The initial release of the iPod wasn’t great. A so-so product that only worked with Macs and required users to spend their lives ripping CDs. But its long-term effect were huge: a massive 10% (and rapidly growing) chunk of music is now sold digitally to the iPod and its competitors. So what will the iPhone’s long-term effect on the cell phone industry be?

Accelerate 3G adoption in the US

The iPhone is a 2G device - ie, it’s slow. This was the right decision: the US has paltry 3G coverage. In most major cities, however, free 802.11b wireless networks are ubiquitous. People with devices like the iPhone and Nokia’s N95 (which also has a desktop-quality web browser) can get a taste of viewing real web on their phones content at reasonable speed over 802.11b wireless networks in cafes and bookstores. The massive speed drop users will get attempting to view a real website over an EDGE network will raise consumer demand for 3G and better networks from carriers.

They’ll also want a 3G iPhone like their friends in Australia have. Late next year Apple intends to release the iPhone in Australia, where 2G networks are being shut down, 3G or 3.5G HSDPA is everywhere, and free 802.11b wireless is rare. By the time that happens, the iPhone will be 3G - not only because Apple wants it to be, but because it has no other choice.

Goodbye ‘Mobile Content’ Market

Tired of annoying ads aimed at teenagers selling expensive mobile ringtones and wallpapers? Then feel comfortable knowing they won’t exist in a few years time. The whole concept of providing ‘mobile’ content is dead. Instead, it’s just content - the images, videos and viral memes from the internet will be the same ones that reach mobile phones. An iPhone user has no motivation to pay for a bad animation when they have Youtube. An N95 user has no motivation to purchase a ‘ringtone’ version of a song they already own when they can simply use the song they already own (Apple have dropped hints that the iPhone will be able to do this in future). Neither user has any motivation to pay for mobile ‘wallpaper’ when they can jump online and visit InterfaceLift.

Farewell Mobile Content. We won’t miss you *.

Goodbye Mobile Java, Hello Flash

The other piece of the puzzle that’s missing from the current iPhone is Flash - there’s no support for rich content beyond the embedded YouTube client. This is the one notable deficiency of the iPhone browser when compared to its desktop cousin. Don’t expect Apple to let this remain for long - Steve Jobs has already said ‘we might see’ Flash in future, Apple-speak for ‘yes, we’re working on it’. They’d be smart to do it quickly - the N95 already comes with Flash lite, and since the iPhone clones need a way to do all that pretty user interface stuff, you can bet Flash will be part of their solution (Samsung already sell iPhone-comparable Flash-based user interfaces in other markets).

Flash on mobile devices is about to explode.

That means competition for the existing mobile Java market. Especially since Flash is already more widely used for multimedia outside phones than Java is. Combine that with that Steve Job’s answer about Java on the iPhone ‘Java’s not worth building in. Nobody uses Java anymore. It’s this big heavyweight ball and chain‘, it’s pretty clear which VM is going to lose this war.

It’s Not a Phone. It’s A Business Model That Needs A Revamp

Helio’s business model is simple: sell 3G capabilities to a US market where such things are rare and partner with web known web brands to create special mobile versions of their content. When 3G is ubiquitous, and phones have real web browsers that work with a users Yahoo, Facebook and Flickr accounts, consumers have no reason to stick with a company like Helio, whose business model needs an overhaul.

Opportunities for Opera

Both Apple and Nokia have desktop capable browsers. Windows Mobile 6 and Blackberry come with old-generation browsers that can’t view websites the way they’re supposed to look - Internet Explorer on Windows Mobile draws pages with a completely different engine than the real Internet Explorer. Microsoft’s current best effort for the future is Deepfish, a beta tool based on taking screenshots of a websites rendered normally, then zooming in on it. It’s as horrible to use as that description sounds, and doesn’t work with the dynamic nature of recent sites.

This is massive opportunity here for Opera, a small company that’s just released a desktop-capable version of its Opera Mini web browser. The question is, how long till Microsoft and Blackberry gets its act together and stars responding properly? Will we see a five year wait to respond to the threat (see Firefox), or a quick and nimble Microsoft that has learnt to pay attention to its customer?

More Handset Manufacturers

Sure, we might see some more iPods. But the iPods been stagnant for a while now, with no improvements since the addition of paltry video support 2 years ago. As Apple has acknowledged, people don’t want to carry two devices. Companies like South Korea’s iRiver made their money from portable music players similar to the iPod (some of their recent models are even better than the real thing). If they’re going to stick around, they have to compete with the iPhone.

* ‘Mobile’ versions of web pages will still exist, but merge with existing ‘low bandwidth’ versions of a page.

This entry was posted on Sunday, July 1st, 2007 at 11:29 pm and is filed under Apple, Cellphone Market, Design, Mobile, iPhone. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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