The iPhone 3G is dead; long live the iPhone '2G'

Recognising that the new iPhone 4 has lifted the benchmark for high-end smartphones, we should also accept that it is only an evolutionary product albeit with some new and, if not overdue, attractive features.

While the company is still promoting the current iPhone 3GS as the fastest and most powerful iPhone yet, this range is unlikely to be available for many months more as production is rapidly shifted to ramp up iPhone 4 shipment.

So, will this latest handset from Apple become the centre of its handset universe, or will the company take the bold course of reorganising its product portfolio and relaunch the iPhone 3G as a low-cost, mass-market device?

Having first launched the iPhone three years ago, Apple has achieved success beyond what was thought possible by many within the industry. It has whipped up a media frenzy and reset user expectations--but, more importantly, stolen an increasing share of the highly profitable smartphone market in mature regions.

Undoubtedly, the iPhone 4 will be Apple's flagship product for the next 12 months or more. But will the company want to simply relinquish the market it has gained with its iPhone 3G handset, or expand this existing sector by launching an iPhone '2G' designed to appeal to a wide market including developing countries?

The only 'evidence' to support this theory is industry chatter that Apple will replace the existing iPhone 3GS 16GB and 32GB handsets with a new 8GB version--which I have speculatively labelled the iPhone '2G.'

However, there are parallels within Apple's product strategy that support this viewpoint.

The first iPod made its debut in 2001, but the company only realised three years later with the launch of its iTunes store that there was a mass market for digital music. This prompted Apple to develop the first variant of the iPod line, the iPod mini, the following year.

The original iPod was a benchmark product and quickly established itself with a market share of about 30 per cent, perhaps setting the guidelines for the iPhone. The iPod mini, which Apple replaced at the end of 2005 with the Nano, was specifically positioned to grab the attention of consumers looking for a cheaper option, but wanting to be part of the Apple family.

However, the competition--Nokia, Samsung and others, are doing all they can to overhaul Apple, and already have a wide and competent range of mid-range smartphones that could cause problems for any future iPhone '2G' device.

But Apple is nothing if not a shrewd marketeer and would probably take great pleasure in causing alarm and despondence within the ranks of its rivals if they were ever to launch such a device. -Paul

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