iPhone applications spoil party for rivals

iPhone and iPod Touch users around the world have downloaded more than three billion apps.

On a warm night in Florida last month, a group of New Zealand and Australian business people were enjoying a few beers and chatting happily about the state of the mobile phone industry.

They were relaxing after a day at the annual Wireless Enterprise Symposium, a conference organised by BlackBerry smartphone maker Research In Motion.

RIM executives had spent the day talking up their company's prospects.

Smartphone sales were continuing to grow, new models had been announced and a new, sexier phone operating system was on the horizon.

Whilst corporate get-togethers of this type are never downbeat affairs, the opulent Orlando conference venue seemed to match the bullish vibe RIM staff were exuding.

Among the Australasian group was the head of a chain of phone retail stores.

A textbook type-A personality, the successful entrepreneur had been speaking freely about his business and was in the midst of sharing in a round of grizzling about a topic that annoys all travelling executives: the high cost of global roaming.

"I'll come home from a two-week trip to the States with a roaming bill of five or six grand," he said matter-of-factly before the conversation moved on to the type of phones people were buying at the moment.

Suddenly Mr Type-A became unusually reticent, glancing around to see if anyone was watching before plunging his hand into a pocket to pull out his personal handset.

Shock, horror, it was an Apple iPhone.

It was the first iPhone I'd seen since entering RIM's temporary land of all things BlackBerry a few days earlier and it steered the conversation in an enlightening direction.

One person at the table claimed to have heard that between a third and half of all phones sold today in New Zealand and Australia were iPhones. Other industry experts involved in the conversation, including Mr A, agreed that was probably the case.

He said he knew why Apple was so dominant in the smartphone war: it was all about the apps, the hundreds of thousands of downloadable software applications that do everything from simulate a game of pinball to monitoring your menstrual cycle.

As someone who is offered the opportunity to sample dozens of phones a year, it was the Apple apps that had reversed his initial indifference towards the device, he said.

"When the guys from Apple came to see me they were clever.

"They didn't just leave behind an iPhone, they preloaded it with apps."

He had since become addicted to using some favourite apps and was now an iPhone convert.

It was a bold admission to make, even among Antipodean friends, at a BlackBerry gig, but hardly a surprising revelation.

iPhone and iPod Touch users around the world have downloaded more than 3 billion apps - both free and paid-for - from Apple's App Store.

The success of the App Store is one of the most obvious indicators of how consumers are embracing smartphones as a technology device they can personalise through their individual choice of software.

Back in Auckland, Lone Misikini, the local head of commercial business at rival phone maker Sony-Ericsson, agrees the app factor has been the secret of Apple's success.

Sony-Ericsson is a relatively small player in the mobile handset market, but is continuing to push into the growing smartphone sector where the high retail price of handsets offers vendors good margins.

Misikini says the strong growth in smartphone sales means there is plenty of opportunity for a number of vendors, including Sony-Ericsson, to carve out market share.

He says Sony-Ericsson's latest smartphone, the Xperia X10, is expected to launch in New Zealand within weeks.

The X10 runs Google's Android mobile phone operating system and the device is an example of how some handset makers are addressing the lure of Apple's App Store and users' thirst for applications.

Android-based apps are available through Google's App Store equivalent, Google Apps Marketplace,which Google and its business partners hope will offer an appealing alternative to Apple's cache of software applications.

Android is certainly growing in popularity, with the number of phone manufacturers now creating smartphones that run the operating system continuing to rise.

This has led to predictions from some industry analysts that the number of Android-based phones in use will exceed the number of iPhones by some time next year.

The rise of the Android platform is being given a boost by Google through its own flagship handset, the Nexus One, which was launched in the US last year but is not yet available here.

Other major handset makers, including Nokia and RIM, have also invested in application download platforms with the aim of enticing handset users to stick with, or move to, their brands, as the iPhone juggernaut continues gain momentum.

Another aspect of making smartphones appealing to buyers is the attractiveness of the "user interface" or the graphical experience a user has while navigating through the phones' growing list of features andfunctions.

As it has with application downloads and usage, Apple's iPhone has led the way in friendly user interface (UI) development with the device widely acclaimed for its ease of use and intuitive menu layout.

Sony-Ericsson has pulled out all the stops to mimic Apple's UI success with the Xperia X10.

It has honed in on phone users' increasing demand for comprehensive social networking functionality on their smartphones by including software on the new phone which integrates, in a highly graphical fashion, a range of contact and social network information in what it hopes will be a format that appeals to users.

RIM used last month's Wireless Enterprise Symposium to preview the release of its latest BlackBerry phone operating system which similarly has highly graphical features reminiscent of the iPhone experience.

Misikini says the X10 aims to address a market for users seeking a smartphone that they can use as an effective tool for both business and personal needs.

RIM appears to have a similar target audience in mind with its new BlackBerry operating system - due to hit the market within the next few months - which has a similarly jazzed-up UI that should appeal to personal users.

Meanwhile, in a sign of how challenging it has been for other device makers to match the iPhone's consumer appeal, Nokia this week announced a corporate shakeup aimed at enabling it to compete more effectively at the smartphone end of the market.

Nokia, the world's largest handset maker, has been seen as not nimble enough when it comes to handset innovation, and this has resulted in it failing to come to market quickly enough with exciting devices.

Analysts say the new corporate structure made up of three new business units - Mobile Solutions, Mobile Phones and Markets - should help address the issue and set the company up to be more competitive in the smartphone arena.

But as its competitors work furiously to match or better its winning smartphone formula, Apple is hard at work preparing to one-up them with the imminent release of the next version of the iPhone.

Unofficially dubbed the iPhone 4G, the phone is rumoured to be set for a public debut at an Apple development conference in San Francisco next month.

With Apple and its many rivals all vigorously marketing a huge range of smartphones to an enthusiastic consumer base, expect the hype to continue and the range of handsets to grow.

If Mr Type-A returns to the Wireless Enterprise Symposium next year, it is anyone's guess whether he'll be brandishing one of the sponsor's new BlackBerry products, an updated iPhone, or something entirely different.

* Simon Hendery travelled to the Wireless Enterprise Symposium as a guest of Research In Motion.