iPhone Rival: Is Samsung Instinct the Real Deal?

The Samsung Instinct is a phone released last Friday by Sprint Nextel which resembles the iPhone in many ways. USA Today columnist Edward C. Baig compares this new iPhone clone with the genuine article made by Apple. His verdict: the Instinct has some nice features that are missing from the iPhone, but the iPhone operates much more smoothly. The Apple fanboys and the anti-Apple fanboys are sniping at each other with some ferocity in the comments.

Apple Profits More on iPhone 2

The market research firm iSuppli Corp reported on Tuesday that the new second-generation iPhone will have have a higher profit margin than the original iPhone. A new iPhone 2 will cost $199 plus a service plan from AT&T. AT&T in turn pays Apple an estimated $300 subsidy for delivering them a new custom. From this Reuters article:

ISupply estimates manufacturing costs for Apple’s new high-speed iPhone totaled $173, compared with $265 for the original iPhone, released one year ago for about $500 with no subsidy. After what it called “component price reductions,” the initial iPhone carried a cost of $226.

“At … $173, the new iPhone is significantly less expensive to produce than the first-generation product, despite major improvements in the product’s functionality and unique usability, due to the addition of 3G communications,” said Dr. Jagdish Rebello, principal analyst for iSuppli.

The figures don’t include other costs, including software development, shipping and distribution, and packaging, iSuppli said.

With Apple now profiting even more per iPhone sold, it’s obvious why they chose to market their phone through only a select few exclusive service providers around the world. By sinking their teeth into a telecommunications giant like AT&T, Apple can make windfall profits, while still not alienating their buyers by making the outward price of the device much higher.

Leave Your Laptop at Home: iPhone Tethering Not Allowed

Tethering a cell phone to a laptop allows you to use your cell for wireless internet on the road. This could clearly be a very enticing usage of the new iPhone’s faster 3G speeds. Unfortunately, it appears that tethering won’t be allowed on the new iPhone 3G. So says iPhone Atlas’s article:

…according to AT&T spokesman, Mark A. Siegel, who spoke with iPhone Atlas earlier this week, AT&T will not be supporting a PAM plan for the iPhone 3G. The only available data plan for the iPhone will be the new $30 consumer unlimited data and visual voice mail plan and the $45 business data plan. The latter is charged when a person makes an enterprise type connection to Exchange or a Blackberry server for email or messaging.

So if you are an iPhone user, you will theoretically have to purchase a separate device with its own data plan to use on your laptop or other computer. Nonetheless, enterprising hackers developed (albeit complicated) methods for tethering the first-generation iPhone, and will likely produce similar options for the iPhone 3G.

Simple web browsing and email can of course be done on the iPhone itself, but more complicated internet tasks requiring a computer will not be aided by carrying around an iPhone.

Explosion of iPhone Software Developers

This San Jose Mercury News article highlights the enthusiasm of software developers towards the introduction of the new iPhone App Store. Analysts even boast that the iPhone will spawn a $1 billion or more software industry:

“I’m seeing an excitement among mobile developers that I’ve never seen before,” said Sam Altman, chief executive and co-founder of Mountain View-based Loopt, a location-based social networking service. “People who said they’d never start a mobile (applications) company because they didn’t want to rely on the carriers are now starting companies focused only on the iPhone.”

Apple recently provided the tools engineers need to create applications for its popular mobile device. The Cupertino company said some 250,000 iPhone software development kits have been downloaded. The App Store Web site, where applications will be sold or given away, is expected to launch soon, perhaps July 11 when the faster next-generation iPhone goes on sale.

Apple could be creating a billion-dollar industry built around the iPhone, said Piper Jaffray analyst Gene Munster. In a recent note to investors, Munster wrote that the App Store could create a $1 billion-plus iPhone ecosystem by the end of 2009.

Like much recent iPhone “news”, it wouldn’t be implausible to speculate that this originated from Apple’s marketing division.

Apple and AT&T Join Forces to Kill iPhone Unlocking

iPhone unlocking may soon be no longer. The new second-generation iPhone 3G can only be purchased with a long-term AT&T service contract. This revelation certainly dashed the hopes of the many people who hoped to use the new iPhone with a non-AT&T service provider. From the Baltimore Sun:

From Now Apple has contracts with carriers in over 70 countries, all of which are preparing to sell the new iPhone 3G. A large and active grey market in unlocked iPhones no longer serves Apple’s interests. Apple needed to make it go away, and quickly.

Apple’s bricking strategy apparently has yielded to a method much harder to defeat: the terms of the AT&T service contract.

Simply canceling the contract with AT&T after the iPhone purchase would seem a workable tactic. Adding the lower cost of the new iPhone ($199) to the $175 fee for canceling the contract and the initial $40 activation fee brings you to a total of $415, just $16 more than buying the original iPhone without a contract.

But according to a Computerworld article, AT&T will require the return of the iPhone before it cancels the contract.

So if you really want to own an unlocked iPhone, you’ll face no insurmountable technical barrier. But since you’ll be paying full freight for AT&T’s service, you’ll have gained little.