*
Money Central: 50 reason not to buy an iPhone
For Matthew Key the choice has come down to Milton Keynes or Uxbridge. Battle
plans have been drawn, extra troops deployed and this Friday at 6.02pm, the
invasion will begin.
Key, the man instrumental in bringing Apple’s iPhone to Britain on Friday,
wants to be in the thick of it when his O2 stores fling open their doors to
sell the most hyped product this side of Christmas.
After months of planning, his main concern is that everything goes smoothly,
and his only decision is which store to attend. By closing all 450 O2
outlets for four hours on Friday afternoon while a new Apple merchandising
area is fitted out in each, Key is hoping that a throng of fanatics will
start queuing in anticipation.
“That is part of any Apple product launch. People do get pretty excited about
it,” he said.
The UK boss of the mobile-phone operator beat the opposition to partner Apple
for its British launch. In June, he jetted to California with César Alierta,
boss of O2’s Spanish owner Telefonica, for an audience with Apple boss Steve
Jobs.
“The iPhone is a step change compared with anything else that has been in the
marketplace,” said Key. “Once people see it and use it, the level of
customer satisfaction is off the scale.”
In America, customers queued for days to get their hands on the phone. Apple
has so far shifted more than 1m units. It remains to be seen whether Britain
will fall as hard for Apple’s latest beauty. But as the hype builds, a
threat lies in the wings.
Google is preparing to announce plans for its long-awaited G-Phone. In some
ways the name is confusing – it’s not one Google uses – because the internet
giant has been working not on a handheld device but on software that will
give phone users fast and easy access to its services, from search and maps
to e-mail.
At first glance it might not seem a radical departure from what is already on
offer. Many phones – including the iPhone – offer access to Google’s
services. But as always, Google’s ambitions are large. While Apple has
revolutionised the phone, Google wants to revolutionise the phone industry.
THE iPhone is an undeniably tasty piece of kit. On a screen just larger than
a credit card, owners can use the telephone, camera, a standard iPod and
navigate the internet, pinching their fingers together to shrink pages of
information and drawing them apart to zoom in.
The two drawbacks are the touch-screen keyboard (the fat-fingered will
struggle) and the price. At £269 each, plus the commitment of a minimum
£35-a-month contract lasting 18 months, the iPhone costs head and shoulders
more than everything else on sale at the moment. In Britain, falling call
charges mean that anyone willing to pay £35 a month can expect a
top-of-the-range phone thrown in for free.
Some analysts are sceptical of iPhone’s appeal beyond a hardcore of fans. “We
see this pricing as limiting the iPhone’s appeal to Apple aficionados and
wealthy fashion victims who are looking to upgrade their iPod,” said James
Barford at Enders Analysis.
Google’s plans are still under wraps, but it is likely to make its attack from
the other end. Last week, Google’s share price rose past $700 on speculation
that an announcement of its mobile-phone plans was imminent. The rise made
the company more valuable than Citi, the world’s biggest bank.
To date, the mobile-phone industry has been about monthly charges and call
costs. Extra services cost extra money. In America, for example, Verizon
customers who want satellite navigation pay $10 a month or $3 a day. It’s a
lucrative business model but it’s not Google’s business model. Google has
made its fortune by giving its services to its customers for free and then
selling ads to pay for them.
In its efforts to gain traction in the mobile market, Google has approached
several handset manufacturers about the idea of building phones tailored to
Google software. Taiwan’s HTC and South Korea’s LG Electronics are rumoured
to be the top contenders.
The phones themselves are unlikely to be the most radical element of Google’s
plans. Google chief executive Eric Schmidt has said that mobile phones
should be free for consumers who agree to watch ads. He believes mobile ads
are worth twice as much as regular internet ads because they are more highly
targeted.
The company is seeking partnerships with the wireless operator Verizon
Wireless in America, as well as Orange and 3 in Europe. An announcement
could come as soon as this week. In return for letting Google use their
networks, the mobile operators would get a slice of the billions in ad
dollars, pounds and euros that Google aims to generate.
Google also wants to open up the software that runs mobile phones, allowing
independent software developers to customise applications and build new
features. Third-party applications could include services tailored to a
users’ location and linked to Google Maps and other Google applications.
Google, meanwhile, could gather user data to show targeted ads to cellphone
users and share the revenue with the mobile-network operator.
Mobile advertising is a rapidly growing market. Analysts Frost & Sullivan
predict the mobile-advertising market in America alone will generate $2.1
billion (£1 billion) in revenue by 2011 compared with $301m in 2006.
The Shosteck Group estimates the market will be worth $10 billion glo-bally by
2010. With all that money to play for, who needs a £35-a-month contract?
Michael Gartenberg, vice-president at Jupiter Research, said: “A year ago you
wouldn’t have put Apple or Google in the same sentence as mobile telephony.
But they are there now and, as they have shown before, they are likely to be
highly disruptive.” AS principal analyst of mobile devices at
Washington-based Current Analysis, Avi Greengart tests hundreds of new
phones every year. “The iPhone is the first phone I would describe as fun,”
he said. Other phones have offered internet access, cameras, touch screens
and so on, but none of them has done it as well as Apple, he said.
