iPhone: One Year Later

Apple's splash into the cell phone market proved consumers will pay for hip devices. Now the race is on to one-up the iPhone.

What a difference a year makes. This month, the hip iPhone celebrates its first anniversary, following its riotous launch last June 29. Its birth followed six months of prerelease hype that was ignited by Apple Inc. CEO and industry luminary Steve Jobs.

The company that brought you the Macintosh computer, and the fabulously successful iPod and iTunes, has jumped -- well, dive-bombed, really -- into the wireless phone business like no cell phone vendor before.

Consider that more than 1 billion cell phones were sold globally in 2007, with thousands of models introduced. But the model that had everyone's attention for much of the year sold just 5.4 million units through March 2008, according to Apple. The company predicts that it will sell 10 million devices this year, partly because of innovations in the iPhone 2.0 version due this month.

No cell phone, nor arguably any electronic device, has ever generated so much interest so quickly.

"Few companies have managed to penetrate such buyer mind share with a single device in a year's time," says Michael Gartenberg, a JupiterResearch LLC analyst and a Computerworld columnist. "What's significant is how iPhone's impact has been far greater than the numbers sold." (iPhone has even spawned dozens of YouTube videos.)

Among smart-phone devices (which basically combine computer and phone functions), the iPhone ranks second to Research In Motion Ltd.'s BlackBerry in terms of U.S. shipments, according to several analysts. However, Microsoft Corp. challenges this claim, saying that the Windows Mobile operating system, on 140 handsets from four manufacturers, leads the way. But the way that market leaders talk about the iPhone -- and the way other vendors shamelessly imitate its touch screen, sleek design and pocket size -- is testimony to its dominance.

Gartner Inc. analyst Ken Dulaney, who was initially a harsh critic of the iPhone because of security worries for IT shops, says that Apple's device and the BlackBerry are the biggest innovations in all of communications and computing over the past decade. Read about iPhone's push into the corporate market.

"The iPhone's biggest impact has been to redefine 'easy to use' in the cell phone industry," Dulaney says. In sum, the iPhone has capitalized on the biggest trends in computing: It has a small form factor, it works wirelessly for ubiquitous mobile usage, and it unifies communications modes of data, voice and even video.

And, equally important, it's cool.

Fashion Forward

The iPhone builds on a trend among cell phone and gadget makers to hire product fashion designers to help in the creative process. Yes, fashion matters, even to geeks. "It seems strange to say there's a coolness factor with iPhone, but it does involve extraordinary attention to details in hardware and software," Gartenberg notes. "It doesn't feel like any other phone."

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