iPhone gives mobile industry new direction

Those 16 percent of participants surveyed show Apple "catapulting" ahead of all other manufacturers in the business, according to researchers who went on to note that Apple's move into the cellphone market is causing a "virtual upheaval" in the industry.

"Although iPhone sales are still in their nascent stages, the effects on phone manufacturers are already beginning to take shape - and no company is bearing the brunt of this more than Motorola," researchers said.

"There's no doubt about it, consumers are embracing the iPhone. And judging by the numbers, they will continue embracing it," said Tobin Smith, ChangeWave Research founder and editor of ChangeWave Investing. "The ascendance of the iPhone is going to be a game-changer for both mobile phone manufacturers and mobile service providers."

Despite mobile phone sales rising almost 7 percent sequentially to 272.7 million units globally in the second quarter of 2007, Motorola let two percent of its market share slip away even as Apple garnered one percent of the market during that same period.

"While the shift in the industry vendor rankings is certainly of importance, perhaps, the big story of the quarter was Apple's debut as a mobile phone vendor with its launch of the iPhone," said director of worldwide mobile device research Shiv K. Bakhshi at IDC.

"Even though limited in the number of units shipped, the iPhone is likely to have a disproportionately large impact on the industry. For one, it has pushed the envelope on industrial design and user interfaces for all vendors," Bakhshi explained. "For another, it could forever alter the structural relationship between device vendors and mobile operators who have traditionally controlled the mobile environment, especially in the U.S."

Changing the smartphone market

Apple's iPhone isn't ready to reshape the entire smartphone industry, but it does introduce a whole new way to interact with and use cellular devices, according to wireless research director Stuart Carlaw of ABI Research.

"The iPhone will not revolutionize the smartphone market, but it is a significant evolutionary step forward. As was pointed out once its specifications were made public, the iPhone is not cutting-edge telecommunications. Where it is radical – in its user-interface and functionality – it will certainly change forever the way handset manufacturers think about their design philosophies. And from the commercial point of view, it is significant in the way it assembles its offerings in a completely integrated, brand-heavy package."

Carlaw thinks other cellphone vendors will incorporate more features similar to those found in the iPhone, such as more sensitive touch-screens and accelerometers that detect movement or current orientation.

"The iPhone's effect on the market will be similar to that of Motorola’s RAZR," the research director noted. "It will spawn a number of look-and-feel-alikes and will be seen as a benchmark for future design. One thing for certain is that the product is not intended to be an enterprise device, so its impact will be most keenly felt in the high-tier feature phone market and in the emerging prosumer market segment."

Filed under: Apple