The iPhone’s Other Killer App


Looking at the latest data on smartphone market share from research firm Canalys, it would appear that while Apple (s appl) is doing well, RIM (s rimm) is doing better.


According to Canalys, over 41 million smartphones shipped last quarter, and of those Apple sold 7.3 million, up from 6.9 million a year ago, a 6.7 percent increase. That’s the good news. The bad news is for HTC, the only major smartphone maker to lose market share, down 5.6 percent, but the best news is for RIM. RIM sold 8.5 million phones, up from 6 million last year, a super-sized 40 percent increase. Based upon these numbers, it would seem logical to conclude RIM is the big winner among smartphone makers, but these numbers only touch the surface of the situation, or rather they don’t.

While conventional wisdom says the killer application for the iPhone has been the App Store, a new survey from comScore suggests that touch is quickly becoming the must have feature for smartphones. For the U.S., sales of touchscreen phones were up 159 percent from a year ago, an even larger increase than touchscreen smartphone sales, which were up 63 percent. Of the latter, the iPhone is the undisputed leader.

The iPhone accounts for a third of the touchscreen smartphone market in the U.S., with no other competitor in double digits. The Blackberry Storm is at 7 percent, the T-Mobile G1 and HTC Touch are at 3.6 and 3.1 percent, respectively. Mark Donovan of comScore believes the iPhone “set the trend in the industry for touchscreen devices, so it’s no surprise that it has the largest share of the market.” However, he also believes “competitors have entered the touchscreen market with compelling devices, competition is clearly heating up.”

That latter comment sounds eerily familiar, not at all unlike predictions about iPod competitors in 2004. Back then, the iPod’s success was attributed to everything from the iTunes ecosystem to Apple marketing, but what really set the iPod apart was the interface, especially the patented click wheel. What we are seeing now is that in every review from the Palm Pre to the Motorola Droid there is a comparison to the multi-touch interface of the iPhone. Without exception, the iPhone wins every time.

Even better, from Apple’s point of view, the smartphone with the worst touch interface — besides beleaguered Windows Mobile on HTC phones — has been RIM’s BlackBerry Storm and Storm2. Further, what is arguably the closest competitor, the Motorola Droid will lack multi-touch, at least in the U.S. Motorola obfuscated something about “differentiated consumer experiences on our mobile devices” based on “region, carrier preferences and consumer needs,” but another theory is wariness concerning Apple’s patents on multi-touch.

Let’s hope so. A vigorous defense of that mutli-touch experience is one half of what could be a plan for world domination by Apple in the phone market. The other half is the end of carrier exclusivity and the launch of a carrier-subsidized “free” iPhone nano, a media player and phone with the best interface on the planet, Apple’s golden touch.



I would just point out that while only 6.7% more iPhones SHIPPED this past quarter over a year ago, over 40% more iPhones were SOLD.

As you know or should know or forgotten, last year, Apple ran down the EDGE iPhone inventory before the 3G launch. The 3G launch had to refill the channel inventory. That was 2M iPhones, so actual iPhones sold last year were only 4.9M, not 6.9M. This year, of the 7.3M iPhones shipped, about 500k were additional to channel inventory, meaning sellthru was roughly 6.8M, or about a 40% increase in sales.


“but the best news is for RIM. RIM sold 8.5 million phones, up from 6 million last year, a super-sized 40 percent increase.”


Some people seem to have made money on the BOGO.

Terminate the extra line for $175 and sell the phone on e-bay or elsewhere for as much as $300!

VZW has increased the early termination to $350 now !


@BKim: Interesting theory but it’s not based on anything IMO.

The curve on the graph is pretty steep, it’s unlikely to ever go down despite the craptastic nature of 90% of the apps. There is never a shortage of crap.

The very worst scenario is more likely to be stagnant growth (stabilising at some number *above* the current 100K), but even then, past trends would predict that the percentage of the eventual “final” number in that scenario that constitute *quality* apps would go up.


You should delete the BKIM comment as it has nothing to do with your post and is a shill for their app – or he cannot figure out how to use more than one poorly selling app on his phone. While the competition is clearly stronger in phones versus the ipod also-rans – basically Apple’s goals are to gain about the same market share in the top end of the market, the $600 range (with subsidies) of smartphones while letting RIM give away phones (bogo) or Andreoid which will have 20 companies sniping each other and either cannibalize its own marketing and of course, drive down prices and margins. There will be two markets, the high margin market that Apple is after and the low margin rest of the players.


WRONG! What makes BKim think the app count will stop here. The App Store is less than 1 1/2 years old. It will mature. Developers will mature and get wiser. The count will fall only to be matched by a rise in average quality.
Now go collect your 3 pieces from RIM et al.


The app store in its current form does not seem sustainable because (as a recent study suggest) most of the developers are not making money. Out of all the apps I’ve installed I have only paid for NeuroMobile and few others. It’s also one the few apps I still use everyday. Many of the free and junk apps will go away and the more popular ones will go to higher price point. So the 100K apps that Apple claims will be reduced to a much smaller number in the long-run.

Comments are closed.