Analysis: How Apple sees the iPhone

Smartphone or consumer gadget? Serious business tool or high-tech toy? Ever since Steve Jobs first pulled an iPhone out of his pocket in January, the debate has raged over just who makes up the target audience for this mobile phone.

Back in January, some mobile device analysts told Computerworld that the iPhone wasn’t so much a smartphone as it was “a super-smart iPod with phone functionality.” Other analysts predicted that Apple’s device would put pressure on other handset makers, particularly those at the higher-end of the market. Meanwhile, recent weeks have seen the research firm Gartner advising its IT clients to keep the iPhone away from their networks, with IDC analyst Randy Giusto describing the iPhone as “not positioned at all for the IT world. It’s a personal device.”

Apple weighed in with its own opinion on the iPhone’s place in the mobile device market last week. The company sent out a data sheet to reporters, comparing the soon-to-be-released iPhone to four other phone models made by Nokia, Samsung, Blackberry and Palm.

Apple’s side-by-side comparison doesn’t necessarily mean the company sees the iPhone taking on those four specific models. “I don’t think Apple is targeting any specific vendor or operator by releasing additional specs on iPhone,” said Bonny Joy, an analyst at Strategy Analytics. But it does offer a glimpse into Apple’s thinking on the company it would like the iPhone to keep.

The phones Apple selected for its side-by-side comparison include the Nokia N95, the Samsung Blackjack, the BlackBerry Curve 8300, and the Palm Treo 750.

Just glancing at the names on that list, it’s clear that whatever analysts think of the iPhone, Apple see it squarely in the middle of smartphone territory—all four of those devices are targeted at business users or consumers looking for a multifunction device to keep them in touch with the office via e-mail, Web, and voice services.

It’s not surprising that in a comparison arranged by Apple, the iPhone comes out on top. It’s the thinnest of the phones listed, beating out the Blackjack by a tenth of a millimeter; at 3.5 inches, it also features the widest viewable screen area. It also helps Apple’s comparison that the data sheet was released after last week’s announcement of improved battery life for the iPhone. Apple also announced that the iPhone’s display surface would be glass, compared to the plastic surface on the four other smartphones.

Improved battery life is particularly key, according to Joy. “In our studies we found that the battery life of their cell phone is one of consumers’ major concerns,” he said. That’s important particularly for cell phones that are also multimedia capable, Joy added—a market segment the iPhone is tailor-made for. To that end, Apple’s data sheet notes that the four would-be iPhone competitors don’ offer specs on how long they last when accessing the Internet, playing back video or playing audio files.

“By announcing iPhone has extended battery life, Apple is targeting existing iPod customer base to upgrade to iPhone, especially the ones who believe features like battery life could be sacrificed for the sake of additional functionality,” Joy said.

The iPhone is not considered a “3G” cell phone — a cell phone that has true high-speed networking capabilities over a carrier’s data network. But the iPhone, unlike all others on the list except for Nokia’s N95, can eschew AT&T’s data network for a local Wi-Fi network instead, boosting its Internet surfing capabilities.

“The iPhone doesn’t have 3G so Wi-Fi gives it an edge,” he added. “There’s a reasonably good penetration of Wi-Fi [in North America].”

Despite Apple’s positioning of the iPhone, Joy notes that the comparisons to the other four devices don’t tilt entirely in Apple’s favor. Some of the phone models trounce the iPhone on price: The Samsung Blackjack is available for free with certain cell phone plans, for example.

While it may be on the upper end of the pricing spectrum for a cell phone at a starting price of $499, the iPhone should compete against other devices that emphasize multimedia capabilities, says Joy, citing Sony Ericsson’s Walkman-branded phones—models that Apple doesn’t compare in the matrix.

“Walkman phones are particularly popular in Western Europe,” Joy said “And Walkman phones are priced from about $150 to $500.”

Regardless of what specific brands the iPhone takes on, it’s clear that if Apple is to meet its stated goal of selling 10 million phones in the next 18 months, it will have to target the growing smartphone segment. And it’s equally clear from this bit of pre-release marketing that Apple understands that.

This story, "Analysis: How Apple sees the iPhone" was originally published by PCWorld.

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