The Iphone fever is back again

Thomas Husson | June 05, 2007, 07:14 AM

I am always impressed by Apple's ability to raise awareness on its products. The due date for the launch of the Iphone has been released: June 29th. Nothing really new here except the new ads (see my colleague Michael Gartenberg's take), since it was expected to be launched in June!

This article from the NYT is a good summary of the current fever in the US. For a thorough view of the impact it will have on the market, listen to this podcast between Gartenberg and David Card.

However, I was surprised by the number of pieces in the European press for a US announcement.

Asked if this is going to disrupt the mobile phone market, I would tend to say it is too early to comment and that no it probably would not. Here's why:

- the mobile phone market is a volume industry of 1 billion + devices. Even if Apple was to reach its end 08 target, they would only have a market share <1%

- of course, this is a different story if you look at the high-end segment. El Reg's view here is interesting in that sense.

- at the end of the day, it is only one phone (at this stage) and not a portfolio of handsets. Apple is a new entrant in the business and does not have a long experience working with operators.

- looking at the European market, it is still much more fragmented that the US market: 150+ MVNOs, 3-4 MNOs per country. Even pan-European operators (with whom Apple could have an exclusive agreement)such as Orange, T-Mobile, Telefonica and to a lesser extent Vodafone do not have a significant footprint in each European country. Apple's retail strategy here will be more difficult to implement than in the US.

- the role of operators should not be minimized since they control a significant part of handset sales thanks to their subsidies

- the phone is not yet available in Europe and it is hard to tell if there will be a 3G version or not. It is not that important of course in the sense that most music listened on a phone is sideloaded from the PC. Anyway, without having tested the device, it is difficult to say how compelling the voice/SMS experience is from a consumer perspective.

Given the strength of Apple brand and marketing know-how as well as the differentiation they bring to the market with a new user-interface & experience, the Iphone could perform well and be very profitable for Apple (10M*500$=a whopping 5bn$).

I do not question the fact that there will be a significant number of Apple aficionados and early-adopters of all kind, who will be ready to pay a premium for the device. I am only wondering to which extent operators here will subsidize the phone so that it can move beyond a niche category product to a mass-market device.

In any case, this is a good news for the industry as a whole, because new entrants always have a different approach to the market. It is a good way to challenge the big guys, see how they will react and make clear to consumers that phones are not exclusively communication devices.