Mobile handsets - shaking up the industry

IPhone 3G Could Shake Up Global Mobile Industry

The latest version of the iPhone smartphone debuted on Friday to white-hot sales. Apple sold over one million iPhone 3Gs in just three days, dwarfing the response for the 2G iPhone which came out in June last year. Experts who were initially doubtful of Apple chief Steve Jobs' pledge to sell more than 10 million iPhones by year's end now believe the goal might be surpassed.

◆ New model turns up the heat

Apple chairman and CEO Jobs said Monday that over one million iPhone 3Gs were sold in its first three days since its simultaneous debut in 22 world markets on Friday. The original iPhone introduced last year took 74 days to top the one million mark. And considering that a system failure delayed service activation in some areas, the figure points to an explosive trend. Analyst Kim Ik-sang at CJ Investment & Securities says it's conceivable that Apple could hit its sales target of 10 million this year and maybe even surpass it.

Behind the device's popularity, experts say, is the price -- just US$199, well below the $499 for the original iPhone. Also helping are added features like 3G wireless Internet support and GPS, with some dubbing the device a "mini PC." Washington Post columnist Rob Pegoraro writes, "Its most obvious benefit is the ability to connect to AT&T's 3G mobile-broadband network, which offers DSL-grade download speeds instead of the dial-up sluggishness of the first iPhone's EDGE service. You can download a program directly to the iPhone or through Apple's iTunes software with a few clicks or taps."

◆ A shift in the mobile industry?

With the iPhone phenomenon heading into its second year, there is speculation that the entire structure of the global mobile communications industry may change. This is because Apple, unlike other cell phone manufacturers, is not focused solely on gadget sales but is positioning itself as also a contents and services provider, which until now has been the domain of the wireless service providers.

In fact, the iPhone 3G offers features that existing telecoms firms have avoided thus far, such as Wi-Fi wireless LAN and Internet telephony. For instance, iPhone users don't need to use the phone's mobile network if they are in a Wi-Fi hotspot, as they can instead use iPhone-exclusive Internet calling services like Truphone or iCall. This means a loss for service providers but potential savings for consumers.

Apple's new applications website for the iPhone, App Store, has racked up 10 million downloads since it launched on Friday. Developers can build programs and post them on the site for sale with no need for approval from Apple. Some 800 such programs have been uploaded so far, including news services, mobile games and educational content. This is much different from Korea where contents registration requires the permission of mobile service providers. In a recent report investment bank Piper Jaffray said the market for iPhone software is a potential W1 trillion (US$1=W1,008).

◆ How will it affect Korea?

The iPhone fad is expected to narrow the bottom line of Korea's mobile industry for now. Woori Investment & Securities analyst Lee Seung-hyuk expects device output and operating profit to edge down a little in the second half. Service providers are also keeping a close eye on the situation. Since the release of the iPhone 3G, a growing number of Koreans have left messages online expressing a desire for the device. But it's doubtful that Korean firms will concede a major portion of the contents and services market to Apple as foreign rivals have done. Another difficulty is that making the iPhone operable here means adjusting it to work with the Korea-only WIPI wireless platform.

Kim Young-geon at LG Economic Research Institute says, "The success of the iPhone will spur manufacturers to also develop content. And if Korean firms also join in attempts to develop proprietary mobile content, it could revamp the structure of the industry."