2013
*Suggested business models
*A market overview - how the market for mobile broadband devices may
develop, encompassing the convergence of a number of large industries
and players from the mobile handsets and computing backgrounds
*Examination of available hardware and software components - processor,
wireless connectivity, applications processors
*Profiles of leading component vendors
*Profiles of leading device vendors
For more information and to download a table of contents please visit
About Informa Telecoms & Media
Informa Telecoms & Media is the leading provider of business
intelligence and strategic marketing solutions to global telecoms and
Driven by constant first-hand contact with the industry our 90 analysts
and researchers produce a range of intelligence services including news
and analytical products, in-depth market reports and Datasets focused
on technology, strategy and content.
Informa Telecoms & Media also organizes more than 125 annual events,
attended by more than 70,000 executives. In addition to the GSM>3G
World Series, our events cover subjects as diverse as fixed and mobile
operator strategy, technology, TV, mobile music and games.
CONTACT: David McQueen, Informa UK Ltd
Tel: +44 (0)20 7017 5554
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