Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
With much fanfare, Apple Inc. CEO Steve Jobs unveiled Apple’s long awaited iPhone in January–a device that might spur the widespread use of mobile commerce. But before the use of the iPhone and mobile _commerce become more mainstream, analysts say, there will be many intervening steps.
With much fanfare, Apple Inc. CEO Steve Jobs unveiled Apple’s long awaited iPhone in January–a device that might spur the widespread use of mobile commerce. But before the use of the iPhone and mobile commerce become more mainstream, analysts say, there will be many intervening steps.
The iPhone unites three key technologies that could jar consumers into using their phones to go beyond downloading music and onward to shopping and conducting other transactions on the go. The handheld device unites the mobile phone, a large-screen iPod and Internet communications.
The first two tools likely will gain a foothold among consumers before the latter, says Kevin Burden, a senior manager specializing in mobile devices at Telephia Inc., a communications market research and consulting company.
The iPhone’s key attraction might be its viewing screen, which is larger than the display of most cell phones. U.S. consumers are more likely to conduct mobile commerce on such a phone, Burden notes, because they are used to PC-sized screens for browsing or shopping via the Internet.
But there are other limits. “Because the iPhone is running on Cingular’s 2.5G EDGE wireless network, the speed of commerce is going to be very slow,” Burden says. “That’s not going to bode well for consumers’ experience. They might try it but the novelty is going to wear off soon.”
The 2.5G service, designating a step between second and third generation wireless network data transmission standards, is available more widely than wireless fidelity, or Wi-Fi connections, but transmits data much more slowly.
For example, downloading music on a 2G wireless network-a service not yet available from Apple’s iTunes music store-can take up to five minutes per song, Burden explains. “But then users will realize they are tying up the phone for five minutes. They will probably only do it once or twice.”
Browsing the Internet via cell phone would improve with a larger screen, but the prevalent wireless network speeds will make that a time-consuming proposition. That’s likely to change if and when cellular service is upgraded to a 3G wireless network, which by comparison will enable music downloads in 30 seconds.
Shopping on 3G
Shopping online via iPhone would be a more pleasing experience in a 3G environment, Burden adds. The 3G network service is not available nationwide yet.
Apple’s Jobs touts the iPhone as a revolutionary device, but consumers might not begin massing in the streets before m-commerce reaches a few more milestones, says Tamara Mendelsohn, a senior analyst with Forrester Research Inc.
“The iPhone does a couple things,” Mendelsohn says. “It will help consumers to move along the path to mobile commerce because it provides an interface that’s easier to use and interact with than some of the current mobile interface devices. And it will encourage consumers to further incorporate mobile devices into their lives.”
It’s not likely to be the big bang that iPod was, she cautions, for several reasons. “The price point means it’s not geared to the mainstream buyer,” she explains. “There are some barriers outside Apple’s control, including relationships between mobile communications operators and credit card companies.”
A recent Forrester survey revealed that only 3% of respondents had ever made a purchase with a cell phone using a mobile payment service. There is interest in such purchasing, however, Mendelsohn adds, largely among younger users that already use cell phones for multiple tasks. Some 12% of those who had not used a cell phone to make such a purchase would consider doing it, the survey found.
A camera, too
The iPhone is scheduled to be available in June in the U.S. and priced at $499 for the 4GB model and $599 for the 8GB model.
The new phone pulls together multiple features including placing calls with a touch of a fingertip to a name or number, syncing with PCs, Macs and Internet services to keep contact lists current, and Visual Voicemail, which enables message screening without listening to messages.
The device includes a camera, iPod with touchscreen controls, e-mail account access, and it features an SMS text-messaging application with a full soft keyboard and Wi-Fi and EDGE technology for data networking.