Needham on iPhone 3.0

The upcoming iPhone 3.0 firmware may serve as an essential lure for Apple, argues Needham analyst Charlie Wolf. The firmware will add a number of important software features, of which push notification and copy/paste are said to be the most critical. Such a strategy could be useful not only to Apple but to the entire smartphone industry, Wolf suggests.

Smartphones are currently enjoying double-digit growth rates, but that rate may be unsustainable without offering something to attract users of regular cellphones. In practice, a smartphone is considerably more expensive than an ordinary one, not just because of advanced technology but because of the extra data costs a user is burdened with. Many manufacturers have been attempting to compensate by making increasingly powerful hardware, for example combining features in the likes of RIM's BlackBerry Bold.

Apple's emphasis on software is a "different bet," Wolf suggests, an attempt to mimic the PC strategy of using applications to draw people in. The new iPhone OS -- alongside the over 25,000 titles at the App Store -- may theoretically be a more powerful force than hardware, though it is thought to be too early to tell which approach might win.

by MacNN Staff