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Brand power — or was iPhone’s competition Android or no-iPhone

The Verizon iPhone is coming February 10 and some of the big questions are: who will leave the AT&T iPhone for the Verizon iPhone, who will leave the Verizon Droid for the Verizon iPhone, and most importantly, what will the next huge wave of Verizon feature phone upgraders choose?

AT&T’s reception — or the lack thereof in some areas — will certainly propel some current iPhone users to switch networks (our poll shows about 19% of TiPb readers are considering doing just that). Some wanted the iPhone badly enough that they tolerated a poor network experience for years but now that they have the choice they’ll switch to a network that better suits their needs as soon as contract and/or cash allow.

On the flip side some wanted the iPhone but just couldn’t or wouldn’t live with AT&T service in their area so stuck with Verizon and got BlackBerry Storms or, especially lately, Verizon Droids. I’m deliberately using Droid and not Android because, like it or not, Android is not a mainstream brand. And no matter how much market metric companies like to graph it, it’s not a phone any consumer can buy. Droid is, in several models, and thanks to Verizon’s massive advertising campaign coupled with Google’s powerful software, it’s a phone that gained some mainstream mindshare.

(Samsung’s Galaxy S, while popular, has a fragmented brand with different names on every carrier so despite incredible sales it collectively doesn’t enjoy the same level of mainstream mindshare.)

No doubt many people bought Droids because they love Android. They’re probably the same people who know what Android is and specifically why it’s great at what it does. They also know Galaxy S and the other models. Many others just wanted a smartphone and Droid did — original, Pro, 2, Incredible, Bionic, etc. They went into the store and it was a brand they recognized thanks to Verizon’s advertising and, with the only other recognizable brand being BlackBerry, they probably picked one or the other (increasingly Droid based on the share numbers).

Now those same customers will walk in and see iPhone. Money Verizon used to spend on marketing Droid is now also being used to market iPhone on Verizon. Apple is also marketing iPhone on Verizon. AT&T will continue to market iPhone (Verizon and AT&T will be competing not just for users but for iPhone users and that benefits the iPhone brand). No one else is marketing Droid.

Some who previously bought BlackBerry Storm or Droid will switch to iPhone, also when cash and/or contract allows. Some will stay with both (productivity mavens and power users), but those who wanted the iPhone and couldn’t get it will switch when they can.

Existing smartphone users are also only the tip of the iceberg. The giant, ship-crushing base of the iceberg is feature phone users who either waited for the iPhone or see the iPhone as just another phone they’ll enjoy using (as opposed to other, more complicated even if more powerful smartphones). The partial migration of AT&T iPhone users and Verizon BlackBerry and Droid users is one thing. The inevitable migration of mainstream feature phone to mainstream smartphone users is another. Because right now iPhone is almost synonymous with mainstream smartphone.

Right now Verizon customers going into a Verizon store to get a new phone might recognize BlackBerry or Droid. Next month they absolutely will recognize iPhone. Just look at how Verizon is positioning it:

• iPhone is front and center on the Verizon home page
• Click on Verizon’s Phone menu and what choices do you get? iPhone, smartphone, feature phone.

Not only is iPhone listed first, Droid and BlackBerry aren’t listed at all. You have to dig for them. [Daring Fireball]

The number of Droid users — of all Android users — on Verizon today is small compared to the number of iPhone users on AT&T. Collectively, across all US networks, Android phones have numbers that equal or beat iPhone just on AT&T. [New York Times]

Next month iPhone will be on Verizon as well. How many will switch to iPhone from Droid? How many will switch to the Verizon iPhone as their first smartphone? No one knows for sure but the number will pass 1 million very quickly, probably in the first week, and several million, probably the first quarter.

Up until now the choice may have been iPhone on AT&T or Droid on Verizon. It also may have been iPhone on AT&T or no-iPhone on Verizon. We’ll find out which next month. My suspicion is Apple’s investment in brand will pay huge dividends and will be something other OS makers and manufacturers will have to start taking much more seriously.

Android's gift to Apple

Google may, paradoxically, be making the world a better place to sell iPhones

Source: Asymco

You might think that the almost viral spread of Google's (GOOG) free and open-source Android operating system would eventually drive down smartphone prices and put pressure on Apple's (AAPL) proprietary iOS -- and on Steve Jobs' enviable profit margins.

But an analysis of the eight largest mobile vendors' average selling prices posted overnight Monday by Asymco's Horace Dediu suggests that something quite different is happening.

Apple's average iPhone prices have actually gone up since Android was introduced, and although there has been some price erosion among the other top vendors (orange line in the chart above), it is surprisingly small.

What's going on?

According the Dediu, the smartphone market is growing so rapidly (90% per year), that there is limited direct competition between smartphones and a lot of competition between smartphones and so-called feature phones. It's the feature phone makers who are having to slash their prices to compete.

