The Apple iPhone

The Apple iPhone is going to make Apple a major player in the cellphone market. Apple's aiming to sell 10 million phones (1% of the mobile market) in 2008. Do I think they can do it? Absolutely.

Let's take a look at the numbers. The key thing to remember is that Jobs is giving that 2008 number because the phone won't arrive in Asia until 2008. We Americans get the phone first, in June, followed by Europe at the end of the year. 2008 is an important year, because by 2008, there will be 3 billion mobile subscribers worldwide, and that 10 million number will becomes less than a percent (but still highly achievable). 2008 also gives Apple an 18 month window of sales in the U.S., and during this 18 month period, approximately 75% of 2-year contracts will expire in that timeframe, enabling them to switch providers and upgrade phones.

While no single phone has completely dominated the cellphone market, there's a couple of popular phones that have boasted large numbers. One of these is the Motorola RAZR, which, as of July of 2006, has sold 50 million of the slim flip phones. The initial price for these phones was not cheap -- $499, to be exact, with a portion of the cost being subsidized by cellphone provider. In the first six months of release they managed to sell 17 million RAZRs. I think RAZRs are rather ubiquitous these days -- while my own circle of friends do not tend to own them (instead preferring the smartphone variety), it really doesn't seem like one can go anywhere and not see at least a few RAZRs along the way.

Now, given how many RAZRs were sold at that price (remember, in the U.S. cellphones are subsidized, but in other parts of they world, they are not), the iPhone suddenly looks very attractive for the price. It surfs the internet, it can make phone calls, and it's a nano-capacity widescreen iPod.There are enough early adopters of Apple products that Apple should make this 10 million figure easily.

One of the things that seems to have helped in the success of cellphones is a catchy name -- everyone knows what a Treo, a RAZR, and a Blackberry look like, and the current trend is to name devices something that isn't just an random assortment of letters and numbers.

Major phone manufacturers like Nokia and Motorola have gone on record saying they're not afraid of the iPhone, but they should be. Apple's strength has been in the vertical integration of the user experience. Think about this for a moment -- Apple controls the hardware and software of the iPhone, which means you're heading to the iTunes store for everything that you might want to buy from a third-party -- games, ringtones, movies, etc. How much do movies, games and ringtones cost and how hard is it to get onto the phone? Enough that I've never paid for a movie, game or ringtone, but if the content can be imported and exported as easily as plugging it into my computer, that makes it accessible to the public, more so than going onto a website that you've never heard of, and asked to select your items, put in a credit card and wait for the phone to download the application, game or ringtone. Ease of use is a major selling point -- grandma might be able to use a cellphone, but can grandma put a ringtone on a Treo? For the same reason that the Wii is successful in being accessible, the same will be true for the iPhone -- it's easier to use, and easier to understand, and that is how you sell technology to the mass audience.