When Apple launched the iPhone a little over a year ago, they disrupted the industry forever.
Let’s first give respect to a maverick and a trend setter. Apple proved that the end user, the ultimate decision maker, was ready for a change. However, it has also woken several sleeping giants that had been happy with their lot for years.
Apple did not copy the rest; it taught them a lesson by making a sleek, sexy and cool phone that people wanted. Motorola did this earlier with the Razr, but couldn't sustain the effort.
Apple went beyond simply replacing the keyboard with a huge touch-screen display; they created a fun, yet effective user interface.
It was different... it was cool... it was sexy... it was pure Apple. Steve Jobs' disciples came out in droves to get their hands on it. Followed by quite a few more people who had never before owned an Apple product in their lives.
This is what opened the eyes of the real handset manufacturers. Nokia, Sony Ericsson, Samsung, and yes Motorola now know that there is a high margin business if they can deliver the right product.
The market for smartphones is growing and is the most lucrative handset sector with the highest margins. There were approximately 125 million smartphones sold in 2007.
One of the most interesting trends is the blurring of the lines between multimedia handsets and smartphones. A smartphone is commonly defined as being an open platform handset that allows access to the OS (Operating System) for application development.
To date the target market for these devices has been business professionals. Now with smartphones adding a full complement of multimedia capabilities, the market has now split into two classes, with a new consumer-oriented segment emerging.
Put simply, incumbent handset manufacturers have been taking conservative, methodical steps to incrementally enhance the phone. However, Apple’s iPhone changed the nature of competition and has held the attention of the industry and consumers since it launched.
Only now is it becoming apparent that the major handset manufacturers were just sleeping for the last 12 months… not dead. They are finally responding, and bringing with them the years of experience and manufacturing prowess that matches the billion unit annual shipments.
The true powerhouse and number one marketshare holder, Nokia, has taken its first shot with the 5800, aka Tube.
It has the large touch-screen display. It Comes With Music for the first year, challenging the iTunes á la cart model. In fact, the 5800 surpasses iPhone on a variety of usability features, including cut and paste, voice dialing, video dialing, MMS, instant messaging, an expansion MicroSD Memory Port , and a higher resolution 3.2 megapixel camera.
Nokia’s latest phone is not even directly aimed at the iPhone market. It's being produced at a much lower price for midrange customers looking for an alternative to the iPhone. More importantly it isn't locked into a particular service provider.
Nokia’s first pass is nice shot across Apple's bow. It's certainly the first of many shots to come. The giant has awoken.
Frank Dickson is co-founder and chief research officer at
MultiMedia Intelligence.
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