In three short years the iPhone has become the industry benchmark for high-end smartphones and the fourth generation device only reinforces this view. The success of the iPhone is down to a number of interrelated factors. First, Apple created a device with a genuinely unique user experience, one that consumers still find engaging and easy to use. Second, Apple wrapped this user experience into a well designed and sleek form factor. Third, the company created an end-to-end platform that integrates Apple's own services (eg iTunes) as well as third party services onto the device (through the hugely successful App Store).
But perhaps more important subsequently has been Apples ability to build and motivate a large and active developer community that produces content, in the form of apps. This ecosystem of developers and the value they bring to the platform, as well as to consumers, is the hardest aspect of the iPhone proposition for other companies to replicate, especially given the reluctance of developers to support multiple software platforms. It is also the reason Apple is so keen to protect this community from disintermediation by the open web and hence its rather tough stance with Adobe over Flash.
However, the iPhone 4 faces much stiffer competition than its predecessors. The rise of Google Android over the last two years has been phenomenal and is allowing manufacturers to create appealing alternatives to the iPhone; critically at cheaper prices. These handsets are more than just iPhone clones. The risk to Apple is that these devices offer greater freedom with available content and may prove more appealing, if it offers the right user and developer experience, than a device with Apple approved content only. This may ultimately be what puts the brakes on unlimited iPhone growth.
Adam Leach is Principal Analyst, Ovum.
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