Why Do We Care About the iPhone? And What Are its Implications?

On the Go

In the past 5 years or so, cell phones have become more and more commonplace. It is no longer shocking to see 12-year olds to 80-year olds wielding cell phones and chatting away on the go. These phones are categorized based on what technology they use. 1G implies the use of analog standards, 2G is based on a digital network, 3G, short for third-generation, allows additional services such as downloading things, using email and instant messaging, etc in addition to placing voice calls, and 4G allows video conferencing and low-latency data transmission.

There are countless mobile phone manufacturers in the world, and some of the larger ones are SonyEricsson with a 5.6% market share LG with 5.3%, Siemens with 8%, Samsung with 12.26%, Motorola with 16.3%, and Nokia with 28.8%. But with the market being so saturated with manufacturers offering cell phones with different technologies and form factors, why is there so much hype and anticipation surrounding the Apple iPhone, and what sense does it make for Apple to enter this market?

Multipurpose Multimedia Device

Both the cell phone market as well as the digital media market are booming. Considering that both the markets have a largely overlapping target audience, it only makes sense that manufacturers are rushing to create dual-purpose devices. Furthermore, the recent increase in storage capacities of cell phones and the increase in data transfer speeds make the usage of computers as an intermediary superfluous. With Apple’s stronghold on the digital media and the digital media player markets, and with that latter market being somewhat merged with the cell phone market, it seems like a logical decision for Apple to capitalize on the situation, lest it have the same fate as Sony’s with the giant’s delayed entry into the digital media player market.

iTunes

The first thing that comes to mind is that the iPhone will offer seamless integration with iTunes. Well, even though the functionality is somewhat restricted, this has already been achieved by Apple and Motorola. Apple restricts the number of songs you can have on the phone to 100, however, a quick hack let’s you increase that limit to 1000 songs.

Design

Too often manufacturers of, well anything, compromise on design, just so they can offer the latest and greatest in technological marvels. Apple on the other hand, has always been praised for offering best of breed industrial design, even if they have to compromise on some features. So the Apple ‘ooh-factor’ may be one reason that the iPhone has wetted so many people’s appetites.

Saving Grace

What some people argue as the saving grace of the iPhone, has been highlighted in a recently uncovered patent filed by Apple. Unlike the iTunes integration in Motorola phones, this technology would takes it a step further and allows “cell phone or wireless handheld users to interact with an online music store–such as iTunes–and mark a song or video file that can be downloaded to a computer at a later time.”

As far as I am concerned, as long as I have to download the song using my computer, and then sync the phone to my computer, this is just not good enough. Until Apple allows me to take advantage of the high speed data transfer offered on today’s cell phone networks and directly interface with the iTunes Music Store to download songs and ring tones to my phone, you can count me out. What difference does it make if I can or can not mark a song through my phone? As long as I have to ultimately use my computer, what progress has Apple made?

Verizon already offers a V-Cast service that allows users to download song directly to their phones over an EV-DO network.

What of the iPod?

The first question that springs to my mind is what effect will this have on the iPod market? If Apple enters the convergence market and markets a device that is a phone but provides the Apple ‘ooh-factor’ and the functionality of an iPod, why would anyone still buy the iPod?

One rather extreme way of rectifying this would be to wait till the digital media player market is completely saturated, i.e., till iPod sales are on a steep decline, and then introducing the convergence device to revitalize sales. Another way, one that would not cannibalize iPod sales would be to cripple the device’s functionality, in which case it is rendered useless anyway.

Apple the Giant Killer

Many providers offer services much like Verizon’s V-Cast, to allow consumers to download songs to their mobile phone. The catch, however, is that these songs cost up to 5 times as much as a song costs through iTunes. What does this mean for Verizon, Cingular, T-Mobile, and the like? There is bad news and there is good news. The introduction of the iPhone, especially if it allows users to directly download from the iTMS, will severely cripple the stranglehold of the current industry giants, simply because of the price differential. Another battle may play out between the giants and Apple, but with the degree of control Apple can exert over its faithful, these companies are likely to bow down to Apple much like the music industry did with respect to the 99 cents pricing model. At the same time, there is some good news for the carriers. Because downloading the songs would require high-speed data transfers, carriers can make money by allowing Apple users to access iTunes and make transactions over their network, and getting a cut of the sale.

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Related posts:

1. History of iPhone
2. Nokia Sues Apple Again over Patent Infringement
3. The Unholy Trinity: iPod, iTunes, and unFairPlay
4. How is Apple’s new iPhone 3G better than all time favorite Nokia’s N-95
5. WordPress for iPhone is here

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