The iPhone's lesson from India: Don't get ahead of the network

A customer in New Delhi shows off an iPhone 3G Credit: Source: REUTERS/Adnan Abidi

Wondering why there's still no iPhone 4G? Apple's difficulty in India might provide an answer.

This week, we got reams of hype spewed out about the incoming iPhone 5 that turned out to not exist. This might be a terrible betrayal, or might be the normal path of innovation, but one of the big complaints was that the phones didn't feature 4G. To see why, check out an interesting article from Bloomberg Business Week about the iPhone's inability to gain much market share in India. In a market with 600 million wireless subscribers, Apple has ceded leadership to Nokia and RIM, two companies that are rapidly becoming first-world also-rans.

BW doesn't quite cast it this way, but one of the biggest problems they outline for the iPhone's Indian sales help explain exactly what an advanced smartphone like the iPhone needs to succeed: a reliable data network. India doesn't have one.

Sales for the world's biggest company by market value are hindered because Indian wireless carriers, which started third- generation networks this year, have yet to offer nationwide services fast enough to take advantage of iPhone features, said Gus Papageorgiou, an analyst at Scotia Capital Inc. in Toronto. "Networks in India are just not conducive for Apple -- 3G networks aren't quite where they are in Western Europe and North America," he said.

This much isn't terribly shocking, but it's worth reflecting on. One of the most important bits of business jujitsu Apple pulled off with the iPhone was in creating a direct relationship between phone manufacturer and consumer. Previously, most people bought their phones from the carrier, and decided what to buy based on what their carrier offered. But just because Apple made the network a commodity doesn't mean they can do without it. A fast network is a prerequisite for the iPhone being anything even vaguely useful. The downside of the direct relationship between phonemaker and consumer is that consumers are more likely to say "my iPhone doesn't work right" rather than "my AT&T doesn't work right."

The phones that are doing well, meanwhile, are those that were built for the last generation of wireless networks in the developed world -- RIM's Blackberry and Nokia. Nokia's even spending resources custom-building a Linux distro for low-end smartphones that will be cheap enough for Indian markets -- and, presumably, will be right-sized in their capabilities for Indian phone networks. Think of them as pre-throttling their customers. iPhone and other first-world smartphone users kvetch when their fancy phones use more bandwidth than their carriers will allow. The best-selling Indian smartphones don't encourage that kind of bandwidth use, because their browsing experience isn't as good.

Someday, Indian phone networks will be better, and the iPhone will probably flourish there (although maybe RIM will manage to get enough of a toehold to upsell strivers). But meanwhile, there's a lesson for Apple here: don't get ahead of the network. And that, more than anything else, may be why 4G capabilities still haven't shown up in the iPhone line. US 4G is in something like the state of Indian 3G: only available in a few cities, and not always living up to expectations where it is. Would iPhones still top every phone quality survey known to man if they were billed as offering "blazing 4G speed" that in practice only worked in a few cities? Better to sit it out for the time being.

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