6/11/2009 11:51:00 AM
Apple pulls further ahead
This week’s announcement of the new iPhone 3G ‘S’ version has drawn scorn from some quarters for the seemingly slight modifications and high cost. For me, it is still the gold standard, both for the device and the business model. The original iPhone 3G leapt so far beyond the existing manufacturers that it only required small changes. The improvements may seem inconsequential on paper but they are likely to be sufficient for many of the one million plus existing iPhone customers to upgrade, and for more to keep flocking.
The ability for existing iPhone customers to carry out a remote software upgrade is at the heart of Apple’s strategy. Impressions of the new 3.0 software are that it will excite existing customers on the capability of their iPhones. And with the need for more memory, faster speeds and better battery, an upgrade to the kit will be sought further down the line.
The fact that Apple can make such a big stride with its device into the worlds of sat nav, mobile broadband and gaming, and the underwhelming response from rivals signifies a failure from the industry to recognise what Apple is doing. This is a significant step for Apple, and it has set another benchmark that its rivals should look upon with awe.
The business model is focused, clear and lucrative. The experience is all around software and applications. Everything fits the existing screen size so rumours of a ‘Nano’ were always unlikely. Equally, by concentrating on the top end, Apple can maintain its rich margins while employing economies of scale without drifting into different segments and components.
The worry for O2 is if it finds itself sinking large sums of its budgets to keep its prized Apple exclusivity at whatever cost.