The more I think about this, the more I’m certain that the iPhone is symptomatic of bigger changes than simply being a well-designed handset that lifts the design bar has been lifted a number of notches. The likes of Nokia and Motorola are going to have to improve on their UIs and form factors to compete. But it goes further than this - the impact on the economics of the networks could be significant as well.
The first impact will be as a result of the (as far as I’m aware) unprecedented sole carrier arrangements - AT&T; in the US, O2 in the UK, TMobile in Germany and so on. The idea of Apple taking a slice of the carrier revenue is a first, and the idea that the carriers had to outbid each other for the rights to the iPhone isn’t one they will have been happy with. The interesting part is how this kickback is calculated - if it’s based on a slice of the monthly fees, then the incentive for Apple to keep the iPhone unlockable are lot less than if they’re getting a part of the traffic charges.
Up until now, the “applications” on your average phone have been aimed less at meeting customer needs than they have been aimed at maximising carrier revenue - after all, they’ve got to recoup those 3G license fees from somewhere. Hence customer-unfriendly moves like blocking IM traffic - yes, TMobile, I’m looking at you. And the utility of the average “application” has been pretty marginal, at best - “portals” which seem to be litle more than upsell attempts.
Not that the iPhone is the first device for which real development is possible, but it’s the first that seems to have any kind of mindshare amongst potential developers. But those applications which are developed are going to be treating the carrier network as a dumb pipe in the sky - just transmitting bits, not adding any “value” in the way that the carriers have attempted to do so up until now.
Already Apple have disenfranchised the networks when it comes to ringtones, because these are managed at the iTunes level, not via the network. The revenues from iPhone ringtones (although that revenue stream will only have lasted as long as it took for iTunes 7.6 to allow user-generated ringtones) accrue directly to Apple.
Ostensibly the arrival of the iPhone SDK will open up application development to the (Objective C-speaking) masses, although there’s talk of Apple retaining its control through using iTunes as the only legitimate way of getting apps onto the iPhone. But that’s cold comfort to the carriers - I can’t envisage a situation where Apple are going to entertain withholding an app because (say) O2 isn’t happy with it. It’ll be a cold day in hell before we see a legitimate Apple-delivered version of Skype for the iPhone, but if or when TMobile finally get the iPhone in the UK, they’re not going to be in a position to block IM traffic for example just because they’re trying to protect their legacy SMS revenues.
All of which puts the mobile carriers in an invidious position - whether they like it or not, they’re gradually being reduced to the position of ISPs-in-the-sky. Whether I use BT Openworld or Tiscali or Plusnet or Zen (which I do) is largely irrelevant to me when I think about internet connectivity - so long as the reliability is above a certain level, and below a certain price, I don’t care all that much. The so-called “added value” services of portals and so on are redundant, because the service is effectively a commodity. That’s where the mobile networks are heading, and it’s difficult to see how they’re going to stop that process.