iPhone Business Analysis

Apple's iPhone is it's latest entry into a field that lightly touches computers but has more of an otherworldly feel. Below I will delineate the iPhone's chances of success/survival in the phone game based upon Porter's Five Forces Model.

iPhone combines three products — a revolutionary mobile phone, a wide screen iPod with touch controls, and a breakthrough Internet communications device with desktop-class email, web browsing, maps, and searching — into one small and lightweight handheld device. iPhone also introduces an entirely new user interface based on a large multi-touch display and pioneering new software, letting you control everything with just your fingers.. – Apple iPhone Website.

Like any new product it won't be known for about 2 years whether or not it is successful. There will be those who rush out to get the iPhone as soon as it's available (early adopters) but most people will hold off for a few months to see if the hoopla is really is backed up with a solid product. What makes this product introduction so interesting is the fact that iPhone simultaneously enters into three markets at one time; the cell phone market, the PDA/mobile communications market, and the iPod/mobile music market. So when looking at Porter's Five Forces, you have to analyze each the iPhone's chances in each market.

Buyer Power-

While most consumers expect to pay a reasonable to high-end price for a fully equipped iPod and PDA device, most consumers are used to getting their phones for free. In fact "Free is the price many consumers expect in the United States. Carrier offers say it all. Out of Cingular's 82 offered phones, 10 are free, and another 22 sell for less than $40. During the holidays, some phone and consumer electronics stores offered Motorola Razrs two for the price of one. There is expectation that phones will be free with service, or at least cheap. The iPhone will sell for $499 or $599, depending on model, according to Jobs.

In my view this is going to be one of two large hurdles the iPhone is going to have to clear in order to be successful. As the saying goes, nothing beats free. In addition to the high price, Apple will also have to offer something extremely compelling to get consumers to switch.

As it stands most Americans already have a cell phone and many have a blackberry like device that allows for e-mail transmission coupled with cell phone capabilities.