A. The Apple iPhone
Not since the introduction of the original Apple Macintosh has a product introduction been met with so much anticipation. The Apple iPhone is an elegantly designed information communicator forged from steel and silicon that runs pioneering software under Apple’s OS X in a Unix Kernel. The iPhone combines smart phone capabilities with a simple to use graphical interface projected on a large ‘multi-touch’ display. Apple has managed to create a Macintosh compputer with mobile phone capabilities, bundled within an Internet enabled PDA and an iPod body.
The iPhone’s functionality is accessed through its 3.5-inch touch screen display and one “home” button. Using only finger commands, a user can navigate seamlessly through iPhone’s features, conjuring up a keyboard when needed. At a resolution of over 25,000 pixels per inch, its picture quality for videos and photos is astounding. An ambient light sensor automatically adjusts the iPhone’s display brightness enhancing visibility and saving power. Audiio is provided by a standard headphone jack, a built-in speaker or through Bluetooth (stereo) transmission.
1. Smart Phone
iPhone touch technology allows users to make calls by simply pointing to a name or number in an address book or by dial
The iPhone uses a quad-band (GSM 850/900/1800/1900) spectrum; utilizing 2.5G EDGE networks — a predominate standard used in Europe and parts of Asia. In the future it is expected that iPhone models will be truly 3G compatible since Apple’s American carrier Cingular, and potential European and Asian partners offer 3G compliant UMTS and HSDPA.
2. Wireless Internet Communication Device
The iPhone serves as a Wi-Fi enabled Internet device that utillizes Apple’s Safari browser to access: Internet email, web sites, online maps, and search engines. The device’s full web capabilities offer a rich HTML email client with imbedded images that syncs automatically with a Mac or a PC. iPhone provides Google Maps directions, free push Yahoo email message forwarding and Apple widget applications connectivity — Java based applets — that provide updated information on stock quotes, sports scores, weather reports, traffic conditions and other services. Auto Wi-Fi detection (802.11b/g), Bluetooth, GSM and Cingular’s EDGE
Think of iPhone as a 3.5-inch widescreen iPod with touch screen controls. Through the iTunes Library— including music, audio books, videos, TV programs, and movies — content is now accessible through a display interface rather than by thumb wheel menus. Videos, controls, previews, songs, lyrics and album artwork are presented directly to the screen. In the future, users should be able to directly access a movie or band’s video by pressing an onscreen order button.
4. PDA, Computer and Camera
Using Apple’s OS X running Widget’s Java based software, the iPhone is able to provide PDA features: appoint calendars, contact lists, photos, emails and documents, literally with a touch of a ‘virtual’ button. It should only be a matter of time before developers will come up with specific iPhone applications, even though Apple has not made any announcements. The iPhone runs Apple’s full-featured OS X, so in the future expect to see powerful applications to appear, especially as the world turns increasingly toward smaller mobile devices for a computing platform.
The iPhone’s built-in camera takes pictures at 2 MB resolution that can be stored in 4 GB or 8 GB flash memory cards or forwarded to a friend, family member or colleague. An internal accelerometer dete
D. Pricing and Specifications
|Ship Date||Ship Date|
|United States||June 2007|
|Screen size||3.5 inches|
|Screen resolution||320 by 480 at 160 ppi|
|Operating system||OS X|
|Storage||4GB or 8GB|
|GSM||Quad-band (MHz: 850, 900, 1800, 1900)|
|Wireless data||Wi-Fi (802.11b/g) + EDGE + Bluetooth 2.0|
|Camera||2.0 mega pixels|
|Battery||Talk / Video / Browsing – Up to 5 hours
Audio playback – Up to 16 hours
|Dimensions||4.5 x 2.4 x 0.46 inches / 115 x 61 x 11.6mm|
|Weight||4.8 ounces / 135 grams|
E. Software Capabilities:
Full OS X
A. Market Statistics:
There have been over 100 million iPods sold. In 2006, the following amounts of systems were sold:
|Game Consoles||26 M|
|Digital Cameras||94 M|
|Mp3 Players||135 M with iPod having 80% market share|
|Mobile Phones||957 M|
Apple’s goal is to achieve 1% market share which is 10 M phones by 2008. They are going after the world market.
