“The thinnest smartphone ever, the highest resolution display every built into a phone, HD video recording, Apple’s A4 processor and up to 40% longer talk time.” There is plenty to drool over for Apple aficionados in the company’s description of the new iPhone 4.
With four-times as many pixels, the display of the iPhone 4 will clearly put its predecessor in the shade, while the “3-axis gyro,” the aluminosilcate glass casing, the flashy camera and other enhancements will surely have iPhone 3GS owners reaching for their credit cards. Unsurprisingly, Apple proclaimed the handset as “the best mobile device for games and entertainment.”
But amid all the hoopla about the new iPhone, it is worth remembering that Apple’s much-hyped and much-loved handsets still account for less than 3% of global mobile phone sales, according to first quarter figures from research firm Gartner. While affluent iPhone buyers are very attractive customers for mobile services, apps and advertising, Apple is still a long way from being a mass-market mobile phone brand.
Gartner says worldwide mobile phone sales to end users totalled almost 315 million units in the first quarter of 2010. Apple only accounted for 8.4 million of those. In terms of unit shipments, there is a yawning gap between Nokia and Samsung, the top two, and then LG at number three. Then there is another chasm between LG and RIM at number four. Apple is at number seven.
While Apple now has an extraordinary mindshare in the U.S., Europe and developed Asia, Nokia’s popularity in developing countries means it is still selling thirteen times as many handsets as Apple each quarter. Moreover, RIM’s Blackberries, which have become fashionable messaging devices in some teenage circles, are still outselling iPhones by a significant margin.
Swapping an iPhone for an iPhone
At a starting price of $199, combined with a two year contract, the iPhone 4 is unlikely to change that. In fact, I suspect most iPhone 4 buyers will already own one of the earlier iPhones. Although Apple’s share of the mobile phone market will no doubt continue to climb, iPhones, like Apple Mac computers look set to remain premium products beyond the reach of most people.
Still, the iPhone and the halo-effect it generates for the iPod Touch and the iPad could still dampen demand for rivals’ smartphones and help Apple maintain its grip on the mobile entertainment market. One potential scenario is that the most affluent consumers continue to buy iPhones, while the less affluent, smitten by the Apple brand, purchase iPod Touches or even WiFi-only iPads.
If they have WiFi coverage in their home and at work, many people might conclude that an iPod Touch, or an iPad, combined with a cheap, but reliable, Nokia feature phone or even a low-end Blackberry, is the best option for them. (With a two-device solution, you should always have enough battery power to make a phone call and you aren’t tied into an expensive monthly phone tariff.)
In other words, the iPhone dynasty is unlikely to dismantle the pecking order in the traditional mobile phone market, but the lavish iPhone 4 and its cheaper offspring will surely strengthen Apple’s dominance of mobile entertainment.