News

BW: iPhone Starting to Take A Toll - on Competition and Apple

Friday, August 8th, 2008 at 12:55 PM - by

The Apple iPhone sent ripples through the mobile phone industry in the summer of 2007. This summer's launch of the iPhone 3G is doing the same, and the impact of the combination smartphone and iPod is now starting to be assessed, according to BusinessWeek.

The lower cost of the new iPhone 3G and the hand-me-down effect of iPhone 2Gs that have been replaced by upgraders to the 3G model are the major effects.

Analysts are looking at the percentage of iPhone 2G users who are upgrading, and the fraction is significant. That Apple has been able to convert so many users to a new version in just 12 months is remarkable, given that in the U.S. market, the average user replaces a mobile phone every 17.7 months.

However, it's not all good news for AT&T because many of those old iPhone 2Gs end up being unlocked and wind up on a competing carrier's network. Only about 10 percent of the iPhones surveyed on eBay have been advertised as still linked to AT&T.

Apple also has a problem with second hand and inexpensive iPhone 3Gs (out of the box) competing with their iPods according to Charles Wolf with Needham and Co. Every "At Christmas, every teenager in America is going to want one," he said. Mr. Wolf thinks that Apple will have to address that issue with new iPods this fall. [Piper Jaffray's Gene Munster believes an announcement could come as early as early September.

While some mobile phone manufacturers appear to be affected by the iPhone, notably Samsung overall, others seem to be riding the iPhone wave, and even some specific Samsung phones like the Instinct. LG has gained some share as well with the Voyager and the Dare.

Analysts and observers are continuing to search for patterns, but they are complex, especially in the consumer market given all the variables, products and competitors. With Apple reportedly ramping up iPhone production and about to change the iPod lineup to adjust for cannibalization, it may be 2009 before the impact of the iPhone on both Apple and competitors is fully understood.

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A guest said: (hide)

Sun Aug 10, 2008 1:04 pm

So the other complains that used iPhones will take sales away from brand new iPhones. But that is a fact of life: If you sell expensive items that still have considerable value even when a year or two old and outdated, then a used item market will evolve. And that used item market helps new sales, because the buyer will expect to get some of their money back when they sell the item a year later.

Most people buying a $80,000 Mercedes sell their old one for $40,000 to someone who sells their even older one for $20,000 to someone who sells their even older one for $10,000 to someone...

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A guest said: (hide)

Sun Aug 10, 2008 5:39 pm

The competition has little to worry about when they see how totally unstable the iPhone is and how buggy iTunes is!

The iPhone 2.0.1 and iTunes 7.7.1 is so totally unstable it crashes everyday and needs a restore. Apps quit constantly, all of them doesn't matter which one. Once one app quits they all do. Restarts and hard resets do not help. Only a total restore is needed. Sometimes when an app quits it kills the iPhone and you are left with a Apple logo.

iTunes takes forever to do backups on the iPhone that wind up useless as when you try to do a restore using a backup, 9 times out of ten iTunes tells you it is corrupted and you need to restore as a new iPhone.

iTunes never knows when you need updates on the apps and is wrong most of the time. If you do and update with iTunes of an app, it downloads the app and recreates the file instead of overwriting it. Take a look in your Mobile Application folder and you will find tons of files building up with incremented file names like AIM, AIM 1, AIM 2, etc.

The iPhone is a fantastic device when it works, which is never more than a day if you install any apps and try to use them. Beware installing, updating or deleting apps directly on the iPhone very often will kill it leaving you with the white Apple logo of death and no phone at all. Such a pleasant experience when it happens in the middle of the day leaving you without even a cell phone. Make a great Apple logo flashlight!

I returned the iPhone for replacement, I synced it with different Macs, tried loading less app, different apps, no apps. Nothing really helps. This is the buggiest products Apple has probably ever released.

The Genius Bars and the Apple support forums are loaded with iPhone problems so I am not alone!

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A guest said: (hide)

Sun Aug 10, 2008 10:57 pm

"The competition has little to worry about when they see how totally unstable the iPhone is and how buggy iTunes is!"

Not sure what you are doing, I know at least five people including my wife and me that are using iPhone 3G's and they worked with ZERO problems with iTunes.

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A guest said: (hide)

Mon Aug 11, 2008 11:08 am

To the guest comment at 8/10/08 5:39pm:

You're description is not typical for iphone users. I haven't experienced any of the problems you list, with the one exception being that it does take a long time to perform a backup. But I've been able to restore from backups with no problems either. You might want to take your phone back to Apple, perhaps you got a bad unit. I've installed a lot of apps and use iTunes every day and haven't experienced any crashes like you describe.

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