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iPhone vs. the world

Save has a really interesting article online today theorizing about the potential impact the iPhone 3G will have on other smartphone manufacturers and the wireless industry at large. The $200 introductory price point can lure lots of customers over to AT&T and put the price crunch on other smartphone manufacturers. Plus, now that the phone has been out for a year, consumers are more eager to upgrade. As the article points out, the trend of cell phone carriers subsidizing the price of handsets was on the wane, but now that the iPhone 3G is going to be released at a subsidized price, other manufacturers might want to follow suit, and that may mean cutting their prices on bulk orders.

Even before the 3G announcement last week, Apple has already forced the other mobile players to up their game. Not only are future phones adopting more iPhone-centric interfaces and features, wireless carriers who can't offer the iPhone to their customers are spending more to remind users of their offerings. According to the BusinessWeek article, Verizon's ad budget increased 30% in the first quarter of 2008.

While AT&T is surely going to continue to benefit from being the sole iPhone carrier in the United States, they also stand-out as being expensive. To help cover iPhone subsidies, AT&T is raising the data plan $10 a month. As BusinessWeek mentions, this could be an area that other carriers could seize on. By offering more features for less money, other carriers have an incentive that while not as flashy as the iPhone, might be more financially practical for lots of customers.

Still, as I said in last night's talkcast, I think the $200 price point is going to vastly reduce the barrier to entry for lots and lots of users. The data plan price increase is going to be more a determent for existing iPhone users, not new users to the fold. Just as the iPod really hit its stride when it became available for under $400, the $200 pricepoint on the iPhone is going to be extremely tempting for anyone approaching the end of a cellular contract. The other phone manufacturers SHOULD be concerned; the war for mobile domination will not be won or lost based on the iPhone 3G, but Apple is a very, very deft opponent.

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