IPhone clone wars heat up

By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- Just when it seemed like none of the iPhone copycats that have been hitting the market stood a chance against Apple's iconic smartphone, some new evidence is emerging that shows iPhone clones are getting a second wind.

In the past 14 months, there have been more iPhone lookalikes than you can shake a stick at. First there was HTC's G1 in October 2008. Then came the BlackBerry Storm. That was followed by the Palm Pre, then the G2, the Storm 2 and, most recently, the Motorola Droid. Next, according to a vague Google blog post this week, Google plans to launch its own smartphone soon.

Despite the recent bounty of mobile devices that offer iPhone-like features like touch-screens, fast Web browsing and the ability to run third-party apps, Apple's (AAPL, Fortune 500) iPhone remains king of the category.

But that may not last too much longer. Rivals are starting to encroach on Apple's turf, suggesting the iPhone clone wars are far from over.

Both Palm (PALM) and BlackBerry-maker Research In Motion (RIMM) on Thursday announced quarterly smartphone sales that soared past expectations. RIM's 10.1 million shipments beat analysts' estimate of 9.6 million, and Palm's 783,000 trumped forecasts of 700,000.

Also on Thursday, data tracker comScore released a study that showed interest in the iPhone plateauing, while other devices are gaining in popularity.

According to the report, 17% of consumers who are shopping for a smartphone intend to buy a phone that runs Google's (GOOG, Fortune 500) Android operating system, compared with 20% who plan to buy an iPhone. That gap is much narrower than the last study, which showed only 7% were going to buy an Android-powered phone, with 21% planning to buy an iPhone.

At the time of `the previous study, which was released in August, the most prominent phone that ran Android was HTC's G2 phone. Since then, Motorola's Droid hit shelves -- the smartphone whose $100 million marketing campaign unabashedly called out all of the iPhone's limitations like the lack of a physical keyboard, or an inability to run simultaneous apps.

IPhone interest fading

Though it will be hard in the near term for any competitor to match Apple's 7.4 million iPhone sales sold last quarter, analysts say interest in the iPhone peaking, and competitors are ready to swallow up new entrants.

"The overall smartphone category is growing, which means there's more market share for everyone to take," said Michael Grossi, director of tech industry consultant company Altman Vilandrie & Co. "As awareness grows about Apple's competitors, they'll start taking away share from the iPhone. The iPhone's not the only game in town any longer."

Analysts say the iPhone copycats are getting better, and many are even adding their own unique features like multitasking, physical keyboards and open-source operating systems.

Many of the other devices are on more desirable mobile networks. Multiple studies have shown that the main reason consumers who want an iPhone opt to buy another smartphone is because they don't like AT&T's (T, Fortune 500) network, which holds an exclusivity contract with the iPhone.

Still, most agree that Apple's revolutionary mobile device is still the leader. At least for the time being.

"I can't say there is a phone that can completely rival the iPhone yet, but [rivals'] market share can only go up," said Doug Helmreich, program director at consultancy CFI Group.

Still No. 1 until ...

How far the iPhone can stay on top remains to be seen, but historical precedent suggests the iPhone will remain king until a device that really revolutionizes mobile phones comes to market.

The last "must-have" mobile phone was Motorola's (MOT, Fortune 500) RAZR, which was introduced in 2004. The RAZR smashed through sales records and remained the top-selling cell phone for 12-straight quarters. That is, until the iPhone surpassed it in the three months following its summer 2007 debut.

When the RAZR was the "it" phone, lots of thin, "clam-shell" copycats came out in subsequent months in an attempt to compete with it. Like with the RAZR, it may take the next big thing to unseat the mighty iPhone.

"There's no doubt in my mind that another device will come out that outdoes the iPhone," said Grossi. "Based on how long the RAZR led the market, that next big device could come in the next few years."

Watch out, Apple. To top of page

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