October 05, 2011, 4:10 PM —
Source: REUTERS/Adnan Abidi
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."