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iPhone 3G and First Third-Party iPhone Apps

Apple has just dramatically expanded the addressable market for the iPhone

If Apple hadn't announced the 3G iPhone today, its share price would no doubt have tanked sharply: this was one of the most anticipated launches in recent memory and has had Apple fans salivating for weeks. The new iPhone checks most of the boxes the various rumors had suggested it would - 3G, GPS, Exchange and VPN support, and so on. It didn't get any bigger - it still tops out at 16GB, half the storage of the largest iPod Touch - but most customers probably won't mind that too much.

Up to this point, the iPhone has been a device for gadget fanatics and big spenders, while shortcomings like the price and lack of 3G have limited the addressable market considerably. By adding 3G, GPS and enterprise support and lowering the starting price, Apple has just dramatically expanded the addressable market for the iPhone, such that it now has at least some claim to be a mainstream device. The big increase in available countries will further add to the potential market size, and Apple should now have no problems reaching its near-term goals for iPhone sales. The bigger question now is whether it will be able to keep up with demand.

The initial applications were also an excellent showcase of why the iPhone has had such a huge appeal despite the selling price and lack of 3G: they again offer a completely new experience compared with what people are used to on mobile devices. The number of applications available to date is small, and Apple's insistence on the official Application Store as the only source is an unfortunate limiting factor. But no doubt the number of applications will grow rapidly and users used to using iTunes to load music and other content onto their iPhones and iPods will no doubt learn to live with it, or continue to Jailbreak their iPhones for access to a wider range of unsanctioned applications.

MobileMe was the biggest surprise of the event, although some blogs had picked up on some signs that it was coming in the last week. It extends .Mac to the iPhone and iPod but perhaps most importantly the PC, and as such becomes a service with many more applications than .Mac ever had. The demo looked pretty, but as ever the proof will be in the pudding as users put the service under pressure and stretch it to its limits. Previous services along these lines have disappointed, and it's not clear users will find Apple a natural provider of "in the cloud" storage and synchronization solutions.

More Stories By Jan Dawson

Jan Dawson is VP of Ovum's US Enterprise Practice, and is based in Northern New Jersey, focusing on the North American and global enterprise markets.

In his role, Jan leads Ovum's research on enterprise network services in North America. As well as conducting research and authoring reports, he works directly with clients to help them implement the strategies recommended in Ovum's research. Jan regularly contributes reports to Ovum's enterprise advisory services, [email protected] and [email protected], which provide analysis of industry and product trends, and advice for enterprise service providers and vendors. He also leads Ovum's wireline strategy research in North America.

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iPhone News Desk 06/09/08 06:56:08 PM EDT

Up to this point, the iPhone has been a device for gadget fanatics and big spenders, while shortcomings like the price and lack of 3G have limited the addressable market considerably