Has the iPhone lost its cool factor?

With the iPhone seemingly everywhere -- including prepaid courtesy of Cricket -- it isn't quite as special as it used to be. That's bad news for the carriers.

Is the iPhone still cool? Apple

commentary Let's face it: the iPhone just isn't cool anymore.

It's sad, but true that there's a reverse correlation between availability and coolness. The harder it is to obtain something, the more highly coveted it is.

Apple's decision to offer the iPhone 4S and iPhone 4 to prepaid wireless provider Cricket may have tipped the scales away from the cool end. With Cricket in the fold, the iPhone is virtually everywhere (T-Mobile, sadly, is still left outside looking in), hitting a critical mass of availability. The iPhone has gone from a gadget of the tech elite to the safe device you buy for your mother.

The original iPhone was a status symbol that drew in gawkers whenever it was pulled out at bars or parties. Despite all the complaining about AT&T's network, the fact that it was on only one carrier gave it an air of exclusivity that likely fueled its ongoing hype. People stuck on Verizon Wireless and Sprint Nextel contracts couldn't get the phone, which only made them want it more.

When AT&T's exclusivity ran out, Verizon Wireless managed to stir up some buzz when it got the iPhone, even luring in Daily Show correspondent John Oliver to the press conference for a bit. Then Sprint Nextel got it, and the carrier was feeling pretty good about itself for joining the cool kids' table.

But what followed couldn't have made the larger carriers happy: a stampede of regional carriers such as nTelos, C-Spire, and Alaska Communications that hopped on the iPhone bandwagon too. Cricket is the latest to join the club, which will mark the first time the iPhone will be sold under a no-contract model.

Now, I'm all for getting every product to as many people as possible, and giving folks all available options. There's also nothing wrong with being the safe choice for consumers.

But I wonder if the broad access to the iPhone hurts its street cred. How cool or special is the phone if everyone around you owns one?

Syndrome: Oh, I'm real. Real enough to defeat you! And I did it without your precious gifts, your oh-so-special powers. I'll give them heroics. I'll give them the most spectacular heroics the world has ever seen! And when I'm old and I've had my fun, I'll sell my inventions so that *everyone* can have powers. *Everyone* can be super! And when everyone's super...

[chuckles evilly]

Syndrome: - no one will be.

-- From Pixar's "The Incredibles"

There are real implications for the carriers. What was a boon to AT&T as an exclusive has become a heavy financial burden for nearly all of the carriers . The iPhone is no longer a way for a carrier to stand out; it's become an expensive must-have.

That's particularly the case for Sprint Nextel, which placed a massive financial bet on the iPhone in the hopes that the continued buzz and draw would turn the company's prospects around. When it joined the exclusive pool of iPhone carrier partners, there were only three members. Now there are nearly a dozen carriers offering the phone. Sprint stands out with its unlimited data offer, but it remains to be seen how effective it really is.

You saw the impact of the iPhone in the last two quarters, when strong sales translated to heavy subsidy costs paid by the carriers to Apple. Sprint, which is already on shaky financial ground, was hit particularly hard with an $863 million loss in the first quarter following a $1.3 billion loss in the fourth quarter .

For consumers looking to be different, the iPhone really isn't the phone for them. The only real cool factor left for consumers is nabbing the next iPhone. While Apple will certainly benefit from the hype and attention the next iPhone will garner, there is little benefit it brings to individual carriers, especially if all of the carriers get the same phone.

I liken the mass availability of the iPhone to the original Motorola Razr. When it first emerged at Cingular for $399, it was highly coveted for its ultra-slim design. By the time it was available for Verizon Wireless and I was able to pick one up, much of what made it unique had faded away as it became the default phone for everyone.

Of course, there are a lot of key differences between the iPhone and the Razr. For one, Motorola did little to improve the Razr beyond color changes, while Apple has continually updated the look of the iPhone. The Razr's main appeal was its thin design and sexy look, while the iPhone also benefits from a massive ecosystem of apps, as well as a cloud service that links it to other Apple products such as the iPad and MacBook.

The underlying principle, however, is the same. The more accessible the Razr got, the less value it had for carriers. The carriers are beginning to figure that out about the iPhone now, particularly as expenses mount.

For Apple, moving into yet another carrier is a good move and follows its strategy of getting its products in as many hands as possible. More distribution means more revenue and profit.

But the iPhone in its current incarnation has to be losing a bit of its appeal at this point. The phone is certainly looking long in the tooth. Because the iPhone 4S shares the same chassis as the iPhone 4, Apple's flagship phone has looked the same for nearly two years.

The next iPhone isn't expected to be unveiled for another few months.

The iPhone also benefited over the past few years because there were few comparably cool products on the market. That's changing. Samsung Electronics' has spent the past few years building up its Galaxy S flagship brand to the point where the Galaxy S III commands nearly as much attention. After spreading itself too thin last year, HTC has rebounded strongly with the One X. Even Nokia has its heavily promoted Lumia 900, which targets consumers looking for something different.

All of those phones, which feature fresh designs and colors, will turn some heads. Can you still say the same about the iPhone anymore? Probably not.

 

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