Smartphones, The PC Killer in Your Pocket

Apple’s killler iPhone sales have forced other smartphone makers to step up their game. But if you read any review of a competing product in the consumer cell phone market, that is the non-enterprise user, the iPhone is the gold standard by which all others can’t compare. No question.

The trouble is that most people agree it’s a horrible phone on a lousy network, so it’s not really a cell phone. The inappropriately named iPhone is really a mini-computer and gaming device. If you get two iPhone users in the same room, inevitably their talk turns to the cool apps they have on their phones. And then they talk about the dropped calls and how quickly they will leave AT&T once it loses its exclusive carrier privilege.

If the AT&T’s iPhone customers do as predicted, leave for better networks once AT&T’s exclusive partnership with Apple runs out, the carrier’s revenues, already suffering through decreased landline use, will fall off the cliff. To prevent this dramatic lose of income the carrier has to physically demonstrate that its network has improved service because marketing alone won’t to get the job done. AT&T may claim more bars in more places, but no one who has AT&T for carrier believes that tag line.

Of course, AT&T may have another surprise up their sleeves, like their first exclusive arrangement with Apple, but I doubt it.

In a perverse way, while the introduction of smartphones like the iPhone has given the carriers more high paying data using customers, it’s a limited their opportunity to drive greater revenue from the customers.

There was a time when Verizon pushed its own music service, overcharging for music with bad sound quality, music that you probably owned already and did not what to pay for again. The iPhone effectively put an end to that potential revenue stream and the Apple app store killed any notion the carriers might have had about delivering games across their networks.

What interesting in all of this is that consumer technology’s true giant, Microsoft, hasn’t found a toe hold in this market. By any objective standard, both versions of the Zune player have been a a bust, if not an outright disaster. Besides, Microsoft attempts to corner and closed the market on PDA operating devices are in the trash bin next to the Apple Newton

This is important because as smartphones become more and more sophisticated, more and more people will stop buying laptops, especially people who can only afford one or the other. You don’t think that going to happen, tell that to the desktop computer makers.