3G iPhone Going For Market Share

The rumor mill was proved right this time round. The new 3G phone delivers on all that was expected from it the past few weeks – 3G, low price, GPS, push e-mail, tighter security, and longer battery life. The surprise factor was surprisingly not there. But then, we expect a lot from Apple, read somewhere that even video conferencing was on the wish list. No video conferencing in this one but the highlight of the event was that the 3G iPhone will launch in 22 countries on July 11 and will roll out to 70 countries by the end of the year. And of course the enterprise features. Recent coverage on Apple is available here which discusses Apple’s moves towards vertical integration.

The feature-packed, faster 3G 8GB iPhone will come for $199, about $200 less than the cost of the earlier version. The 16GB 3G iPhone will cost $299. However, there is a catch here. AT&T is still the exclusive carrier for the iPhone in the US but it won’t be sharing iPhone revenue with Apple anymore. For subsidizing the iPhone, AT&T has increased the cost of the unlimited 3G data plan by $10 to $30 per month. Unlimited 3G data plan will be $45 per month for business users. So, in effect, using the new iPhone will cost about the same for two years but the advantage is the faster 3G network.

As for battery life, the new 3G iPhone can give 5 hours of 3G talk time (10 hours talk time on EDGE), 5 – 6 hours of browsing time, 7 hours of video time, and can stay 300 hours on standby mode.

As for enterprise users, it will support Microsoft Exchange and Cisco Secure VPN connection security. Not just email, but changes to contact lists and calendars will be pushed to the phone. It also offers wireless access to email, calendar, and photos through its MobileMe service, an update of the .Mac service. The beta release has already been tested by 35% of the Fortune 500 companies. All pointers that iPhone is being welcomed with open arms in the enterprise. And the price will definitely help. It is cheaper than the new Blackberry Bold which will come for $300-$400.

With the price cut and enterprise-friendly features, the new iPhone will make easy work of the 10 million iPhones target this year. But what I would have liked to see was a better keyboard and editing capabilities. That one still eludes, and with my huge writing load, I cannot yet replace my laptop with an iPhone.

Apple is clearly targeting the emerging markets also with the low price and international launches. But we need to wait and see what the carrier plans amount to. Competition is fierce in the emerging markets. You have HTC, RIM, and Samsung trying to woo them. Yesterday, before the release of the 3G iPhone, Samsung released Omnia, an iPhone look alike. Omnia also supports 3G, has TouchWhiz for UI, and a 5 Mega Pixel camera compared to iPhone’s 2 Mega Pixel. It never ceases to amaze me what is possible in technology.

Preceding the release of the new iPhone, there was a slump in sales. In the first quarter, Apple’s market share for advanced phones slumped to 19.2% from 26.7% market share while RIM at 44.5% and Palm at 13.4% gained market share. But it is definitely going to make up for that in the coming quarters. Apple is going for market share, finally, even though it is at the cost of margins.

Apple shares fell 4% following the release with investors booking profit from the recent boost in stock in anticipation of the 3G iPhone. It is currently trading around $181 with market cap of around $160 billion. In after-hours trading, it fell about 1% to trade around $180. The future of the Apple stock, however, still looks very promising.