But will it make as big a splash in Britain? Unlike the American mobile-phone
market, the British market is saturated with handsets. Many people have more
than one, for home and for work. Loyalty is low. So anything that marks one
operator out from the rest can only help.
In many ways this plays to Apple’s advantage. O2’s Key hopes the iPhone will
help him pinch high-value customers from Vodafone, Orange and T-Mobile.
“Because of the structure of the UK market, three-quarters of customers using
the iPhone will be new to O2,” he said. “The same customer using an iPhone
is more profitable to us than one using an existing phone. It has far more
functions and they will be using them more.”
But his detractors say Key had to sell his soul to Apple to secure the
partnership. For the first time, a handset maker will cream off service
revenues from a network operator, giving it a continuing income stream.
Rivals say that they baulked at Apple’s demands for 30% of revenues.
“Clearly, there are lots of sour grapes from the other operators,” Key
retorted. “I sometimes put myself in their shoes and think: what would I be
doing to protect my business? I am very happy with the deal we have.”
The industry is not taking Apple’s incursion lying down. Vodafone has signed
up Music Station, a music-download service backed by all the main record
companies. It is offering unlimited downloads for £1.99 a week. Meanwhile, 3
has just launched its Skypephone, offering free international calls to other
Skype users.
The company everyone is really watching is Google. The iPhone is the latest in
a long line of beautifully designed and ground-breaking products from Apple.
But unlike the iPod, which has changed the music industry, the iPhone is in
some ways a throwback to an older model of mobile-phone ownership. For all
its beautiful bells and whistles, the iPhone is expensive and comes with
heavy monthly charges.
Google has had a tough job convincing the mobile-phone industry that it needs
to change and that the future belongs to free services paid for by
advertising. After a series of skirmishes it appears that some of them are
listening. In Britain, Vodafone and Yahoo announced an advertising deal last
year. In America, Verizon and Google, which were slugging it out in
Washington over the internet firm’s mobile plans, are talking.
“The buzz around Google is that they could change the way mobile phones and
services are sold. They have this huge machine in internet advertising
behind them. They could change the economics of the industry,” said
Greengart.
Google’s Schmidt was among the first to get his hands on an iPhone. He even
appeared on stage with Apple’s Jobs at the launch, announcing Google Map and
search would be on the phone.
“There’s a lot of relationships,” Schmidt told the audience. “If we merge we
can call it Applegoo.”
As Apple and Google both turn their formidable focus on the mobile market, can
relations stay so sweet?
SQUARING UP FOR A FIGHT: HOW APPLE AND GOOGLE COMPARE
Apple: Market value $163.5 billion Sales $24 billion Sales
growth (one year) 24.3% Profits $3.5 billion Employees
14,800 Chief executive Steve Jobs Founded 1977 Products: Macintosh
computers, iPod digital music players, iTunes music store, Mac OS X
operating system, iPhone.
Google: Market value $212 billion Sales $10.6 billion Sales
growth (one year) 72.7% Profits $3 billion Employees
10,674 Chief executive Eric Schmidt Headquarters Mountain
View, California Founded 1998 Products: Google search, maps,
images, Earth, books, g-mail, YouTube, news, video, the G-phone?
Having only ever bought Macs, my loyalty for apple is rapidly waning. Suffering from ever finding a mobile that simply synchronises my calendar with the Mac, finally apple produces a phone, and then greed prices most loyal mac users out of the market.
After it's hard to ever get software that is compatible with the Mac, Apple itself is now penalising me for choosing its Macbook. The cost of the iphone is more than a new computer.
Clearly, Mac wants to be associated with lawyers, bankers and VCs rather than creatives and those working directly towards society.
agnes queen, london, uk
Ads on my phone? Do I have to listen/watch them before, in the middle of, or after I make or take a call? How stupid is that idea?
It's called the mobile phone. Mobile. It's for people to use while they're on the go with their mind on something else aside from the phone call their engaged in. Will anyone really welcome the additional distraction and waste of time that will result from being forced to view/hear ads?
Al, Minneapolis,
Errata:
Verizon customers who want satellite navigation pay $10 a month or $3 a day. ???????
Sure apple merch is overpriced. But.....it is a fabulous, high end, perfectly gorgeous product line. Not to mention that they have a simple to use, super reliable, and finally Apple support is bordering on miraculously personable, and resolve issues in light speed.
Get version 2.0 of the iphone--the bugs will be gone.
PC's are for the masses.
joel, dallas , texas
wow iphone simply amazing peice of equipment it almost has evrything, the gphone on the other hand from what i have personally heard and seen, sounds better in some wqys because the amount you will be paying each month for an i phone is outragous and thers no denying that most people that have the money to pay for n iphone could be spending the same amount of money on something diferent most people already have a phone and then suddenly this iphone comes out , i mean there is hardly anything bad about it but it's bloody expnsive the gphone on the other hand is hopefully should e cheaper because of the advertiing and it could be even better than the iphone but the images that google have actually put of the gphone is not really that good but who knows i personally think that instead of going to the o2 store on the first day wait a bit see the gphone or even wait for other phones because the phone is just to expensive and to be honest it looks way to delicate.
sincearly yours jack dc
jack de carle, coulston, england