14 DAY TRIAL // The iPhone has been without doubt an extremely rumored, analyzed, and - most of all - awaited gadget since... well... forever. The first question one might first ask himself is if Apple will be able to deliver such a device that will not disappoint the "Apple crowd" or if Apple will be able to deliver it on the market at all. These are not relevant questions. Apple has built itself a reputation of accomplishing the impossible, possible, of satisfying everyone with their ideas, through the way these ideas are implemented into its products and the superior quality of their finished products.
The thing that one should ask himself is: What will Apple do to make the iPhone a hit like the iPod? How will Apple be able to get into a market that already has its giants? The mobile business implies a little more than the music player business and, to get ahead, the company will have to adopt some pretty good strategies.
According to Ian Fogg, Apple has 4 major options:
The first one is to Continue licensing software to established handset vendors This basically means expanding the type of relationship it already has with Motorola but this could weaken its end-to-end experience through working with such partners. The upside is that it enables Apple to enter a challenging value chain that is quite different to today's iPod market, the analyst says.
The second choice would be to Create its own iPod mobile phone handset and sell via mobile operators.
Regarding this option, Ian puts things this way: Apple has a deserved reputation for creating well-designed devices, that are compelling, and revive stalled markets in which previous companies have delivered so-so devices. The mobile operator subsidy would make Apple's phone extremely attractive on price. But Apple's challenge is that, unlike Nokia, Sony-Ericsson, Samsung and the rest, it lacks strong operator relationships to secure a good distribution deal. Additionally, the operators may insist on changes which compromise Apple's brand and the overall consumer experience, as well as cutting into Apple's margins.
In the third place - and a highly unlikable choice - is to bypass current operators by launching one or more MVNOs (mobile virtual network operators). This means that apple would have to work country by country and this would cripple its global aspirations. Also, commentators speculating about MVNOs miss the big point: an MVNO is a virtual operator; Apple would still be reliant on an existing mobile operator for wholesale capacity. An MVNO would have little benefit for Apple, in Ian's opinion.
The final option is selling iPhones in retail Consumers would just slot in an existing SIM and have a working combination device. What's the downside? Not much: Apple would find it hard to sell over-the-air music downloads without an operator partner, but that is a nascent market, with little immediate profit potential. Apple could continue to to sell music via PCs and make its traditional retail margins. This approach doesn't even need an expensive 3G radio - which would help Apple keep handset cost, size and weight down and make the handset competitive with (relatively) bloated 3G handsets sold by operators.
Apple will most likely pursue a multi-track approach as it enters the mobile market. I'm sure retail sales of Apple's iPod mobile phone should, and will, be one part of that strategy, perhaps even the main one, the analyst further explains.
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