Talk of the iPhone's innovative user interface, polished music player, and newly integrated application store must
be getting old for executives at rival phone manufacturers. In the year since the iPhone's launch, Apple has shipped well over 6 million units, with more than 1 million of those sales following last week's launch of a 3G version.
But Apple's iPhone, offered exclusively to AT&T subscribers, will not dominate the mobile world forever, analysts say. Other manufacturers and wireless service providers are gearing up their strategies to take back the buzz and defend their market share. Here's a peek at their possible playbook.
Step 1: Clone the iPhone
One thing is certain: No "iPhone killer" copycat has killed the iPhone yet, and none is likely to succeed soon, despite what Sprint's recent Instinct commercials might want you to think. What these copycat clones can do effectively, however, is get consumers to take a second look at non-Apple phones and non-AT&T carriers.
"If you're anybody but AT&T, you have to have a solution in order to blunt the impact of everyone going to the AT&T store," said Bill Hughes, an In-Stat wireless analyst. "They have to have, on their shelf, something that is comparable to get people in the store, whether it's the iPhone clone, knockoff or imitator."
The first clones, of course, started coming fast and furious before the iPhone was even released. Now, however, quality devices such as Samsung's aforementioned Instinct are coming to market and tarnishing some of Apple's luster, even if they are a long way from dimming it entirely.
Step 2: Bring the browser into the post-1995 world
For years, most cell phone browsers have used Wireless Application Protocol (WAP) or similar technologies to deliver a "translated Web" to cell phones. While such technologies speeded page downloads and reformatted sites automatically for small mobile screens, the experience was less than ideal (imagine reading the New York Times at 10 words a page) and failed to evolve with the rest of the Internet.
Microsoft, Research in Motion (RIM), and Opera Software have all sought to create a better mobile browsing experience, but the iPhone blew these competitors away early on by delivering a full-featured desktop-style browser with a great user interface. Apple demonstrated that a good browser can greatly extend a device's usefulness even without opening up the device to outside developers. Hundreds of iPhone-specific Web applications quickly sprung up, and AT&T reported that the average iPhone's data usage was three times higher than that of other smartphones.
Building a good browser for cell phones is hard, admitted Jack Gold, principal of J. Gold Associates, particularly if you have a broad array of devices to support: Screens, interfaces, available memory and even architecture all vary greatly. But the era of sub-par browsers has come to an end.
"Would anybody today buy a PC without a good browser? Yet we settle for phones with poor browsers," Gold said. There are good browsers out there, but most vendors have not put them on phones – yet.
Manufacturers have learned, though, and the next generation of phones has earned early praise for improvements: RIM's next BlackBerry release is reported to have a revamped UI with better rendering, and a new version of Opera Mobile coming tomorrow boasts similar improvements.
Step 3: Users come first …
The traditional paradigm for phone companies, according to Gold, is that features come first, and then a device is designed around them. In a carrier-dominated landscape, it made some sense: Design a texting phone to maximize texting usage and revenues, design a picture phone to maximize picture messaging and revenues, and so on.
Now that users have had a taste of a phone that throws out features (No MMS? No video recording?) in favor of form factor, many won't be willing to go back.
"These [guiding principles] were there before and people forgot them or didn't pay attention," Gold said. "I don't want to battle with the phone to play music, make a call or send a text."
Step 4: … Not the carriers
A large part of that is getting the carriers to stand down and stop pushing features that are profitable on paper but clumsy in practice. Instead, just as Apple took a strong lead over dictating the iPhone terms to AT&T and other carriers, service providers may need to let companies that are good at phone and application design handle those areas.
"Is it a good strategy? I hesitate to say it's a good strategy," Hughes said. "But it is a pragmatic strategy." Few of the most hyped phone capabilities are actually new concepts, he said. They are just features that service providers have thus far failed to bring to market, ranging from location-based search to scanning a barcode with a camera phone for instant product reviews.
"The capabilities in devices have been around for a long time; [they] just really haven't been exploited by the operators," Hughes said. "Wireless operators just don't seem to have the right skills."
If manufacturers had taken the lead, these features would be ubiquitous -- and reaping huge profits -- by now. Forging partnerships with tech giants like Google is worthwhile, even if details about profit-sharing from location-based services are tough to hammer out.
Step 5: Open up the storefront
Carriers need to relinquish their tightly controlled storefront approach and find ways to provide easier third-party access to applications, both from an end-user and developer side.
"The iTunes App store, based on the preliminary data I've seen, has [met] its primary objective, which is to get people aware they can download applications," Hughes said. Before the application store, the users downloaded an average of two applications on their phones. Many didn't even know it was an option.
Apple claims that users have downloaded 10 million applications onto their iPhones since the application store opened just last weekend.
Hughes said that many operators and manufacturers couldn't get away with the tightly controlled ecosystem that Apple has put forward, but they still need to devise a simpler way to get applications developed and onto the handsets of users.
That means getting rid of traditionally complex, custom-contracts for each approved application while actively supporting the developer community.
Step 6: Take a deep breath
Others disagree, but both Hughes and Gold say the iPhone hysteria is no different in principle from other phone crazes before it -- the Sidekick or the Motorola RAZR, which was at one point ranked #12 in the greatest gadgets of the past 50 years but is now regarded as a mid-tier feature phone at best.
"Is Apple going to take over the world? No!" Gold said. "But they have set a couple of new benchmarks."
In an industry that grosses $140 billion domestically alone, competition is fierce, and no one device stays on top very long.
"It's a vision into the future, but if [Apple] sells 10 million units, the industry has sold 1.2 billion units," Hughes said. "In terms of the global market, it's a percent."
"Somebody needs to come up with something that's really innovative, and then you'll see loyalties switch in a second," Gold said. "I think it's probably going to be folks in the Far East: LG or Samsung, or maybe a Chinese company we don't even know about yet."