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Meet the iPhone imitators

Mobile phone sales will be 11 per cent higher in 2008 than in 2007

It may be too early, or too presumptuous, to call Apple Inc.’s iPhone a technology icon, but all the other major equipment makers in the emerging smart phone realm are looking to create their own “iconic” device.

While iPhone imitators almost never want to say they’re imitating the iPhone, analysts see the iPhone as largely driving the smart phone market.

The main feature being imitated is the iPhone’s touch screen, even though the iPhone 3G’s new networking abilities — and Exchange e-mail capabilities — got the big marketing treatment from Apple this summer. Of several imitators already on the market, the most successful to date — based on retailer comments and buzz — appears to be the Instinct from Samsung. The Instinct offers a touch screen and haptics feedback technology that gives users a little buzz when a touch is made.

Nokia Corp., the largest maker of cell phones worldwide, was supposed to have introduced by now a new smart phone code-named Tube to take on the iPhone. “It needs to hit the market by the end of September to take advantage of Christmas sales,” said Carolina Milanesi, an analyst at Gartner Inc. in the U.K.

While Nokia has been tight-lipped about the Tube’s specs, the company has stated it will be sold as a “high-midtier” device, rather than the earlier expected “higher-tier” device. That means it could sell, before any carrier subsidy, for about $450 to $500, Milanesi said.

Compared to the starting price of the iPhone 3G — $199 — the Tube’s price could allow carriers to back off more stringent subscriber contracts, yielding both lower monthly subscription costs and shorter contracts. “It could be more favorable to consumers,” she said.

Milanesi said the phone’s success will not depend only on contract terms and price, but also the “right look, specs and usability,” she said. So far, nobody has seen a prototype.

Can the world’s biggest cell phone maker, with 40 per cent of the market and 120 million phones shipped in the second quarter of 2008, come up with the magic ingredients to out-do the iPhone? Doubtful, Milanesi said — mainly because the iPhone is such the rage in the U.S., a market where Nokia doesn’t have the same brand identify as Apple or other brands. “Nokia is still having trouble making inroads in the U.S.,” she said.

Meanwhile, the iPhone might seem like the only smart phone getting much attention, but that’s partly because the smart phone market was just emerging when the first iPhone appeared a year ago.

How well the Tube does will also depend on how well other iPhone imitators do, including the upcoming HTC Touch Diamond, Research In Motion Ltd.’s Bold and the RIM Thunder.

Given what is known so far about the Tube, Milanesi predicted it would be aimed more at consumers than business users, in contrast to the iPhone 3G’s appeal to both kinds of users.

There is also going to be pressure from the Android phone, rumored to be coming from HTC.

“Everybody wants to have that iconic device like the iPhone,” Milanesi said. “IPhone has definitely created a bar for all to get to, and that includes everybody: Nokia, Sony Ericsson, Motorola, LG and Samsung.”

Milanesi, in a Gartner report, said consumers in developed markets such as the U.S. and Europe favor mid-tier devices over high-end ones. She noted second-quarter sales of all kinds of mobile phones of nearly 305 million, or about 12 per cent more than the 272.6 million in sales for the same quarter in 2007. Nokia led with 120 million, or nearly 40 per cent of the market; Samsung was second with 46 million phones sold, or 15 per cent; Motorola was third with 30 million sold, or 10 per cent; LG was fourth with 26.7 million, or nearly nine per cent, and Sony Ericsson was fifth, with 23 million phones sold and 7.5 per cent of the market.

Milanesi repeated an earlier projection that mobile phone sales will be 11 per cent higher in 2008 than in 2007, although she said the slowing economy will put pressure on vendors to lower their average selling prices.