Is iPhone a revolution?

Apple is introducing its smart phone when smart phones are old news. Will it lure callers anyway?

Published February 2, 2007

SAN JOSE, Calif. - Pablo Gonzalez, a Prada-wearing cell phone connoisseur who jumps from one new handset to the next, is ready to ditch his $1,000 touch screen cell phone for Apple's iPhone when it becomes available in June.

Tark Abed, on the other hand, just got the new Samsung BlackJack smart phone for $149. The industrial designer at Palo Alto-based Speck Design isn't keen on spending $500 for an iPhone, even though he finds its sleek interface alluring and innovative.

Their divergent views underscore why Apple Inc.'s much-hyped seminal cell phone is all the rage and why, at the same time, rivals are stirred but say they are not shaken.

The iPhone got everybody - from techie bloggers to late-night TV hosts - talking when it arrived fashionably late on the wireless communications scene. But would-be rivals are questioning Apple's claim that the iPhone is "revolutionary."

Apple's competitors predict that even as the gadget will likely boost the company's fortunes, it will have limited market share and fall short of the successes Apple has seen with the iPod. They contend some of the phone's much-touted features - such as its touch screen, movement sensors and music player - are not innovative or new.

"They're just jumping into the party where everyone else is," said Peter Skarzynski, of Samsung Electronics.

Because nearly everyone already has a wireless device of some sort, the success of the iPhone will depend on whether Apple's notoriously slick marketing machine can persuade consumers to replace their current phones with an iPhone that costs $500 or more. In some cases they'll have to switch carriers, as Apple's gadgets will work only through Cingular Wireless.

"This is not just as easy as going out to buy an iPod," said Jonathan Hoopes, an analyst at ThinkEquity Partners.

But, one of the brightest growth spots for the industry has been in do-it-all smart phones. It is precisely this category that Apple is targeting with the iPhone, which triples as a phone, a music player and an Internet device.

Sales of smart phones in North America are estimated to grow from 11-million units in 2007 to 55-million in 2010, according to market research firm Gartner Inc.

Nokia Corp. chief executive Olli-Pekka Kallasvuo told analysts last week that he doesn't think Nokia, the world's No. 1 handset maker, needs to change its business approach because of the iPhone.

But Apple's entry will bring about more multipurpose phones from many manufacturers, he said. "I think it will be good for the industry," he said.

With the iPhone still months away from the market, no one knows all its features or how well it functions in real life.

Any criticisms leveled now - the high price, the exclusive distribution through Cingular Wireless, the choice to use the slower 2.5G data network, the apparent lack of support for Microsoft Corp.'s business e-mail programs, the lack of a traditional QWERTY button keyboard - could become moot or insignificant later.

Analysts say cell phone makers should be concerned about Apple making inroads into their territory.

"They better be nervous," Hoopes said. "But they are all trying to feign complacency."