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Apple proves: It pays to be late

...And ignore the mobile networks

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Large Tier 1 phone manufacturers such as Nokia and Samsung pursue a strategy of market segmentation, where differences between products are reduced to tickboxes on a spreadsheet. Analysts weight the relative strength of the "portfolio" on the play in a "segment". This means that the care and attention paid to the final product (and remember who the customer really is) are minimal. It's better to be mediocre in different areas than strong in one but weak in another. And it shows in the quality of the end user experience.

As soon as the iPhone arrived it was clearly different. While the original iPhone was slow, and lacking in features, it had clearly been nurtured with thought, care and attention. The hype didn't initially enamour a sceptical British public (recall the tumbleweed that blew through empty stores when O2 and Carphone first launched the iPhone in the UK), but it deservedly became a word of mouth hit. You can't keep a good product down.

As a indicator of the iPhone steamroller, today, you can now pick up an iPhone on pre-pay and for a tenner a month you'll get 500 minutes, unlimited 3G data (the Comes With Asterisks version of "unlimited") and unlimited Wi-Fi for a year. The catch is that you plunk down a large amount of money to get this deal. But unlike an investment in a regular smartphone, the iPhone keeps its value very well. So while the sticker price tops £400 for the 16GB version, in a year's time you'll probably be able to recoup $250 to £300 for it on eBay. It's better than any deal on postpay.

Rivals would love this kind of deal for their smartphones, just as they'd love to have instant eBay, Facebook and PayPal apps available. (They'd love to have more than a handful of users downloading the inevitable bugfixes, too.) But they only have themselves to blame for years of neglecting the right customer - us - in favour of the networks.

So is Apple home and dry? Not quite by a long shot, as we'll see.

A few phones short of a masterplan

Market segmentation still has enormous strength for a manufacturer. Traditional economies of scale also benefit the established players. Look how quickly Nokia could turn the innards of its premium flagship N96 into the budget 6220 classic.

Marketing one phone doesn't satisfy all kinds of people. Old crusties like your reporter (alternating between a seven-year-old design and a five-year-old design as the main voice device) like simplicity, big buttons and a long-lasting battery. The iPhone only checks one of those boxes. The poor camera and lack of 30fps video are a bit embarrassing on a high end device. It also takes too long to switch between tasks - something Palm noticed, and designed around with its Pre.

So the classic technique for a successful manufacturer is to differentiate, so that it looks like you are the entire market. Apple should be thinking about an "iPhone Photo", an iPhone Pro (with extended battery and a QWERTY, or at very least, a good alphanumeric keypad) and a budget iPhone Nano. It needs to ramp up speed and usability (particularly task-switching), and it should drop its hostility to run times such as Java, Flash and scripting engines. If you're going to be the market, you can afford to tolerate development environments you don't completely control.

This week shows Apple as a kind of mirror image to Nokia. The Finns still have arguably the best hardware engineers in the business, but are chained to a user interface that should have been canned a long time ago. It's lost the mindshare of enthusiasts and developers. "Pretty much the only community around S60 is the community we pay to be there," Nokia admitted last year. As the demise of EMCC and others shows, Symbian stalwarts have gone elsewhere. One former staffer describes it as more of "picosystem" than an ecosystem these days.

Maybe Nokia really should concentrate on its key strengths, and license the iPhone OS?

In the end the only thing standing between Apple and ruling the phone business may be not making enough phones people actually want. ®

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