IPhone sets menacing tone for competition
The sleek iPhone will shake up the wireless industry and force manufacturers to come up with more user-friendly handsets, industry analysts said Tuesday after Apple Computer Inc. showed off its highly anticipated mobile phone.
The handset, to be launched in June by Apple and Cingular Wireless, has a plethora of features that challenge the way handset makers are building so-called smart phones. A frequent refrain among analysts Tuesday was that the iPhone will set a high bar for customer expectations.
"Competition has just heated up," said Seamus McAteer, an analyst at M:Metrics Inc., a mobile market research firm.
At least on the surface, cellphone makers seemed unfazed by Apple's entry into a crowded and competitive market.
"Welcome to the market and thanks for providing another proof point validating our long-held vision for converged connected devices," said William Plummer, spokesman for Finnish handset maker Nokia Corp.
Nokia was among a number of manufacturers to introduce a slew of powerful cellphones at the Consumer Electronics Show in Las Vegas this week. The company embraces an open system that allows customers to take advantage of all of a handset's features, even if they don't lead to more revenue for the carrier.
Cellphone companies have long controlled what features to enable, charging customers incremental amounts for each one. But that model is breaking down as Sprint Nextel Corp. and T-Mobile USA move toward the Nokia model.
Initially, the iPhone won't be on a high-speed cellular network, Sprint spokeswoman Kathleen Dunleavy noted, and Apple will control what customers are able to do.
That means the handset won't get the capability to stream TV programs that, for instance, Verizon Wireless' phones have. Instead, Apple customers will have to download videos from the iTunes online store before transferring them to iPhones.
Although Apple faces a lot of challenges, such as the phone's high prices and the controlled system, it should capture a profitable chunk of the market, analysts said. That makes it a big win for Atlanta-based Cingular, the nation's largest cellphone carrier, they said.
Although Apple's announcement was widely expected, it still had an immediate effect on Wall Street.
As Apple Chief Executive Steve Jobs spoke about other products at the Macworld conference in San Francisco, analyst Rob Enderle noticed that the company's shares were falling. But as soon as Jobs announced the iPhone, the stock shot up, he said. It gained $7.10 to $92.57.
