iPhone 4 is outdistancing Google’s Android phones, thanks to video-calling features, a sharper screen and its array of 225,000 applications, analysts said.
The iPhone 4, unveiled yesterday by CEO Steve Jobs, is thinner, has better resolution and adds a front- facing camera. It also sports a new type of glass and a stainless-steel band Apple says is designed to improve network reception.
Apple is counting on iPhone 4 to fend off mounting competition from Android. The iPhone is evolving fast enough to keep competitors at bay, even if the new version lacked major surprises, said William Kreher, an analyst at Edward Jones in St. Louis.
"They remain the technology innovation leader," Kreher said in an interview with Bloomberg Television. "While nothing was really revolutionary in terms of the new features, I think that Apple took a nice step forward."
Jobs, who unveiled the phone at Apple’s developer conference in San Francisco, downplayed the threat from Android. The iPhone was the No. 2 smartphone in the U.S. in the first quarter, with a 28 percent share, he said, citing Nielsen Co. data. Research In Motion Ltd. ranked first, with a 35 percent share, while Android-based devices accounted for 9 percent.
hough many of the iPhone 4’s enhancements were expected -- a prototype of the iPhone was dissected and photographed by technology blog Gizmodo.com in April -- the upgrade provides Apple with a unique package of capabilities, analysts said.
"The combination of a new form factor and software will likely serve as a powerful catalyst for iPhone 4 sales."
Even so, the new abilities come with caveats. The video- calling program, called FaceTime, will be limited to Wi-Fi networks for now. That means customers won’t be able to make video calls using AT&T Inc., the exclusive U.S. wireless carrier for the iPhone. And while the phone can tap upgraded networks, that technology won’t be available across AT&T’s system until the middle of next year.
In a reminder that some of Apple's features are dependent on the reliability of wireless networks, Jobs struggled to use some of the new tools during his presentation.
The trouble stemmed from a poor Wi-Fi connection, rather than AT&T’s service. Jobs asked attendees to shut off the wireless connections on their computers and mobile hot spots because of interference.
When Apple’s first iPhone appeared in 2007, its touch- screen design and app-based interface shook up the market. RIM and other mobile-phone makers clambered to add similar features to their devices. Since then, the industry’s rapid-fire advancements have made it harder for an upstart to catch up quickly.
"Apple and its competitors are steadily bringing better and better technology and software to go with it to the market," he said. "In that environment, it’s difficult to leapfrog the competition in the same way the iPhone did when it was first introduced."
The iPhone is now Apple's top-selling product, generating 40 percent of revenue last quarter -- more than the Macintosh computer. The company has three products that work with its App Store: the iPhone, iPod Touch and iPad. All together, Apple will have sold 100 million of those devices by sometime this month, Jobs said.
There are now more than 225,000 iPhone and iPad apps available. The company has paid out more than $1 billion to developers. Android developers, meanwhile, have only created about 50,000 apps.
The iPhone 4 adds a camera for capturing high-definition video, as well as software that makes video chatting possible. Its so-called retina display packs four times as many pixels in the 3.5-inch screen, delivering higher-resolution text, photos and videos. New iPhone operating-system software, called iOS 4, supports features such as multitasking.
The iPhone 4 is about 24 percent thinner than its predecessor, the iPhone 3GS. A 16-gigabyte model will cost $199, and a 32-gigabyte version will sell for $299.
Apple, which has delivered a new iPhone every year since it first came out, sees the fourth-generation device as "the biggest leap" in design and functionality in three years, according to Jobs.
A mobile advertising system called iAd will be built into the new iPhone software, giving app creators a new way to make money. Software developers will get a 60 percent cut of revenue from ads placed by Apple within their programs. After eight weeks of taking orders, Apple said it has commitments for $60 million in advertising for the second half of the year.
With iAd, Apple is less concerned about making money from the ads, Kreher said. It’s more about making its software and mobile devices more attractive for developers -- and creating one more way to distinguish itself from Android.
"They just want to cultivate a better ecosystem for developers and advertisers to be comfortable in working with them," Kreher said. "It’s really just about getting more people on board then driving the bottom line."
Apple fell $5.03, or 2%, to $250.94 yesterday in Nasdaq Stock trading. The stock has gained 19% this year. The drop mirrored a 1.9% decline overall in the S&P 500 information-technology index.
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