iPhone Apps: Five Markets Under Siege

Will the iPhone's ability to combine features and functions doom standalone products such as GPS devices, MP3 players, handheld games, low-end digital cameras and e-readers?

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Fri, August 28, 2009

CIO — Thanks to the App Store and the iPhone's versatility, Apple's smartphone combines many different devices into one compact product. In the face of such a juggernaut, is it possible for standalone GPS devices, MP3 players, handheld games, low-end digital cameras and e-readers to survive?

No one is saying that these five product categories are going by the wayside, succumbing to the almighty iPhone app that usually costs pennies on the dollar for the same functionality as that of the standalone device. Some markets will have it worse than others, of course, but analysts agree that the iPhone will at least disrupt all of these markets.

For newer markets such as navigational devices and e-readers, the iPhone threatens to gobble up first-time customers who would have bought the standalone device. "Portable navigation devices are definitely under attack from smartphones with GPS," says Gartner analyst Van Baker. "The devices will have to get cheaper to remain viable, and that is not an attractive segment going forward."

[ Find out the best of the best iPhone apps. | Check out CIO's slideshow of iPhones and iPods used in creative ways on the job. ]

For mature, saturated markets such as the ones for digital cameras and MP3 players, the iPhone (and other smartphones) will likely steal sales on the low-end. That's because the iPhone offers a much cheaper alternative to these devices; that is, an iPhone with the camera, iPod app, navigation app, game apps, and an e-reader app would cost less than buying all these separate devices.

However, the iPhone might drive some low-end buyers up market toward better digital cameras and music players. Passionate consumers will continue to seek standalone devices simply because they provide features that an iPhone app can't match—everything from rendering better digital images and videos to providing a more exciting gaming experience.

Standalone devices also give users some comfort knowing that the device won't run out of juice unexpectedly. An iPhone app, on the other hand, might not be available when you need it given the much-maligned iPhone battery. As an iPhone's capabilities grow, its battery life will shorten.The GPS radio on navigational apps, for instance, dramatically saps the battery. Most navigation iPhone apps keep the iPhone screen lit, says Forrester analyst Charles Golvin, "and this also sucks battery life." Golfshot: Golf GPS, an iPhone app rangefinder that threatens to displace handheld rangefinders, drains the battery to the point that many golfers use an external battery pack just to get through the round.

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