Apple's iPhone Stirs Up Would-Be Rivals

Pablo Gonzalez uses his $1,000 touch-screen O2 cell phone at his office in Fremont, Calif., Wednesday, Jan. 31, 2007. Gonzalez, a Prada shoe-wearing cell phone connoisseur who jumps from one new handset to the next, has already made up his mind. He's ready to ditch his $1,000 touch-screen cell phone for the iPhone when it becomes available in June. (AP Photo/Paul Sakuma) (Paul Sakuma - AP)

SAN JOSE, Calif. -- Pablo Gonzalez, a Prada shoe-wearing cell phone connoisseur who jumps from one new handset to the next, is ready to ditch his $1,000 touch-screen cell phone for Apple's iPhone when it becomes available in June.

Tark Abed, on the other hand, just got the new Samsung BlackJack smart phone a month ago. The industrial designer at Palo Alto-based Speck Design isn't keen on spending $500 even though he finds the iPhone's sleek interface alluring and innovative.

"I upgraded to an unlimited data plan and got the BlackJack for $149," he said, "and that's a lot of phone already for $149."

Their divergent views underscore why Apple Inc.'s much-hyped seminal cell phone is all the rage and why, at the same time, incumbent rivals are stirred but say they are not shaken.

The iPhone got everybody _ from techie bloggers to late-night TV hosts _ talking when it arrived fashionably late on the wireless communications scene. Would-be rivals are welcoming the challenge but questioning Apple's claim that the iPhone is "revolutionary."

Apple's competitors predict that even as the gadget will likely boost the company's fortunes, it will have limited market share and fall short of the successes Apple has seen with its iPod portable music player. They contend some of the phone's much-touted features _ such as its touch screen, movement sensors and music player _ are not innovative or new.

"They're just jumping into the party where everyone else is," said Peter Skarzynski, a senior vice president at Samsung Electronics Co.'s telecommunications unit in North America.

Apple is getting in at a time when competition in the cell phone business is, as ThinkEquity Partners analyst Jonathan Hoopes puts it, "as hot as Hades."

Because nearly everyone already has a wireless device of some sort, the success of the iPhone will depend on whether Apple's notoriously slick marketing machine can persuade consumers to replace their current phones with an iPhone that costs $500 or more. In some cases they'll have to switch carriers as Apple's gadgets will work only through Cingular Wireless.

"This is not just as easy as going out to buy an iPod," Hoopes said.

The cell phone market is crowded, yet still growing, and its biggest players are looking for ways to squeeze more profits from declining prices and ever-fickle consumer tastes.

One of the brightest growth spots for the industry has been in cell phones that function as do-it-all devices capable of not only voice communications, but also data, such as Web-browsing and e-mail.