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Last Updated: Wednesday, 10 January 2007, 17:09 GMT
Can Apple's iPhone upset the mobile cart?
Analysis
By Jon Cronin
Business reporter, BBC News

Apple boss Steve jobs with an iPhone
Apple's Steve Jobs hopes to sell 10 million iPhones in 2008

Apple's new iPhone, unveiled amid much fanfare, has quickly caught the imagination of many within the telecoms industry.

The handset, Apple's first foray into the mobile phones market, will among other things enable users to download music and videos and use their phone much like an iPod.

The iPhone's large and distinctive screen, using patented touch-sensitive technology that does away with the need for conventional buttons, will ensure it stands out from the pack.

Apple boss Steve Jobs has claimed the futuristic new phone will "revolutionise the industry".

But has the iPhone got what it takes to change the shape of the mobile industry?

Small beer

Market leaders such as Nokia and Motorola will not be losing too much sleep over the iPhone yet, many analysts believe.

Several million iPhones will be great news for Apple, but I don't think at this point it will make a big difference to the industry competitors
Jeff Kagan, Kagan Research


Starting at $499 (257) each, the phone will firmly inhabit the highest end of the market, where sales volumes represent just a slice of the overall global market.

"It's not necessarily going to be a threat for the Nokias of this world to start with," says Niek van Veen, associate analyst with researchers Forrester.

"Younger audiences will find it expensive, but the price may come down over time."

Mr Jobs predicts Apple will be able to sell in the region of 10 million iPhones in 2008, when the device will be available not just in the US and Europe, but also in the fast-growing Asian market.

While sales on that scale would be good for Apple, they would still be relatively small beer when compared with total annual global mobile sales.

US handset maker Motorola revealed last year that it had sold more than 50 million of its Razr branded mobile phones since its market debut.

"Several million iPhones will be great news for Apple, but I don't think at this point it will make a big difference to the industry competitors," says Jeff Kagan of Kagan Research.

Making waves

IPHONE VITAL STATISTICS
Screen size - 3.5in (8.9cm)
Resolution - 320x480 pixels
Memory - 4GB/8GB
Wireless - Quad-band GSM/wi-fi/Bluetooth
Camera - 2 megapixels
Battery life - 5 hours talk/16 hours playback
Size - 115 x 61 x 11.6mm
Weight - 135grammes
Operating System - OS X

Industry insiders point to other challenges facing the iPhone, in particular battery life.

Many mobile phones already include music players, but listening to tracks on a handset quickly drains power, requiring phones to be recharged more often.

Experts believe Apple will have to go some way toward solving this problem in order for the iPhone to offer itself up as something more than an iPod digital music player with a built-in mobile phone.

However, senior Gartner analyst Carolina Milanesi says the iPhone will already be making waves among some competitors within the industry.

The new phone's strong emphasis on music play and downloading could pose a considerable threat to Sony Ericsson's Walkman music branded handsets.

"I would have thought that Sony Ericsson is looking very closely at Apple's new phone," Ms Milanesi says.

'Enjoyable experience'

Apple's reputation for creating user friendly products could also have wider implications for the industry.

"It will mean that Nokia and Motorola will have to step up a gear on user interfaces," says Ms Milanesi.

"Phones are getting more and more complex, and firms really need to make user interfaces straight forward and a more enjoyable experience."

While, for the timebeing, Apple will probably be a small fish in the global mobile phone market, Forrester's Mr van Veen points out that "the pond is much bigger" than the market for digital music and online downloads of MP3 files.

"The iPhone does have the potential to shake up the competitive landscape even if it's not a device that's targeted to mass consumers," adds analyst Michael Nelson of Stanford Group.

"It's clearly targeted towards the highest-value subscribers and they are the most profitable subscribers."

SEE ALSO
Beneath the bonnet of the iPhone
10 Jan 07 |  Technology
Apple shares up on iPhone launch
10 Jan 07 |  Business
Apple hails phone 'breakthrough'
09 Jan 07 |  Technology
Rivals battle for connected world
05 Jan 07 |  Technology
Bill Gates hails 'digital decade'
08 Jan 07 |  Technology
Security project focuses on Apple
04 Jan 07 |  Technology

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