SmallDoses

I had promised myself that I would not write an iPhone related post but a lot of MoTo people have been proclaiming (rather loudly) about how they believe Apple’s closed standard iPhone doesn’t really make it an adequate competitor in the high end handset space. Though some of their arguments do make sense - I think people at MoTo and Nokia should be vary of who they are up against and I don’t mean this with regards to design or user experience.

Apple has learnt with the iPod how to utilize its brand in maintaining a rather tough position with it’s manufacturers. They keep a very low inventory and pay their suppliers only on the sale of the unit which was unheard of just a few years ago. Take a look at some of these numbers:

MoTo and Nokia can fight on scale and volume but at each step they will have to lower the price point on their pda-like devices - we’ve already heard of RIM slashing prices on the BlackBerry Pearl, for MoTo and Nokia however lowering price points and reduced profit margins from their high end devices will mean much greater pressure from the B-players like LG and Samsung who have already demonstrated their capability in building devices like the Chocolate and BlackJack respectively. The end result will be a tight squeeze from both ends of the spectrum for MoTo and Nokia unless they realize what they are up against and switch their strategies soon.

Apple on the other hand also has the ability to go the MVNO route and capitalize on the seamless nature of their product by integrating heavily with iTunes, Google and Yahoo which they plan to do anyways. This gives them a near perfect opportunity to increase the Average Revenue Per User without having to pay external service providers which all the other carriers will always have to do. Until they do decide to go the MVNO route they have Cingular to provide the back-end infrastructure required to take the iPhone mainstream and feel the waters so to speak. Add-on devices like GPS dongles, printers for the camera  might add another realm to the iPhone which will provide the opportunity for further add-on services which all stand to increase the revenues that iPhone generates for Apple.

Apple has shown in the past that its ability to innovate has taken an existing market and accelerated it to a HUGE one - remember the old clunky mp3 devices? That’s exactly what Apple will do with the high end phone market. Industry insiders place the number of units that Apple distributes in its first wave to be close to 12M units - the distribution of which is not limited to the US since it is quad band and will be available through all the international Apple Stores starting June of this year.

Instead of fighting the design, interface and user experience battles and focusing on the closed standard MoTo and Nokia need to understand that the fight they are up against is a production, delivery and distribution battle which Apple seems to have won already. The next wave will be Apple providing add-on services to the iPhone and frankly I don’t think any user will care if a 3rd party developer or Apple internally created a particular widget or application - so the closed standard won’t matter - users (me included) will be drooling over our new iPhones and enjoying every minute of it.

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