Competitors to benefit symbiotically from iPhone’s success
So far, much has been said about the competition between AT&T, Apple, and the iPhone with competitors like Sprint and Verizon, and had several editorials pitting the iPhone against the latest iClone or iKiller. In contrast, relatively little has been said about the possible benefits that might come of the iPhone’s projected success for the industry as a whole. Jason Gertzen of the Kansas City Star, in an article on Mac News World, discusses some of these possible benefits.
230 million Americans are already carrying a cell phone. With the market saturated with satisfied customers, the only way they see to expand is by drawing customers from competing carriers. One side effect of this is that making a call on a cell phone has become cheaper, making profits from them drop. What are their solutions for these problems?
One tactic they use is music downloading. Aside from the obvious profit made from songs downloaded to the device from them (on average, Sprint gets US$4.6billion from these services alone), having a phone full of music that can’t be switched from one carrier to another traps the customer with their original provider, preventing other companies from snatching them away. Do they consider this an advantage over the iPhone because it can use music from a computer (maybe even a network?), opening up the possibility of utilizing the ? TV to store and download music? I don’t.
I’m not sure if the above will be helpful for the competition due to the iPhone as much as in spite of it, if that. However, a one way the iPhone might help competitors’ sales is what they refer to as “sticker shock”. The price tag is the biggest drawback for the iPhone by far, and the competition plans to snatch up those who admire the iPhone but settle for something more affordable. Says IAG’s Entner:
“”You go to the Ferrari dealership and ogle the Ferrari, but then you go buy a Pontiac.”
Another way Etner believes the iPhone will help the industry is by drawing attention to smartphones in what he calls a “ruboff effect”, what, to me, seems most likely (and relevant).
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