IPhone a 'Wake-Up Call' for the Industry

With the announcement of the iPhone during Steve Jobs's keynote on Tuesday, Apple has put a tremendous amount of pressure on handset makers like Motorola and Nokia, according to industry analysts. Capitalizing on its legendary talent for creating easy-to-use products, Apple will be a competitor out of the gate.

"There was so much demand for the iPhone, it should serve as a wake-up call to the rest of the industry," says Michael Gartenberg, vice president and research director of Jupiter Research. "It's going to put a lot of pressure on the other handset makers in the high-end market, and that's where the money is."

A View of the Market

According to statistics quoted by Steve Jobs during his keynote, 957 million mobile phones were sold worldwide last year. (That compares with 209 million PCs.) Just a 1 percent market share would mean selling around 10 million units, the Apple CEO figures--and that happens to be Apple's goal for 2008.

Using a new touch screen and Mac OS X for its navigation, the iPhone will seem very familiar to Mac users and should be a refreshing change for users of other smart phones once the Apple device ships in June. As it did with the original iPod, Apple took a different approach to solving the problems associated with the cell phone.

"We knew we had an opportunity to entirely reinvent the phone," said Greg Joswiak, Apple's vice president of Worldwide iPod Product Marketing, after the Jobs keynote. "Apple has never been about doing a "me too" product--we take a complicated task and make it simple."

While it will be some time before the full effects of the iPhone will be felt, Apple has strong feelings about what its impact will be. "It will do for the phone market what the Mac did for personal computers," Joswiak said.

Breaking Out of the Niche

Apple has long been considered a niche company working with a small market share, but in recent years the iPod has propelled the company into a mass-market success. The iPod's success has helped drive up market share for the Macintosh, as well. The iPhone puts Apple front and center in another mass market that it hopes to one day own a significant piece of; it's clear Apple hopes to duplicate the iPod's success both in the company's bottom line and in its core business.

The iPhone has been in the works for more than two years. Jobs called Tuesday's unveiling "a day I've been looking forward to for "two-and-a-half years." Apple executives say the iPhone, while a new venture for Apple, stems from the company's corporate culture.

"A lot of the decisions we made during the hard times have led to where we are today," Joswiak said. "While other companies were cutting back, we continued to invest in products and technologies that we believed in."

The Apple of the Future

While Jobs announced more than the iPhone during his keynote, it is this product that analysts are looking to to set the mark for the company in 2007.

"The iPhone will send a shock wave that will be felt well beyond San Francisco," Jupiter Research's Gartenberg says. "This is a defining moment for Apple."

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