B. Value proposition
Intended for style-conscious cell phone consumers who would like to browse the Internet and enjoy entertainment to-go, the iPhone is a smart phone that combines a web browser, email, iPod and personal computer into a single, fashionable, easy-to-use device.
The following strategy canvas illustrates how the iPhone is differentiated from the BlackBerry Pearl (a s
C. Value Chain
The value chain below illustrates the context in which Apple delivers value to the customer with the iPhone:
D. Consumer Targets
Although the iPhone’s functionality would be attractive to business users, its price is considerably higher than that of Blackberries (~40% higher). This makes enterprise purchases unlikely, since businesses are typically price sensitive.
However, the iPhone’s compelling mix of features makes it attractive to a broad set of cell-phone consumers. The iPhone’s market is limited by two factors: 1) the high price ($499 for 4gb) and 2)Apple’s exclusive US carrier agreement with Cingular.
E. Total Addressable Market
Cingular customers who have iPods are the most likely early adopters for the iPhone. Assuming an uptake rate of 50%, this gives an estimate of 8.7 million customers.
|Cingular subscribers with iPod||30%||PiperJaffray estimate|
|Cingular subscribers with iPod||17.4||million|
|Uptake rate from Cingular iPod customers in 1st year||50%||assumption|
|Estimated uptake of iPhone by Cingular iPod customers in 1st year||8.7||million|
This first-year estimate is higher than the 5.8 M Cingular customers who currently own a smart phone costing more than $300. In contrast, the estimate is lower than Apple’s target of 10m customers.
GROWTH AND COMPETITION
A. Barriers to Adoption of iPhone
Since iPhone is only offered by Cing. . .
The iPhone does not support UMTS, a telecommunications standard of importance in Europe. While no announcement has yet been made about which cellular carriers Apple plans to partner with in Europe and Asia, this could potential limit their options.
The iPhone has several features that add to the strength of the product. These include its unique look and feel accompanied by a mobile operating system. It has phone sensors that work with the multi-touch screen, which is a new patented technology. These new features are presented to a large and loyal user base that Apple has accrued over the years. Additionally, marketing was given support from all over the internet, saving the company over 400 million in advertising fees. Finally, the fact that the company is first to deliver in this arena of computer phones is one of its greatest strengths
Like every new product, there are is a set of weaknesses. The iPhone is not a 3G device and will not work in technologically advanced countries such as Japan and Korea. All of their phones are 3G compliant. Several of the iPhone features are also not particularly impressive. These include the fact that it has a sub par camera, standing at about 2 megapixels as well as its memory not being removable. The phone is priced around 500 to 600 dollars and surveys have shown that 52% of consumers are happy with their current mobile device; essentially, this phone is geared towards the high end consumers. Apple’s choice of distribution channel has also been construed as a weakness as they’re limiting it to only Cingular and Apple retailers. Finally, its purpose is to be questioned – does the phone fulfill corporate duties or is it just an entertainment system.
There is quite a demand for a better mobile computing experience. The iPhone tries to combine both powerful computing as well as entertainment into one system. People have also noted that the Mac OS applications for desktop can be seamlessly adapted for the iPhone. Also, this is the first step towards an Internet Protocol-based network. The emergence of Wi-Fi networks is pushing for there to be visitor fees instead of having a provider lock in users. It is very likely for the device fees and pay-per-view system to take flight, eliminating the month to month subscription fee.
The majority of threats come from other companies including Nokia, Sony, and Google with their respective products. Smart phones are one popular example that stands to compete against the iPhone. The fact that these phones run on the 3G network also puts iPhone behind in the speed race. Although the economy is no longer in its volatile stages, the release of the iPhone is still in a time where people are cautious of spending money. The last threat is the Cisco vs. Apple trademark-infringement lawsuit that may or may not have taken away from the product launch steam.