So, now you can get an iPhone 4 without the famous antenna problems. In fact, now you can get an iPhone 4 without an antenna. Apple yesterday duly unveiled a new version of its iPod Touch, which has most of the features of an iPhone 4, with the notable exception of mobile connectivity and the financial burden of a monthly mobile contract.

Previous iterations of the iPod Touch have sold well, even though the device only has WiFi connectivity, and the arrival of the sexed-up new model could curb demand for Android and Symbian smartphones, which are increasingly seen as poor man’s iPhones. Some of the next wave of potential smartphone buyers might decide to buy the US$229 iPod Touch, rather than subscribe to an expensive mobile tariff, bundled with a free Android or Symbian smartphone that lacks the cachet of an Apple product. These buyers can reduce their monthly mobile spend by moving on to one of the low-cost SIM-only postpaid mobile tariff plans, which are weakening the once annual cycle of handset upgrades. Here in the UK, if you don’t want a new handset, you can easily get hundreds of minutes and hundreds of texts for £15 (less than US$25) a month on a SIM-only plan.

For people who aspire to own an Apple device, but can’t afford the hefty monthly tariff plans associated with the iPhone 4, the iPod Touch isn’t too great a compromise. The new model has the same advanced “Retina” display as the iPhone 4, the same powerful A4 processor, the same three-axis gyro and the same support for the hyped FaceTime video calling service, which only works over WiFi, anyway. And, crucially, you get access to the heavily-promoted App Store, which Apple says now has 250,000 apps, including over 65,000 game and entertainment titles.

While the coverage and convenience of mobile networks are generally miles ahead of WiFi, the latter does tend to provide faster and more stable connections, particularly in congested urban areas. Moreover, most people in North America, Europe and developed Asia will probably visit at least one WiFi hotspot a day, either in their home, their office or a local coffee shop or burger bar.

Two devices, two batteries, more juice

Moreover, a two-device solution reduces the chances of being left with a flat battery. If you carry an iPod Touch, you probably won’t have been using your conventional handset for multimedia web browsing, watching YouTube videos or playing video games, meaning you’ll have enough juice to make phone calls. Of course, the downside of a two-device solution is you need to carry and charge two devices.

As well as unveiling an alternative to an Android handset, Apple fired another shot across Google’s (and Facebook’s and MySpace’s) bows yesterday. It launched iTunes Ping, a social networking service, integrated into iTunes, aimed at music lovers. In this case, Apple seems to be behind the game;  many Facebook and MySpace users already spend a lot of time chatting about music and it is hard to see why they would want a specialist social networking service to do that. Apple’s best chance of making an impact with Ping will be to persuade big-name artists to post exclusive content on the service, while adding some really slick recommendation tools for Ping users.

For consumers, mobile operators and other elements of the mobile ecosystem, Apple, Google, Facebook and Nokia’s increasing encroachment on each other’s turf is clearly driving innovation, while also improving their buying power. But for the mobile industry, Apple’s strategy of upgrading the iPod Touch, rather than producing a low-cost iPhone, does leave a big fly in the ointment. The Cupertino, California company is essentially flagging to its customers who can’t afford an iPhone that the one feature you can do without is mobile connectivity.

Moreover, there is a danger that Android’s licensees and Nokia will also feel compelled to roll out their own WiFi-only models, potentially limiting sales of mobile data plans. Mobile operators need to ensure that their networks are good enough to convince people that compromising on mobile connectivity is a false economy.


David Pringle

This article was first published on the GSMA’s Mobile World Live portal. David moderates discussion forums on the site and is a freelance media and investor relations consultant.

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members