No one in the mobile industry has been able to capture the design and elegance of Apple’s iPhone yet. But how much will “good enough” rivals stunt Apple’s growth?
This week’s Mobile World Congress trade show in Barcelona birthed a slew of new smartphones, from HTC’s new Google-powered ‘Magic’ to new Nokia (NOK) and Samsung devices. Common thread: Many look (or try to look) like Apple’s (AAPL) iPhone, which is still the gadget to beat in the mobile industry.
None of them, from what we’ve seen, is as good as the iPhone. But they’re getting closer. And for many consumers, they could easily be good enough. Especially for people who want to use mobile carriers that Apple doesn’t work with, or for people want phones with slide-out keypads.
At the very least, this means a more competitive market when Apple announces whatever new iPhones it’s going to release this year, RBC analyst Mike Abramsky says in a note today. At worst, it could mean “downshifts” to Apple’s growth or margins, he says.
The very idea of “good enough” will send many Apple loyalists reeling. And it’s worth noting that “good enough” rivals have tried — and failed — to put a dent in Apple’s iPod business. But the mobile phone business is different. Subscribers are often loyal to (or under contract to) wireless carriers, not phone manufacturers. And let’s not forget about the computer industry, where Windows is “good enough” for 90% of PC buyers.
So what can Apple do to trump these new smartphone competitors? Well, another truly revolutional iPhone would be impressive. But that’s not as likely as simpler upgrades like more storage, a better camera, video recording, and cheaper pricing.
One change that could help: We think Apple would be smart to start breaking up its exclusive carrier distribution deals sooner than later, such as with AT&T (T) in the U.S.
AT&T has been a valuable launch and marketing partner over the last two years, but there are good reasons why two-thirds of U.S. wireless subscribers choose carriers other than AT&T. If the iPhone were on sale at Verizon (VZ), for example, there’s no way it would have sold 1 million RIM (RIMM) BlackBerry Storms over the holidays.
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