Can the iPhone win?

We are used to see Apple in that kind of high end, exclusive customer segment that makes it difficult to imagine it as a mass market brand. But, did you consider if Apple could be the next Nokia? Can Apple win in the broad mass market?

These days we are witnessing the release of the third quarter sales charts, developed by the market research group NPD. For the first time, the iphone is the most purchased handset in the US displacing Motorola Razr. Apple sold 6.9M iphones in the four quarter, more than in all previous quarters combined. Moreover, an study elaborated by Canalys shows that smartphones grow at a 28% rate while traditional phones only at 3%. However, the distance among brands in the market is still big, Nokia is the leader with a 38.9% or the market, followed by Apple with a 17.3%, RIM (blackberry) 15.2%, Motorola 5.8% and HTC with a 5.8% too.

We can argue that in the smartphone market the platform (itunes) is an entry barrier and of course we will agree with that, but is the only one. All brands are also trying to compete in platforms and at a point some of them may succeed in having equivalent offers. Of course, platforms have big network and first mover effects and this is the explanation why all brands are trying to be the first to develop a platform with a sizeable number of users (only Apple is succeeding at that). However is that all?

I think it is not. There is a fundamental difference between a smartphone and a normal phone: a smartphone is a computer and a normal phone is just a phone. What are the implications? That a smartphone can easily incorporate any new function as long as it can be implemented in software. This is an enormous competitive advantage. The ability to transform all your user base of terminals by just providing a new download can effectively prevent and stop competition of many sorts. In fact my iphone (yes I have one since 1 year more or less – and I am very happy with it … please Apple put cut and paste the ability to forward sms !!) had three major changes since I have it and today is a completely different device than the one I bought 1 year ago.

That means that the only way to compete is with a tight integration of software and hardware features that could not be replicated with a software update.  Many believe that the incorporation of sensors could provide a way to create the new disruptive innovation in the mobile market. This is however, a huge step because sensors need an infrastructure ….  

However, Nokia is working on that, Apple is working on that too …. the stakes are too high. Probably you and I are the only ones that are not working on that … but … we are not phone companies, are we?