Apple has changed the iPhone business model to prolong sales of the older models, in the run-up to the launch of a 3G version of the device ‘ and is coming under fire from a growing number of challengers, including the Samsung Instinct, RIM BlackBerry Bold and HTC Diamond.
The high profile handset will be available in a host of new markets now, in some cases via multiple carriers, mainly where Vodafone is one of the partners. The world’s largest cellco by revenue has been resistant to the iPhone’s charge and not prepared to take the hit on revenue sharing that Apple demands for an exclusive, but it is willing to put the device in its portfolio in some markets, notably those where it needs a boost against a dominant rival. “Apple is realising that it should be making the iPhone as widespread as possible – Vodafone having taken the view in Italy that it is not willing to share revenues for what will likely be a mediocre product,” analyst Will Draper of Execution told Unstrung.
In Italy, Vodafone and TIM can now both offer the iPhone. There will also be multiple cellco partnerships in Australia and India. One reason for adopting a multi-carrier approach is where a territory has a high proportion of prepaid users (Italy has 91%). There is also the Apple motivation of selling as many 2G/EDGE models as possible before the first generation iPhones reach the end of their lives, and of gaining market share in order to lay the foundation for selling more content.
To this end, Apple is now going global, with new distribution deals in various Asia/Pacific and Latin American markets. These include a multi-country agreement with Vodafone, which steered clear of the first wave of iPhone deals, passing on the chance of a much rumored pan-European pact because it disliked the pricing and level of control Apple demanded. Vodafone was justified to some extent when European cellcos, such as O2 and T-Mobile, which did succumb to the iPhone, found that it did not attract the same level of manic user demand as AT&T encountered in the US.
The new Vodafone deal will clearly have come with far better terms, from the cellco’s point of view, as it covers the 2G devices. It applies to 10 countries – Italy, Australia, New Zealand, India, The Czech Republic, Egypt, Greece, Portugal, South Africa and Turkey. “This is definitely a sign Apple is capitulating,” Will Draper, an analyst at Execution, told Unstrung. “The initial model was that Apple would give the iPhone to a network on an exclusive basis, but in Europe, where you have the likes of Nokia and Sony Ericsson selling sophisticated 3G devices, the iPhone simply isn’t seen as such a premium product.” It remains to be seen whether Vodafone will also take the impending 3G version in any of its territories, though presumably the two-year exclusive clause will still apply for the first wave of adopters with regards to the 3G iPhone.
Other operators putting the iPhone on their books are Bharti Airtel in India, SingTel Optus in Australia, SingTel itself in Singapore, and Globe Telecom in the Philippines, all starting later this year. None of the operators gave a specific launch date or pricing, or stated whether they would offer the 3G version of the phone. In Latin America, America Movil is to offer the iPhone in Argentina, Brazil, Chile, Colombia and Mexico, and in Canada, Rogers Wireless has a two-year exclusive.
Meanwhile, as Sprint Nextel continues, despite its problems, to attract top class handsets, it is putting considerable marketing weight behind the Samsung Instinct touchscreen. Other would-be iPhone challengers are gaining even more coverage, notably the HTC Diamond, a successor to the highly successful Touch Windows-based smartphone, which ‘ unusually for Windows handsets ‘ has crossed the divide between enterprise and consumer markets, and has been responsible for taking HTC from the white label sector to become a notable brand in its own right. Touch has shipped 3m units since it launched in June, about half the run rate of the iPhone.
The Touch Diamond has many similar features to the iPhone, but already supports 3G. It weighs less than four ounces and measures 4x2x0.4 inches. It includes a 3.2megapixel camera and 4Gb of memory, supports wi-fi and Bluetooth, and promises time of up to four hours on a fully charged battery. The device will be offered through all major European carriers from June, and later this quarter in Asia and the Middle East. The device is scheduled to ship in north and Latin America in the second half of the year.
Also taking on Apple with a 3G smartphone is RIM, which has gone a step further and also formed a venture capital fund devoted to backing mobile applications developers focused on the BlackBerry family ‘ a move that also emulates Apple. The new BlackBerry Bold is a 3G iteration of the 9000 Curve range, although launch times are as vague as those for the 3G iPhone, with both handsets due some time this summer. RIM’s product supports tri-band HSDPA and 802.11 a/b/g wi-fi and will be available initially from AT&T, priced between $300 and $400.
The new BlackBerry Partners Fund is a $150m venture capital fund, formed in collaboration with financial information services company Thomson Reuters and the Royal Bank of Canada, plus an unknown number of unidentified private investors. Although the focus is clearly on “mobile applications and services for the BlackBerry platform’, RIM says it is not restricted to its own products. The Fund “will not restrict the development of mobile applications and services to any single mobile platform or any specific industry segment,” said the official statement. This reflects RIM’s perennial dilemma ‘ as the BlackBerry faces competition from more and more devices with similar functionality, and the threat of the round of upgrades of corporate mobile email systems, how far RIM should seek to spread its activities into more open markets.