Virtual Keyboard Screen
"First, don't call it a phone," says Ovum analyst Roger Entner. "The carriers have destroyed the value of the phone. To most people, a phone means it's free. It's like calling your car a Yugo." Phone companies routinely subsidize the purchase of a new customer's phone in exchange for a one- or two-year service contract. A hallmark of Motorola's woeful financial performance last year was how the once wildly desired Razr phone became a freebie to entice new users. Apple plans to sell the iPhone in its own stores and let AT&T (T) sell it online. AT&T's exclusive deal with Apple probably prohibits any toying with the prices, but AT&T will no doubt offer its own rebates to rake in lucrative two-year contracts. However, don't expect much give on price from Apple. Apple famously dictates every aspect of its business, from its secretive product launch schedules to the terms of its retail prices. There are no Apple discount outlets, and even its refurbished gear gets resold at nearly new prices. And instead of cutting prices as products get older, the company discontinues models and unveils new ones. One of the only outfits comparable to Apple in the wireless industry is Research In Motion. The BlackBerry maker has some of the highest margins in the phone business thanks to its command of the big ticket business segment.
music player screen
Observers say the iPhone offers a direct challenge to RIM's hot new consumer device, the Pearl. But the BlackBerry business niche may not feel much pressure from Apple. The iPhone's OS X operating system and lack of basic office software makes it almost a pure consumer device. But one outfit that sits squarely in Apple's path is Palm (PALM). The Treo, an expensive handheld computer phone, had many loyal fans before sleeker smartphones, such as Motorola's Q and Samsung's BlackJack, started chipping away at the Palm phone. Now, with the imminent arrival of the iPhone, Palm seems doomed, say analysts. "Palm is shaking in their sandals," says Ovum's Entner.