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.

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"As the innovation leader, the iPhone is currently facing fierce competition from look-alike and feature-alike products. Apple cannot let up on innovation, because its competitors certainly will not," says Gloria Barczak, professor of marketing at Northeastern University's College of Business Administration.

And while many gadget fanatics love the iPhone, they can be fairly blunt about what they perceive as its faults. Some users love the iPhone's touch screen; others knock it. "It's a real pain in the you-know-what to type on and gets all greasy on a hot day," says Cat Schwartz, eBay Inc.'s gadget director, who notes that she prefers a real keyboard. (And analysts say there are probably many third-party applications in the works to provide support for a keyboard via Bluetooth wireless.)

Numerous critics assert that device competitors will have a hard time matching the iPhone's hype, if not its features, in their initial product releases. Schwartz recalls that one eBay bid for an iPhone reached $12,000 at the time of last summer's launch, prompting some in the media to escalate the hype further. "The iPhone was revolutionary, extraordinary, groundbreaking -- not because it was the greatest invention in the world, but because of how overhyped it was," Schwartz adds.

Another year in spotlight?

Whether the iPhone, with its 2.0 release, continues to be the sexy new thing for another year depends on many factors. Competition will play a role. For example, Nokia, the biggest cell-phone maker in the world, is marshaling resources around an iPhone-beater, code-named Tube, that could have an important influence on that company's market share in the U.S. And Nokia is just one of a number of healthy companies vying for the same customers as Apple.

In addition, endorsements or quiet rejections of iPhone 2.0 by major corporations for business users will inevitably affect sales, although most prognosticators don't believe there will be many outright rebuffs.

A wild card is how well other operating systems -- including those from more established manufacturers, the coming Linux-based Android platform, or even open-source rivals Open Moko and LiMo -- will do in the market. Android devices could be paired with hundreds of open market applications, even ones from garage-based developers who believe that the future of computing is in the palms of our hands.

Meanwhile, Apple, with its insistence on distributing applications only through its AppStore, faces a potential user backlash "that will make even Microsoft look like an open company," Gold claims. Some corporate IT executives have already expressed worries about being locked into "the Apple way."

Whatever happens in the next 12 months with the iPhone, it's safe to say that the device has already made its mark. However, that place in history could be fleeting, given the astounding number of wireless handheld computing innovations on the table.

Yes, all parties agree that iPhone has altered the smart-phone landscape. A lot has happened in one year.

Now what?

Next: A Trickle into the Enterprise 


Copyright © 2008 IDG Communications, Inc.

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