New iPhone to stake out new turf

New iPhone to stake out new turf
In what could be the worst-kept technology secret of the year, Apple Inc. chief executive officer Steve Jobs is expected to unveil the next evolution of the company's game-changing iPhone today.

The updated iPhone will almost certainly run on the most advanced wireless networks yet available, and will promise customers the ability to surf the Web and stream video at speeds comparable to home broadband connections.

Analysts say the “3G” iPhone will give Apple the technology it needs to become a global cellphone powerhouse, and for Rogers Wireless Communications Inc., the Canadian carrier of the device, iPhone version 2.0 represents a potential windfall of new revenue.

Although most analysts expect Mr. Jobs will show off the new iPhone when he delivers the keynote address at Apple's Worldwide Developers Conference today, what new features will be included in the updated version of the touch-screen device, whether the company will continue to sell its older 2G models, and when it will arrive in Canada all remain unknown.

“Apple plays their cards very close to the vest,” said Van Baker, a senior analyst with market research firm Gartner Inc. “Those are all open questions.”

Since going on sale in the United States on June 29 last year, the iPhone has captured 20 per cent of the U.S. smart phone market, and is a rising global star, accounting for more than 5 per cent of the worldwide market for Internet-enabled cellphones in the first three months of 2008, says market research firm IDC.

Mr. Jobs' stated goal is to sell 10 million iPhones by the end of 2008. Most observers say the company is on pace to sell 13 million to 15 million iPhones by the end of the year.

In addition to a new high-end model, Apple could also be prepping a smaller, less expensive iPhone, similar to the way the company produces both the iPod Touch music player as well as lower-cost Nano and Shuffle devices, said Kasper Jade, publisher of AppleInsider.com.

Canada is among a group of nearly 50 new markets the iPhone is expected to reach this year, a list that includes Japan, Spain, Australia and Egypt.

A 3G device is critical to Apple's global strategy since customers in many Asian and European markets are accustomed to faster Web browsing speeds than the existing iPhone offers.

Those limitations have disappointed some of the first phone companies to sell the iPhone, said Mark Goldberg, of telecom consulting firm Mark H. Goldberg and Associates.

The new iPhone is built with chip sets capable of handling data at faster speeds and batteries with greater longevity, he said.

That's good news for Rogers, which announced in April that it had an exclusive deal with Apple to sell iPhones in Canada.

Rogers has invested hundreds of millions of dollars in building a 3G wireless network, a process that began in 2006, but so far the company hasn't pumped much of its marketing might into the upgrade.

That means most customers on the 3G connection are not even aware of the upgrade, save perhaps for a different icon on their screens.

Rogers declined to say anything about Apple, the iPhone or the product's launch in Canada. But in a recent interview about the state of the company's next-generation network, Jim Smith, vice president of network engineering, said its 3G technology now covers 60 per cent of the country.

The upgrade runs eight to ten times faster than the previous technology and in many cases the speed is the same as fixed broadband over home connections, he said.

To truly capitalize on the investment, Rogers needs popular devices that entice customers to use the new services available, which include video-calling, streaming video-on-demand, mobile television and satellite radio-on-demand.

At the moment, Rogers sells more than a dozen models of handsets capable of tapping these features, including products from LG Electronics Inc., Nokia Corp., Samsung Electronics Co. Ltd., Motorola and HTC.

But it is still waiting for the world's two most popular smart phones to arrive in 3G form: the iPhone and Research In Motion Ltd.'s BlackBerry Bold, which is expected this summer.

“Rogers will use the iPhone as a pivot point to explain what the new 3G technology can really do, said Kaan Yigit, president of consulting firm Solutions Research Group Inc.. “People need a visual clue to believe that this is not so crazy.”

Rogers mobile television service, for example, includes access to Fox Sports, BBC World Service and the Weather Network These kind of features take the transmission of data far beyond just email, and analysts look at them as potential cash cows for the industry.

Rogers is testing the waters with different pricing plans for each of these services, including some fixed-rate packages.

The company reported growth in its data business of 47 per cent in the first three months of the year compared with the same period in 2007, to $206-million, or 15 per cent of total wireless revenue.

With the iPhone, Rogers is going to benefit from the spill-over effect of marketing in the U.S. and the media hype around the latest product release, analysts predict.

“Christmas will come early for Rogers this year,” Mr. Yigit said. He estimates that on average iPhone customers in Canada will incur charges of $80 a month on their monthly bill. That's a 10 per cent premium to the average revenue per user that Rogers reported from all its wireless customers in the first quarter of the year.

Mr. Yigit also expects that more than half of all people buying the new iPhone will be new wireless customers to Rogers.

“The iPhone could be a switching magnet, especially for the fashion-forward group in their twenties,” he said.

He forecasts that Rogers will sell about 500,000 iPhones in the first 12 months, the product launches by mid-July and comes with a reasonable monthly charge.

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