Apple iPhone creates chatter and more speculation on impacts

The biggest news at the Consumer Electronics Show in Las Vegas on Tuesday morning was the news occurring simultaneously in San Francisco at MacWorld, where the long-awaited Apple Inc. iPhone was announced.
Sony Ericsson Mobile Communications executives in Las Vegas, for instance, used the browser on an SEMC device yesterday morning during a meeting with a reporter to learn what their new competitor was up to.
Anticipation of the iPhone’s launch-with emotions ranging from curiosity and envy to fear and loathing, depending on your position in the wireless industry-had built to the point that the news triggered Wall Street to send Apple’s stock up and most of the established handset makers’ stock down on the news. The mantra about stock traders, of course, is that their daily responses are based more on emotion, less on analysis. Wireless analysts’ initial reactions were tempered by more thorough knowledge of the industry, and, in some cases, actual-though-limited experience with the iPhone itself.
Albert Lin, financial analyst with American Technology Research, noted in a report to investors today that Cingular Wireless L.L.C., where the iPhone will launch initially in June, experienced a doubling of its net subscriber addition rate when the Motorola Inc. Razr launched in the third quarter of 2004. Thus, he expects Cingular to grab additional market share through its new deal with Apple.
“We believe the Apple iPhone could have similar results,” Lin wrote.
The potential losers may be Motorola and Sony Ericsson, according to Lin, because both have a substantial position in the device portfolio at Cingular.
Sony Ericsson, in particular, has had a substantial and profitable share of the music-phone market and Cingular is its largest client among the top-tier carriers. Sony Ericsson executives-including North American President Najmi Jarwala and Paul Hamnett, vice president for North American sales-projected an aura of calm as news of the Apple announcement rippled crossed the Internet, suggesting that Apple’s market entry would only help grow the music-phone space.
Avi Greengart, market analyst with Current Analysis-who traveled from CES to MacWorld to get his hands on the actual device-credited Apple with delivering an innovative, attractive and responsive user interface that nonetheless draws on elements already available from other vendors such as Palm Inc. and Sony Ericsson. By packaging innovations both new and extant, however, Greengart said in a report yesterday that Apple would likely take credit for-or be given credit for by less savvy consumers-everything contained in the iPhone.
After all, the new device falls in the nascent-though-growing, smartphone-with-multimedia-capability category, already occupied by a bevy of devices such as the Motorola Q, the Research In Motion Ltd. Pearl, and others.
Beyond technology is the gadget factor, according to Greengart.
“The touch-everything UI [on the iPhone] is . fun,” Greengart wrote.
Whether fun and, undoubtedly, the cachet of owning the new device, will move consumers to pay $500 or $600 and migrate to Cingular-the first carrier to offer it-obviously remains to be seen. A number of analysts, prior to Apple’s announcement, had suggested that between the CDMA/GSM split in the American market, pricing competition and the number of existing vendors, the computer titan’s market impact would be incremental.
“It is far from a mainstream proposition,” Greengart wrote. “The iPhone’s initial market will be extremely limited.”
Greengart’s caveats: the device is expensive, touchscreen functionality is not universally popular and Cingular’s exclusive deal could drive new subscriptions while dampening its overall device sales. Despite the iPhone’s touchscreen QWERTY keyboard, Greengart saw little impact on RIM’s hold on the corporate IT-driven device market. Also, the EDGE speed device is up against a slew of higher-speed HSDPA-speed devices landing at Cingular.
“3G is conspicuously missing,” Greengart wrote.
With a June launch date at Cingular-six months is a very long time in the device market-the analyst believes that Apple will face catch-up challengers from “the competition,” previously known as the pantheon of existing mobile device vendors, now facing a brand-based and user-interface-based challenge from the cheeky newcomer from the personal computer world.
But Apple’s splash had its intended effect of creating chatter at CES and across the Internet.