Apple’s iPhone 3G is poised to re-invigorate the smartphone market, but is the industry prepared to react?

Apple’s iPhone is far from and probably never will be the mobile market leader in unit sales. Nor does it have the industry’s most impressive raw specifications, the lowest price or the widest carrier availability. In the latest version, iPhone 3G, users still can’t cut-and-paste. Yet everywhere you look, people wonder what it will take for a handset maker to deliver an iPhone killer, or if it’s pointless to try.

Challengers abound. Apple CEO and co-founder Steve Jobs, at the 3G launch last month, compared the iPhone to Palm’s Treo 750 and Nokia’s non-touchscreen N95. Samsung recently introduced the Instinct in the United States and the Omnia for European and Asian markets. HTC’s Touch Diamond is another competitor. Others due by early 2009 include Research In Motion’s BlackBerry Thunder and Nokia’s 5800 Xpress Media, also known as the Tube, although neither company will comment on unannounced products. Regardless, attempting to compete directly against the iPhone is a misguided mission unless Apple suddenly stumbles, said Avi Greengart, research director of mobile devices at Current Analysis.

APPLENESS
“If you are defining your product as ‘We are going to beat the iPhone,’ you are going to lose. I understand why journalists are asking it, but I don’t understand why device vendors are playing the game,” Greengart said. “There’s certainly an Appleness to Apple products. So one approach for competitors might be to take a different approach.” For example, even when devices equal or better the iPhone on paper, they’ll sell best when marketed as low-cost alternatives such as Sprint’s $130 Instinct, as branded premium devices such as LG’s Prada phone, or as gaming or imaging handsets such as Nokia’s N-Gage series or various high-resolution cameraphones.

Moraru: Samsung’s Instinct and Omnia have plenty of advantages of their own.

Meanwhile, the definition of “Appleness” is tough to capture. Most people associate it with the company’s history of slick user interfaces and stable operating systems, so customers are unlikely to prefer the closed-source operating system of the Instinct or the complex Windows Media basis of the Omnia.

Other aspects of “Appleness” are the iPhone’s tightly integrated process for installing updates and its seamless ecosystem for acquiring applications and music. Sprint comes closer than most carriers to equaling that integration, Greengart said. However, more than 40% of U.S. iPhone customers switched to AT&T specifically to get it, carrier spokesman Mark Siegel added.

STANDING OUT
Samsung’s Silviu Moraru, senior manager of product planning, said “truly we didn’t” design the Instinct specifically against the iPhone. He did acknowledge the iPhone’s je ne sais quoi and the need for competitors to further stand out. “It could be brand, it could be hype, it could be experience, it could be many things. What we’re looking to do is independent of what’s out there.

We’re looking to address all of the segments, and going forward, segmentation I think is going to increase. You cannot have one phone that does it all, and even if you could it doesn’t make sense economically.”

Seybold: Touchscreens are not the end-all, be-all for smartphone interfaces.

“We definitely don’t develop a product to be a killer to another product. We compete like everyone else and it’s natural to want the best of what’s out there in the field. I don’t look at it like an iPhone killer,” Moraru continued.

Having said that, if comparisons are inevitable, then the Instinct has advantages, he noted. “It’s differentiated by a lot of services that we support on the Sprint network. We have a lot of applications that Sprint is selling to its customers like the TV, radio, Sprint navigation, Live Search, the music store, Pocket Express. So this device is definitely positioned as a very strong partnership,” he said.

He also noted the Instinct’s expandable memory, removable battery (with a second battery included) and haptics feedback (making the phone vibrate slightly in response to a virtual keypress) – compared to the iPhone 3G’s 2-megapixel camera, non-expandable memory, non-removable battery and no physical keypress feedback (although the latter is rumored to be under development).

NOT A BEEP
Industry pundit Andrew Seybold, who also writes for Wireless Week, added that touchscreen phones are not necessarily the best possible future. They are tedious to use 1-handed, which makes them unattractive to corporate users. The current offerings also ship with Web browsers designed to closely replicate the desktop experience, but in such a small device it makes more sense to have intelligently integrated widgets (small online applications), he said. A handset with those features would resemble less of an iPhone or Instinct, Seybold said, and more of Beep – the handheld imagined by science fiction writer Gordon Dickson for a now-famous 1978 edition of the Hewlett-Packard Calculator Journal. “In very real fact, as long as he had the XX2050, he needed very little else in the way of material things. The XX2050 was like a latter-day Aladdin’s lamp, which could summon up anything he needed and that either he or his company could afford. It did this by interlocking with the large, established computer nets wherever it happened to be,” Dickson wrote.

Sounds nice, but Beep is set in the year 2025. Seybold and others said Google’s Linux-based Android platform, for which the first handsets are due to ship later this year, probably represents the best real-world option for something truly different to dent the iPhone’s unquantifiable karma and mind share. For example, Android is set to introduce new sophistication for location-based services and mobile Web mash-ups not found anyplace else, rather than trying to blatantly copy the iPhone in an open-source wrapper. But handset companies, service providers and Google itself can’t completely escape the cult of Cupertino – recent demonstrations of Android phones focused on touchscreen interfaces with iPhone-like gestures and movements.

Seybold dislikes the phrase “iPhone killer” to refer to Apple’s competition. But with Jobs’ iPhone strategy, he said, “It is karma. He is the hypster of all hypsters. He generates excitement and rightfully so. It’s hard to compete.”

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