Apple’s iPhone may be the most anticipated device in the history of the wireless industry. But when it hits AT&T and Apple stores June 29, it will face plenty of competition.
With the introduction of the iPhone just weeks away, the battle to woo customers to feature-rich phones is moving into high gear, and that could produce benefits for everyone.
“We think the (iPhone) buzz is very good,” says Peter A. Skarzynski, senior vice president of Samsung Telecommunications America. “It helps people understand the convergence of phones and music players.”
AT&T executives hope the iPhone will liven up the phone company’s wireless brand as it makes the transition from Cingular to AT&T. They also figure the device will attract customers to AT&T stores even if they don’t purchase it, according to people close to the company.
IPhone’s rivals can’t tap into Apple’s iTunes store, which millions use to download music, and most of them don’t have phone-company partners in the U.S. yet. But the iPhone will be priced at $499 for four gigabytes of memory and $599 for eight gigabytes, and it will require a two-year contract with AT&T. Skarzynski predicts that will create an opening for other phone makers to market expensive phones that will double as mini-entertainment units.
Executives at rival carriers say they’re prepared. Verizon is redesigning and perhaps rebranding its LG Chocolate music phone, a person familiar with the company’s plans says. The iPod look-alike was panned by some critics for a clunky interface. Verizon also is toying with the idea of carrying LG’s Prada phone after testing it to make sure it works on Verizon’s network, this person says.
Denny Strigl, president of Verizon Communications, which co-owns Verizon Wireless, says the carrier doesn’t want to go head to head against iPhone with any single device. Instead, it plans to rely on a broader set of mobile services and phones to win over customers. “With what we have as an overall product line, I’m confident we won’t lose (market) share to the iPhone,” Strigl says.
Sprint Nextel tried to beat Apple to the punch with its release of Samsung’s slim music phone, “UpStage,” which costs $99 with a two-year service contract. Skarzynski at Samsung called it “the nano of the phone industry,” referring to an inexpensive Apple iPod. He expects UpStage to be popular among those consumers who don’t want to pay more than $100 for a cell phone — about 85 percent of U.S. phone users.
“By naming it UpStage, they’re clearly trying to upstage the iPhone,” says Avi Greengart, an analyst at Current Analysis. He thinks the Samsung device is innovative and attractive but not that easy to use. “I wouldn’t call it an iPhone competitor,” he says.
Meanwhile, Apple predicts it will sell 10 million handsets by the end of 2008. AT&T’s new chief executive, Randall Stephenson, also has been bullish about iPhone sales. Some people close to AT&T, though, believe Apple’s projection is overly ambitious. The first-edition iPhone has the drawback that it won’t be able to surf the Web as fast as some of its rivals.
But Apple and AT&T are already developing a successor device with a so-called third-generation chip that will speed up Web access, people familiar with the companies’ plans say. The two companies also are exploring whether to make a version that is slimmer than the original, the people say. Representatives of AT&T and Apple decline to comment on future product development.
Long term, one of iPhone’s fiercest rivals will likely be Nokia’s N95 multimedia smart phone, analysts say. The phone is equipped with a sharp-image screen, a music player with an equalizer and an Internet browser that pulls up a minimap automatically. It even comes with more bells and whistles than the iPhone, including a five megapixel camera and a GPS navigation system. But all these features also come with a high price tag: $749 in the U.S. market, plus more for the GPS service.
Unlike the iPhone, the N95 lacks a major U.S. carrier partner that will distribute it at thousands of retail stores and back the device with a big marketing budget. The gadget will be available only at Nokia’s two flagship stores in New York and Chicago, its online store and a few independent retailers. Buyers will have to arrange to link the N95 to a carrier that uses the same network technology.
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The competition
– Nokia already has begun selling the N95, a high-end smart phone that, like the iPhone, has a large color screen, can surf the Web and can play music and DVD-quality video.
– LG Electronics has brought a sleek, minimalist touch-screen phone to market in Europe and Asia that was co-designed with the fashion house Prada. A slightly different version will be offered later this year in the U.S. market.
– Taiwan-based smart-phone maker HTC is introducing a handset called “Touch” this month in Europe and Asia. The phone allows users to navigate its features by sweeping across the touch screen with their fingers, much like the multitouch feature of the iPhone.
– Not to be outdone, Samsung has released a $99 super-thin music phone that it calls “UpStage.”
