SCOTTSDALE, Ariz., October 15, 2008— When Apple launched the iPhone a little over a year ago, they disrupted the industry forever.  Let’s give respect to a maverick and a trend setter. Apple proved that the end user, the ultimate decision maker, was ready for a change.  However, they also woke up several sleeping giants that had been happy for years.

Apple did not copy the rest; they taught them a lesson. They made a sleek, sexy and cool phone that people wanted.  Motorola did this earlier with the Razor, but they did not sustain the effort. Apple went beyond simply replacing the keyboard with a huge touch-screen display, they created a fun, yet effective user interface.  It was different; . . . it was cool; . .  it was sexy; . . . it was pure Apple.  The Apple disciples came out in droves to get the first ones.

Smartphones to the Main Stream
This is what opened the eyes of the real handset manufacturers.  Nokia, Sony Ericsson, Samsung, and yes Motorola now know that there is a high margin business if you deliver the right product.  The market for smartphones is growing and is the most lucrative handset market with the highest margins.  There were approximately 125M smartphones sold in 2007. 

One of the most interesting trends in handsets is that there is now a blurring of the lines between multimedia handsets and smart phones.  “Smartphones” like the Samsung’s Instinct, Nokia’s N70 and Apple’s iPhone are all loaded with multimedia feature like high resolution image sensors, compelling displays, and superior music capabilities.  A smartphone is commonly defined as being an open platform handset that allows access to the OS (Operating System) for application development.  Apple is there.  However, the target market for these handsets has been business professionals.  Now with smartphones adding a full complement of multimedia capabilities, the market has now split into two classes, with a new consumer-oriented segment emerging.

Apple Created the First Consumer Friendly Smartphone, but Will Nokia Deliver it to the Masses?
Handset manufacturers have been taking conservative, methodical steps to incrementally enhance the phone.  However, Apple’s iPhone changed the nature of competition. Yet, the major handset manufacturers were just sleeping… not dead. 

Now they are responding, and bringing with them the years of experience and manufacturing prowess that matches the billion unit annual shipments.  Now, the true powerhouse and number one market share holder, Nokia, has taken its first shot with the 5800 aka Tubes. 

Nokia has the large touch-screen display.   Their XpressMusic phone comes with music for the first year, challenging the iTunes á la cart model.  In fact, the Tubes surpasses iPhone on a variety of usability features, including cut and paste, voice dialing, video dialing, MMS, instant messaging, an expansion MicroSD Memory Port , and a higher resolution 3.2 megapixel image auto focus sensor with dual LED flash. 

The Future
Nokia’s phone is not even directly aimed at the iPhone market.  It is being produced at a much lower price for midrange customers looking for an alternative to the iPhone.  It is about half the cost of Apple’s phone. More importantly it does not locked into a particular service provider, featuring a SIM card in a covenant, easily accessed slot. 

Nokia’s first pass is nice shot across Apples bow.  It is certainly the first of many shots to come.  The giant has awoken.

 About Multimedia Intelligence
 
MultiMedia Intelligence, a market research and consultancy firm, specializes on the markets and technologies for delivering and monetizing digital content and services across multiple platforms. We look beyond the classic 'three screens,' which include TVs, mobile handsets, and computers. We put markets into the broader context of the industry ecosystems that are converging and changing traditional business models.