Rivals Answer the iPhone
Apple Inc.'s iPhone may be the most anticipated device in the history of the wireless industry. But when it hits AT&T Inc. and Apple stores June 29, it will face plenty of competition. — Nokia Corp. has already begun selling the N95, a high-end smart phone that …
Context & Ripple Effects
The iPhone's June 29 launch at AT&T and Apple stores caps weeks of buildup, with AT&T already framing the device as its 'iWeapon' in a bid to pull subscribers onto its network. The Wall Street Journal's framing is that Apple enters an occupied market: Nokia has its flagship N95 smart phone on shelves now, not after launch.
Market chatter around the launch cuts both ways — some commentary argues rival manufacturers will duplicate the iPhone's functionality and erode Apple's edge, while analysts float projections of a $10 billion iPhone business for Apple (both unconfirmed), and MarketWatch has gone so far as to advise shorting the stock on the strength of its good news.
First-order effects
- Nokia's N95 is positioned to compete against the iPhone from day one, giving consumers a shipping high-end alternative rather than waiting on Apple's supply chain.
- AT&T gains a launch-exclusive device it hopes converts new subscribers, while Apple carries full responsibility for retail, pricing, and support at its own stores.
Second-order effects
- Rival handset makers are pushed to accelerate their own touch-and-multimedia smart phone roadmaps to match the iPhone's feature set before it defines the category.
- Carriers beyond AT&T face pressure to sweeten device subsidies and data plans as a premium unlocked-style handset resets what customers expect from a phone deal.
Third-order effects
- If the pattern holds, handset competition shifts from carrier-specified feature phones toward consumer-pulled smart devices, forcing incumbents like Nokia to fight on software and design rather than distribution alone.
The trend: High-end mobile hardware is converging on a single battle over the smart phone experience, with Apple's entry forcing incumbents like Nokia to answer in kind.