Price

Five hundred bucks is a damn high price, especially considering the two-year contract. I tried to compare it with other phones offered by Cingular (now AT&T again), and it is by far the most expensive phone with a two-year contract. Converted across other phones, it would come to thirty thousand unsubsidized, which is ridiculous.

It must be said that the early adopters philosophy works. There are many people who are willing to buy this phone for five hundred dollars and a two-year contract just because they will be the first to have it. It is generally reported that four percent of customers react impulsively in this way. This could also be a strategy, with some suggesting that Apple wants to appease Cingular for the fiasco with the virtually unsellable Motorola ROKR with iTunes support. That may be the case. However, we can also expect the price to fall. Parts calculators have already calculated that the production cost of the iPhone hardware is USD 230, so the selling price could remain at USD 500, but without a two-year contract. In Czechia, that means something like CZK 14,000 including tax. High enough that not every idiot will have one, low enough that every fan can afford one. However, the price will certainly drop quickly.

What’s more, the iPhone won’t officially arrive in Europe until the fall, with sales in the UK set to begin in October at the earliest. Well, we’ll see—Apple has a way of changing the gray channels.

In the long run, the iPhone won’t be a big hit at this price, but I hope that’s clear to the people at Apple and Cingular.

They want one percent of the market

Apple has announced that it expects to sell around ten million iPhones in 2008. Journalists quickly calculated that this represents a one percent market share with expected sales of one billion mobile devices.

That’s one-sided math. Let’s look at the other side. Sales of around 100 million smartphones, including the iPhone, were expected for next year. According to Gartner, approximately 81 million were sold in 2006, with Symbian devices, particularly those with S60 and UIQ, accounting for over 60% of this market. The rest was shared by… well, the rest.

Based on this calculation, the iPhone should have a total 10% share of the smartphone market in 2008, which will pose an unpleasant threat to Microsoft with its WM and Symbian. Fortunately (for them), Apple will not be selling licenses.

Update from the future: in 2008, Apple sold 11.4 million iPhones, gaining an 8.2% share of the global smartphone market. Nokia leads the pack with 43.7%, followed by RIM (BlackBerry) with 16.6%, then Apple. Nokia is losing ground, having had a share of almost 50% in 2007, while RIM and Apple are growing rapidly. Symbian had a 52.4% share in 2008 (Nokia was not the only manufacturer of Symbian devices at the time), Windows Mobile had 12%, and Linux had an interesting 8% in its various mobile versions. Palm OS accounted for slightly less than 2%. Apple crossed the 10% mark in smartphone sales in the last quarter of 2008. The fact that Apple did not sell licenses for its mobile operating system to other manufacturers, not even Microsoft or Nokia, did not bring them any luck in the end: Apple reaped all the success itself.

And ten percent is a hell of a lot, because let’s add a third figure to our view. Europe will have virtually no impact on sales, as the iPhone will not be sold there until the end of 2008, so who knows. However, the US lags dramatically behind Europe in smartphone sales. According to the latest Telephia survey, smartphone penetration in Western Europe is 8.8%, while in the US it is only 3.8%. Apple will therefore take a quarter of the US smartphone market. And that would be a damn good start, even considering the fact that the only relevant market for Apple is the US, which it has been ostentatiously making clear to us Europeans for years. With such rapid market progress, Balmer’s recent mocking comment about the iPhone to Microsoft shareholders, already annoyed by the promise/result ratio in the iPod/Zune case, would be wiped out.

Whether Apple will tackle the European and especially Chinese markets after conquering the American market is an open question. If it were serious about doing so, Nokia, the last living (not surviving) European mobile phone manufacturer, would have a lot to fear. On the other hand, it has a year to do something about it, which is not a short time. And on the third hand, for Apple, Europe has always ended somewhere around Mohan, so we don’t have much to look forward to.

So, guys in Finland, please, how about sending a different message to Cupertino than the mockery circulating in the media?

Yes, I agree that Apple is well on its way to bringing a major revival to the mobile market. This is true even if we won’t see its phone on our market in the next two years, because Apple places the same importance on localization into Czech as it does on translation into Esperanto and Latin. Its support for obscure languages is simply minimal.

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