on the downside these deals might limit the
target market, they meant that the carriers
had been fighting one another to kick-back
hard won revenues to the device vendor.
US carrier AT&T had a lot to thank Jobs and
co for as its wireless subscriber base topped
65.7 million at the end of the third quarter 2007.
The carrier added two million net subscribers
during the quarter and, even though it didn’t
reveal how many bought iPhones, the figures
rather spoke for themselves. “Apple shifted a
total of 1.4 million units in that first quarter
of operation in total,” said MCI’s sister website,
Telecoms.com, at the time. “And even if 250,000
of these have been hacked, that still means
almost half of AT&T’s net additions over the
past three months were on the iPhone,”
Along with the consolidation of BellSouth’s
financials, iPhone subscriptions helped push
AT&T’s revenues up to $30.1bn, compared
with $15.6bn in the year ago quarter. Net
income for the third quarter totalled $3.1bn
compared with $2.2bn a year ago.
And if the iPhone user interface proves to
be groundbreaking and much imitated, it’s a
fair bet that other leading handset vendors
will be just as keen to engineer financial arrangements
with their carrier customers of
the kind pioneered by Apple.
“I reckon Apple will continue to seek that
kind of arrangement with carriers and that
operators will continue to want to work with
Apple,” said Michael Carroll, a handset analyst
with Informa Telecoms & Media (ITM).
“The handset is a big draw into an operator’s
stores, and the revenue-sharing deals cut the
amount the carrier has to invest in content
development.”
The world was treated to footage from
the US of Apple devotees camping out over
several nights in order to be among the first
to own the device. When they went on sale,
the familiar American stampede was broadcast
across the globe, presumably in a bid to
build yet more hype in the markets where the
handset was soon to appear.
It didn’t quite work out like that, with
European audiences proving a little more
reserved. Nonetheless, the carriers Apple
selected were more than enthusiastic about
demand for the phone.
In the UK, O2 reported that the iPhone was
the fastest selling handset that it had ever seen.
“Sales are bang on expectations,” said a company
representative. “Footfall into our stores over the
[launch] weekend was three times higher than
normal. On Friday night we had more than 50
Mobile Communications International | First for news, best for business
per cent more traffic
to our website than
normal.” Crucially, the
firm reported that two
thirds of iPhone activations
were going to new
customers—making
good on the expectation
that the iPhone
would prove a powerful
competitive draw.
Apple’s decision to
lock the handset to
the network it had chosen in each country
was almost certainly driven by the business
model that sees the firm take a share of the
usage revenues that its product generates.
Its decision to issue software updates that
disabled phones that had been hacked and
unlocked would have been intolerable from
any other company but in the end went more
or less unnoticed.
But Apple’s strict approach to device management
was an irresistible challenge for
many hackers and it was a matter of hours
before the first units had been unlocked. Commercially
these developments were largely
meaningless, given the difficulty faced by the
average consumer looking to get a brand new
handset surreptitiously unlocked.
More effective, and probably more worrying
for Apple, were domestic rulings in France
and Germany—brought about following complaints
from competitor carriers—that the
iPhone had to be sold unlocked as well as on
contract. Apple simply responded by hiking
the price to a very silly point indeed, but the
tussle between Apple, hackers and regulators
will no doubt long continue.
Apple has an awfully long way to go before
it catches up with the likes of Nokia or
Samsung, or for that matter Motorola, LG and
Sony Ericsson. It’s unlikely that the firm will
ever be a top tier handset vendor—indeed it’s
doubtful that it’s in Apple’s gameplan. Steve
Jobs stated that his target for cumulative
shipments by the end of 2008 (including the
part of 2007 during which the unit was on
sale) was ten million.
It sounds achievable, says ITM’s Michael
Carroll: “They should reach that due to the
popularity of the device, and potential growth
in the number of markets its sold in. The recent
ruling against T-Mobile in Germany and
France’s consumer laws regarding unlocked
handsets should also help boost sales, though
T-Mobile remains the exclusive distributor
iPHONE FEATURE
Apple has an awfully long
way to go before it catches
up with the likes of Nokia
or Samsung, or for that
matter Motorola, LG and
Sony Ericsson
and has put a prohibitively high price of
�999 or thereabouts on the unlocked units
it provides.”
The big question is whether or not the
iPhone has actually changed the landscape of
the handset market as so many analysts and
hype merchants predicted. Michael Carroll,
for one, reckons the landscape was changing
anyway. “The iPhone might have come along at
the right time in terms of the features it offers,
and the fact that Apple ultimately remains in
control of the users through using iTunes to
verify each device sold,” he says.
The truth is that, for the time being, the
handset is unproven. We don’t know how robust
it is, we don’t know if users will tolerate the
integrated battery, we don’t know if they will
soon tire of the fancy UI functions that Apple
made the headlines of its launch strategy.
But Apple has form. It has brought about
significant changes in the music industry
through the tremendous success of its iPod
and iTunes model—and it has done so without
becoming a major player in the sector.
Imagine what the firm could do with an
iPhone that was HSPA capable, an iPhone
with a camera of comparable quality to those
found on high end phones from Nokia or Sony
Ericsson. In some ways the firm has given its
established competitors a chance to steal the
next round of its thunder, as they’ll be more
expert at integrating such functionality with
revamped industrial design and a series of
modified user interfaces.
Because we can be sure that 2008 will see
a rash of devices released by the leading
handset vendors that will leave us in little
doubt as to the impact of the iPhone’s design.
Even if the device—and the many future iterations
it will go on to spawn—do not become
market leading products, it seems likely that
Apple will deserve recognition for upping the
game of a sector in which, this time last year,
it played absolutely no part. �
31
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