World smart-phone market heating up

Apple may have sparked a competitive storm in the global smart phone market by slashing the price of its popular 8GB iPhone 3G by half, prompting predictions that the move could double sales of the iPhone.

The price cut came as Apple introduced the successor to the iPhone 3G at a software developers' conference in San Francisco - just days after Palm launched its new Pre smart phone on the US market. The Pre now costs double the price of its hottest competitor.

Just two years after entering the cellphone market, Apple enjoys a 19.5-per-cent share of the global smart-phone market. Its iPhone has become on of the world's most popular smart phones.

This success has led rival phone makers to respond with formidable touch-screen devices of their own, including Research In Motion's BlackBerry Storm and T-Mobile USA's G1 - which runs Google's Android software - and Palm's Pre.

Research In Motion is still by far the top seller of feature-packed smart phones, with a 55.3-per-cent share of the market, according to IT research giant International Data Corporation (IDC), but Apple is in hot pursuit. Palm has 3.9 per cent of the market.

From now on, competition in the world mobile-phone market is expected to heat up. Research house Ovum expects 171.9 million smart phones to ship this year, an increase of 23 per cent over 2008, accounting for about 15 per cent of the worldwide mobile-phone market in 2009.

Apple reduced the price of the current 8GB iPhone 3G to US$99 (Bt3,391), which is half the price originally charged when it was introduced last year.

Morgan Stanley estimates that the slashed price of the entry-level 8GB iPhone model could double current sales. The new $99 cost of 8GB iPhone is half the cost of the Palm Pre.

The price cut came just days after Palm launched the Pre smart phone, which some analysts say is the iPhone's closest rival. Apple executives did not comment on the impact on profitability from the cheaper iPhone

Apple's strategy appears designed to take advantage of the Pre's limited availability, said Lawrence Harris, from market research firm CL King and Associates.

The full-featured $99 iPhone will turn up the heat on its rivals, said Michael Gartenberg, an analyst with market researcher Interpret. It will put a lot of pressure on the competition.

Apple says it has sold more than 40 million iPhones and music-playing iPod Touches to date, up from 37 million reported sold in a quarterly-earnings statement in April.

The new iPhone 3GS

Apple's new smart phone, the iPhone 3GS, comes with twice the speed of the old device and with a longer battery life. While the 3G label still indicates its third-generation technology, the "S" stands for speed.

A 16GB iPhone 3GS will cost $199, while the 32GB model will cost $299.

Most of the iPhone 3GS's improvements are in software. The new iPhone OS 3.0 operating system will be available for free download to any generation iPhone on June 17. It will also be downloadable to any generation iPod Touch for a fee of $10. The operating system will allow software developers to sell additional content, like electronic books or extra levels to a video game, within applications.

Apple says messaging will be more than twice as fast on the iPhone 3GS than it was on its predecessor. Battery life improvements also point to factors other than the hardware changes.

Apple has announced other new features in smart phone's software, such as an ability to cut, copy and paste text, and "tethering," which means the iPhone 3GS can be used to connect a computer to the Internet.

Apple might also be banking on expanding the profits it reaps from taking 30 per cent of the revenue from downloadable applications on the iPhone and the iPod Touch.

The App Store gives Apple a huge advantage over Palm and others. Via its iTunes App Store, Apple has made available more than 50,000 applications for the iPhone and iPod Touch, and among them are a host of new applications.

Palm Pre aiming for significant share

The Palm Pre, the new smart phone from the US pioneer in handheld devices, went on sale in the United States at the weekend amid generally glowing reviews and favourable comparisons to Apple's iPhone.

The Pre was named Best in Show at the 2009 Consumer Electronics Show in Las Vegas in January, and most reviewers have been equally full of praise for the latest device from the California-based company.

Palm produced some of the first personal digital assistants (PDAs) in the 1990s, but has been lagging behind rivals Nokia, Apple and Research in Motion (RIM), maker of the Blackberry, in recent years.

The much-anticipated touch-screen Pre is being seen as Palm's best opportunity in years to win back a significant share of the highly competitive cellphone market.

In what has been hailed as a remarkable achievement, Palm - a company that was something of a has-been - came up with a phone operating system that is more powerful, elegant and user-friendly.

"It's always nice to see a bunch of people waiting for a product you worked on," Palm executive chairman Jon Rubinstein - a former Apple executive who helped create the iPod - said at a store in San Francisco's financial district, where more than a dozen people lined up to purchase a Pre.

He said the opportunities for smart phones were big enough to sustain a market for three to five successful vendors.

"For us, the opportunity is not to take customers away from RIM or Apple," Rubinstein said, but rather to entice users of lower-level cellphones to upgrade to a more powerful smart phone.

BlackBerry Storm 2 is coming

Meanwhile, RIM is working on its next-generation device, which is currently labelled BlackBerry Storm 2, although this may not be its final name.

The first-generation Storm has been a success "in terms of sales and adoption" and its sales remain strong, which has prompted the company to develop the line.

The BlackBerry Storm was RIM's first touch-screen device and was quickly pegged as the company's answer to the iPhone.

Co-chief executive Jim Balsillie says more than half of the company's 25 million subscribers now fall into the non-corporate category.

A recent report by market research firm NPD Group revealed that the BlackBerry Curve 8300 series surpassed the iPhone 3G as the top-selling consumer smart phone in the United States. The BlackBerry Storm came in third and the BlackBerry Pearl came in fourth.