Apple delivers with iPhone 3GS, but faces tough challenges
Published: 9 June, 2009
So in marketing terms, Palm was left looking like the enthusiastic school cheerleader next to Apple's superslick professional - as usual, the iPhone maker created a great balance of anticipation and last minute nerves ahead of its new handset launch, and got its timing just right, leaving the Palm Pre only a couple of days in the sun. But beneath the excitement that surrounded the announcement of the iPhone 3GS yesterday at the Apple Worldwide Developer Conference (WWDC), and the usual obsessive dissection of the handset's every feature, are real challenges for the vendor.
Squeezed margins (the lower end iPhone 3G drops to $99 and there is no premium for the new features); a narrowing gap in features terms between the iPhone and its rivals (for all the chatter, the 3GS is interesting but not a game changer); arguably being stuck with the wrong US carrier, and having difficulties attracting strong sales in emerging or business markets. This last challenge may be addressed by the new product lineup, with a heavier focus on RIM's enterprise sector clear in the software enhancements, while the $99 model could work better in markets like India and Russia where carrier subsidies are rare.
The iPhone 3GS ('S' stands for 'Speed'), will be priced at $199 for the 16Gb version and $299 for the 32Gb. It claims to be up to three times faster than the existing 3G iPhone. The better performance and new software features from the iPhone 3.0 OS - already detailed - are the main leaps. In terms of actual phone capabilities, the iPhone remains short of the superphone league - its camera does have autofocus and video capture/edit now, but is only 3.2-megapixels, a far cry from the 12-megapixels boasted by the Korean vendors and Sony Ericsson. In form factor terms, the 3GS looks pretty much like the current 3G device. Other features include voice control and the long awaited cut-copy-paste (users can shake the phone to undo this).
Among the welter of software enhancements is MMS, though the crowd at WWDC howled when it was revealed AT&T would not support this until late in the year. This was just one of a series of criticisms of the carrier by the audience, increasing the sense that Apple is being held back in its native market by its operator's patchy network, which could give the lie to the 'S' label of the new phone, despite AT&T's ongoing program to upgrade its system. Such pressure may encourage Apple to make a CDMA-based deal with Verizon Wireless, which is also reported to be getting the Pre as early as January, when Sprint's exclusive should end.
Also added is the ability to track and wipe lost handsets via the MobileMe service, while Apple has introduced the ability to rent and buy movies from iTunes on the handset and is partnering with Scroll Motion on digital books for App Store.
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