"The only correlation with pricing power is whether you build smartphones or dumb phones," he writes. "The more smartphones you build, the more price you can charge. This is regardless of platform."

Dediu has long argued that the phone market should be studied as a whole because the competition is not between platforms but between smart and non-smart. "Android," according to Dediu, "is expanding the market without crushing pricing."

"In a way, this is all good news -- even for Apple," he concludes. "A world full of smartphone users is a better addressable market for iPhones than one filled with voice products. iPhone's traction was always in markets which had been seeded by some smartphones: the U.S. with [Research in Motion (RIMM)] and Europe with [Nokia's (NOK)] Symbian. Such a smartphone-soaked world will have better mobile broadband infrastructure, users with more demanding tastes and awareness of the value that a smart device can bring."

Maybe letting Google CEO Eric Schmidt sit on Apple's board of directors wasn't such a bad idea after all.

AT&T

AT&T

Apple iPhone 4

This time it’s personal. No, we’re not referring to the increasingly testy rivalry between Apple and Google’s multiplying Android army. We’re talking about how much more personal a communicator the iPhone 4 is relative to its predecessor. For the first time ever you can have face-to-face video chats (though for now only with other iPhone 4 owners), and Apple has so vastly improved the camera on its handheld that you'll think twice about using that pocket-size digicam or camcorder to record precious memories. Even the relationship between you and your content—whether it’s the stuff you record, apps, websites, or iTunes videos—feels more personal, thanks to the ultra-sharp Retina display on this device.

When you consider that the iPhone 4 is also the thinnest smart phone on the market and it offers a considerably beefier battery than the iPhone 3GS, it’s hard to find fault with this sequel. Or is it? Monster-size competitors like the Evo 4G and Droid X are breathing down Apple’s neck, and one can’t ignore AT&T’s overtaxed network. Despite some flaws, the iPhone 4 does enough to stay slightly ahead of the superphone pack.

Design

Not only is the iPhone 4 a vast departure from the 3GS’ bulbous plastic backside, it’s also the antithesis of the big Android slabs that have suddenly become all the rage. In fact, the two-tone black-and-silver design looks like a very slim and elegant pocket camera. And we mean slim. At 0.37 inches, no other smart phone on the market has a sleeker profile. The iPhone 4 is also thinner and narrower than the 3GS, though both devices weigh the same 4.8 ounces.

While devices like the HTC Evo 4G and Motorola Droid X have sturdy and functional industrial designs, we wouldn’t call them sexy. The iPhone 4, by contrast, screams luxury; between the chemically hardened glass and little touches like how the light reflects off the ridges of the stainless steel band, this device looks and feels more expensive than its price tag intimates.

This silver band, which Apple claims is forged to be five time stronger than standard steel, wraps around the whole phone. On top you’ll find the power button, 3.5mm headphone jack, and one of two microphones (used for FaceTime calls and suppressing noise). The second mic (for voice calls, memos, and voice commands) is on the bottom along with the speaker and dock connector. A ringer switch and two circular volume controls line the left side, and the hole to access the micro-SIM Card is on the right. The black chassis (white coming soon) has a glossy but classy look and houses the 5-megapixel camera and LED flash.

Too bad Apple didn’t see fit to include a dedicated camera button for launching the app and taking photos. You can’t even program a shortcut for double tapping the Home button, as that’s now reserved for multitasking/switching apps. You also won’t find an HDMI port, which would make it much easier to share the HD footage you record with the iPhone 4’s camera on a big-screen TV. (Here’s hoping Apple or someone else launches an HDMI dock.)

Retina Display

While other smart phone makers are touting larger displays that display more information at once or Super AMOLED technology that’s tailor-made for outdoor readability, Apple went a different direction with the iPhone 4. Its Retina display (so named because the company claims that consumers can’t distinguish individual pixels) emphasizes clarity and pixels per inch. In fact, this handset’s 960 x 640-pixel, 326 dpi screen doubles that of the iPhone 3GS. While the Droid X’s display is nearly an inch larger (4.3 inches), it has a lower resolution of 854 x 480 pixels.

The end result is that text reads as if you were out of a magazine, an effect enhanced by the fact that everything from photos to webpages appear as if they’re painted on top of the display. IPS technology (found on the iPad) delivers superb viewing angles, putting the 3GS and most other smart phones to shame.

Now, the effect isn’t exactly mind-blowing, but we could definitely notice the difference when we had the same New York Times page and weather widget displayed on the iPhone 4 and its predecessor. Text was much sharper, and we could make out more detail in the two same Flickr photos of the Eiffel Tower.

App developers have already started to write or re-write applications for the iPhone 4’s Retina display, including Twitter and EA Sports’ NCAA Football (even the logos seem to jump off the screen). Having said all that, there are some benefits to a larger-screen device. For example, we were able to make out more text on The New York Times homepage on the 4.3-inch Evo 4G without needing to zoom in, and watching movies and TV shows is a more immersive experience (despite the narrower viewing angles).