iPhone Calling: How Apple Is Changing Handset, MNO, and Software Dynamics

Event Spotlight

Apple and AT&T released the iPhone on June 29 in the US. The launch appears to have broken all records, including that of media hysteria, and by any measure it was a huge success. At this time, it appears that over the first three days alone Apple sold at least 500,000 iPhones — unsubsidized, unlike almost all other handsets sold in the US — which is more than the Motorola RAZR sold in its first month. In comparison, the iPhone has generated roughly 200m mentions on the Web, according to Google.

Whether the iPhone turns into a long-term success or not, however, the combination of excitement and fear it has stirred has already caused a number of changes in the mobile communications industry. Most important is that the device has raised user expectations— and not just for that superior design for which Apple is famous. The iPhone has already woken up a large portion of the market to the benefits of a menu-free, multi-touch user interface, to the idea of mobile Internet access, and to the opportunity in software and device integration.

Pyramid Prediction: Over the next few years, these raised expectations for interface, Internet, and integration will have profound consequences not just for handset makers, but also for mobile network operators (MNOs) and telecom system and software vendors as well as integrators. For the time being, both MNOs and handset makers will counter the phenomenon most effectively in the enterprise market.

Analysis Summary

• The iPhone is in the wild, and looks like a success. Whether it sold 500,000 or more during the first week, however, the expectations Apple has raised will have profound consequences for handset makers, mobile network operators, and telecom system and software vendors over the next few years.

• The iPhone has already woken up a good chunk of the market to the benefits of a menu-free, multi-touch interface, to the idea of mobile Internet access, and to the opportunity in software and device integration.

• The biggest weakness of Apple’s mobile strategy to date is its neglect of the enterprise market. This is also where countermoves will be most effective — for the time being.

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