Apple Apps Could Be Killer App To Some CE

By Amy Gilroy On Jul 21 2008 - 6:00am

Apple's iPhone 3G could prove disruptive to a wide range of consumer electronics devices, not just smartphones and PDA phones, a variety of analysts said.

The products that could feel the competitive impact of the communications device include handheld games, personal navigation devices (PNDs), portable radios and universal remote controls, they contended, because Apple is encouraging the development of third-party applications. Already, more than 800 applications are available for the device.

"The influence of Apple on the market is huge," contended Shiv Bakhshi, IDC's mobile device research director. "[Steve] Jobs changed the way we interact with computers, and then music with the iPod, and now the phone."

The iPhone 3G will be a game changer in consumer electronics, analysts explained, because it brings a large touchscreen display, accelerometer and fast Internet access to whatever applications are loaded on it. On top of that, Apple has a devoted corps of software developers looking to push the limits of the platform. About 250,000 software development kits were downloaded for the iPhone in four months, Apple noted.

Finally, Apple's marketing machine, the consumer-level penetration of the iTunes PC software and Apple's Apps store are helping promote new applications, the analysts said. The store appears as an icon on the iPhone for over-the-air downloads, but the store can also be accessed through iTunes software on a desktop PC. The apps also work on the iPod Touch.

IDC analyst Billy Pidgeon contended the iPhone 3G could finally create a cellphone gaming platform that lives up to consumer expectations. Until now, he explained, "the devices just haven't been capable of a lot of the tricks people expected." But the iPhone "is establishing a new set of minimum requirements — a large display, a touchscreen, an accelerometer and fast connectivity," he said. "The touchscreen and accelerometer are great for games because they provide a very intuitive and fun interface." If you tilt the iPhone forward, for example, a racing car can go faster, or if you tilt it backward, the car will go slower, he explained.

Also in mobile gaming, the iPhone is solving another problem, he continued. "iTunes, as a shop, steps up the promotion and marketing and retailing of the games. Typically games are sold over the air, and carriers don't usually provide a great retail experience," Pidgeon said.

For his part, Gartner digital entertainment director Michael McGuire said he believes "there's a serious potential for disruption" in the PND market. "The portable GPS in your car does a good job of giving you basic directions, but what's fascinating with the mobile phones, especially with the developer kits Apple has put out there, is what you can add." To McGuire's mind, it is the avid team of developers straining to find new uses for GPS that could pose a threat to the portable navigation devices (PND) market. On top of that, the iPhone features a relatively large screen that makes for easy-to follow maps.

TeleNav announced after the iPhone 3G launch, it will develop an Apple App that will convert the iPhone into a virtual PND with voice-issued turn-by-turn directions and traffic updates. The iPhone's relatively large screen makes it easier to follow maps while driving, overcoming a deficiency suffered by most GPS-equipped cellphones and matching one of the key advantages of a dedicated PND. Other Apple Apps link a user's buddy list to GPS, so friends at a convention who want to meet for lunch can easily find each other, noted McGuire.

The obvious category that will be affected by the iPhone 3G is the smartphone market. From the moment it shipped, analysts said it put a new price ceiling on the market at the subsidized prices of $199 and $299. At those prices, competitors will find it difficult to justify price tags above that level. In fact, Sprint has lowered the price of the HTC Touch PDA phone and Samsung Ace smartphone to $100 each with a two-year contract, from respective original costs of $250 and $200.

McGuire stresses that Apple's large developer base poses a challenge not only to consumer electronics products but other markets. "We're just scratching the surface of what can and can't be disrupted," he said, pointing to the downloadable iPhone apps, Google's open-platform Android cellphone operating system and other efforts to realign the carrier's control over the types of cellphones sold and their applications.

Strategy Analytics predicts the iPhone and iPhone 3G will account for 6.3 million of the 18.1 million touchscreen phones sold in the United States from January through December 2008.