CTIA attendees ponder the iPhone

CTIA organizers devote an entire panel session to a single product from a company brand-new to the mobile phone market that didn't even attend the show: Apple's iPhone.

Influence is tough to measure, but it's one of those things where you know it when you see it.

Apple's influence on the mobile phone industry after just over 90 days as a player was evident at the CTIA show Tuesday. Microsoft CEO Steve Ballmer didn't mention the iPhone specifically in his keynote address, but noted that Apple "has done some nice work." After Ballmer's keynote, a friend of some staffers in Microsoft's booth enthusiastically demonstrated his iPhone for an audience checking out the latest Windows Mobile phones. And a panel of five mobile executives spent 90 minutes discussing the impact of the iPhone on their businesses and the future of the industry.

Surrounded by Windows Mobile phones, a friend of the blue-shirted staffers at Microsoft's booth shows off his iPhone. Tom Krazit/CNET News.com

That's not because they're scared Apple is eating into their piece of the pie, observed Motorola's David Ulmer, senior director of entertainment products. Apple may have sold over a million iPhones last quarter, but "some of us sold that many before breakfast," he quipped: The entire mobile phone industry ships well over a billion handsets a year these days.

Instead, panelists recognized the iPhone as bringing two major changes to their industry. First, the iPhone is the "first mass-market non-carrier controlled event," said Adam Guy, general manager of the telecom and media practice at Compete, a market research firm. Apple owns the experience and the relationship with iPhone users, not the carrier, and that's a feat the other hardware companies have yet to pull off.

The iPhone also is a new way of looking at smartphones: Is it a computer? A phone? An iPod? Lee Ott, director of product management for Yahoo Mobile, said, "The iPhone is the first phone that puts the Internet and data right up on a par with calling," explaining that while there are plenty of phones out there capable of browsing the Internet, few of those products emphasize data as much as they do voice calls. In fact, the iPhone is already one of the top five devices in the world that accesses Yahoo Mobile on a daily basis, he said.

Well then, why didn't the established players figure out that formula? Given the lack of a carrier representative on stage, panelists spent a fair amount of time discussing the sins of the carriers. Ulmer said that Motorola sells tons of touch-screen capable phones in China, but when they approached U.S. carriers with similar designs two years ago, they were rebuffed by executives who said, "Come back when you've got a keypad."

He also noted that in the past, it was more profitable for carriers to emphasize voice and text messaging on bandwidth-constrained networks over interesting video or data applications, so that's what they did. That's changing as 3G networks become more widespread, but helps explain why the iPhone caught the industry flat-footed.

But these are companies with deep pockets and enough experience to know which way the wind blows. All major U.S. carriers and most major phone manufacturers will have an answer to the iPhone available by the end of this year that emphasizes a better user experience, said Sam Altman, CEO of Loopt, a start-up that lets friends track each other's whereabouts through their mobile phones. "Even for people that don't have iPhones, they expect their phone to behave like that."

Sometimes, it takes an outsider to remind an industry where it needs to be, said Cyriac Roeding, executive vice president for CBS Mobile. "For the first time, you have a Silicon Valley company disrupting the entire (mobile) market. The fact that we are sitting here talking about the iPhone, and that Motorola is joining us to talk about the iPhone, shows the power of the iPhone. It's an awesome version 1.0."

About the author

    Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.

     

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