By: MountainViewCellphones.com , 4/10/2008

Apple had to get in the cell phone business as music was moving towards becoming a feature rather than a separate device.  The IPOD era was ending and the IPHONE begun in 2007.  ITUNES, their premier franchise needed the support but even this has intense competition from proposals from everything music packages and even great music services like Pandora. 

Now we have this from CTIA:

OVERLAND PARK, Kan. & DALLAS, Apr 07, 2008 (BUSINESS WIRE) — Sprint (NYSE:S) and Samsung Mobile’s newly unveiled Instinct was awarded “Best in Show” in the third annual Emerging Technology (E-Tech) Award competition during last week’s CTIA Wirelss 2008 at the Las Vegas Convention Center. The E-Tech awards honor the best products and innovations in a number of categories representing the wireless ecosystem, including mobile consumer electronics, consumer mobile applications, enterprise solutions, network infrastructure, and 4G.

Instinct was named “First Place” in the Mobile CE - Phones/Smartphone category by a panel of 31 judges who evaluated each entry on innovation, functionality, wow factor, importance of technology and ease of use and implementation. “Best in Show” was then chosen by CTIA WIRELESS 2008 attendees via text messaging during the conference. Nearly 300 submissions were received for this year’s E-Tech Awards.

Instinct was also honored as “Most Innovative Product at CTIA Wireless 2008″ in the Best of CTIA Wireless 2008 competition judged by the Editors of LAPTOP, a leading mobile technology magazine. In selecting award winners, LAPTOP chose innovative products announced at the show that enrich the mobile lifestyle of business users and consumers and improve the way users communicate, work, and stay entertained on the go. More details on this award can be found at: http://http://blog.laptopmag.com/category/best-of-ctia.

CNET recognized Instinct as the “Best Cell Phone” in its annual Cream of the Crop CTIA 2008 awards. “Not only does it offer a boatload of features, but also it offers a sleek design with a full touchscreen and an attractive and . . . user-friendly interface,” according to the announcement. Sprint and Samsung won this honor together last year with UpStage by Samsung. More details can be found at: http://http://reviews.cnet.com/8301-12261_7-9909812-51.html

It’s apparent the form factor of the IPHONE is not that unique.  It can be replicated and improved upon within 1 year.  Unless the IPHONE 2 makes quantum leaps (which it can’t because the network can’t handle it) in value for the consumer, the lower priced alternatives will destroy Apple’s margins.  It’s apparent that Sprint is not going to get the IPHONE, I could be wrong, but they have opted for Samsung as their partner (more profitable for Sprint while ATT gets the Apple anchor cutting into their service revenues). 

The Instinct with Sprint’s Simply Everything Plan for $99.99 will be an unstoppable force for moderate to heavy users.  To match this, ATT would need to rapidly deploy HSDPA services and have that incorporated in the IPHONE 2, which I believe already is in there (my opinion).  EVDO REV A is going to be the big innovation for phones in Sprint this year.  The faster speeds and services available will continue to have Sprint, Verizon, and ATT break away from carriers like MetroPCS and T-Mobile.

However, for Apple, the situation is very precarious. 

1.  ATT is increasing it’s profit margins by letting LG VU come in and play in the Apple sandbox.

2.  Everyone now has a touchscreen phone as part of their line-up, while Apple’s entire line up is the IPHONE.  Reminds me of when the RAZR ran out of run way and just went off the cliff taking Motorola with it.     

3.  That little stunt of allowing unlocking of Apple phones makes ATT look like a stupid oaf for providing exclusivity payments to Apple for a non-exclusive product.  Well, what goes around comes around with the introduction of LG and others in the market. 

4.  Their product is no longer unique.  This was what allowed them to maintain margins and market share.  Now they are the RAZR and everyone else is coming out with their RAZR version.  The consumer will say yes to choice and this will steal significant share from Apple’s IPHONE.

5.  We are in a recession and the last thing the user will buy is an IPHONE for over $300 when they can pick up an Instinct for even $50 or $100 less with more capabilities.  

I’ve seen the confidential roll out documents they supplied us and the Instinct is going to have it all.  First and foremost, as CTIA will show you, it has a full browser with EVDO REV A speeds….that’s about all I can share or I might get some investigator from Sprint on me.

Back to Apple, the company was forced to enter the cell phone business.  Unfortunately, the cell phone business is one of the most competitive and capital intensive.  I’ve never been in another business that moved and innovated so quickly.  Phone product cycles are 1 year if you are lucky.  Mostly, phones make most of their money within 6 months and then just wait till clearance time (this is the store perspective).  Apple’s IPHONE was a good start, unfortunately, the competition learns, moves quickly, and is very well funded.  And Apple, from everything I’ve heard is a premium brand, arrogant, and has never faced Samsung, Nokia, HTC, or LG on any business battlefield before.  Apple will be in the vice of sacrificing margins for market share or sacrificing market share to maintain its margins.  It will need to invest higher sums in actual innovation of the product instead of just good looks (IPHONE no GPS capabilities, no high speed WAN network, no live TV capabilities, no removable battery).  Competitors adopt quickly and they can make substantial improvements in the internals of the phones and add good looks too.        

It’s the beginning of the end of the IPHONE Era (if you can call 1 year an Era)…I would wager it will also signal the continued rise of Samsung to the leading innovator and eventual market share leader in the cell phone business globally.      

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