Apple gears up for battle royal on handsets

The iPhone is moving more firmly into the business space

Apple's announcements yesterday at its Worldwide Developers Conference are a new salvo in the battle royal among handset manufacturers.

At stake is the huge smartphone industry, and handset manufacturers, and the service providers that support them, are all looking for a slice of a market that's worth millions now and billions in the future.

Apple's decision to offer its 8GB iPhone at a market friendly $99 (£61) is important for many reasons. Firstly, it opens the appeal of the platform to the mass market in a time of deep economic stress. The company has creamed off the enthusiasts who were willing to pay nearly $600 (£365) for the phone initially, and is now taking the platform to all.

It is no accident that the announcement came the day after Palm released its new entrant into the smartphone market, the Pre. Palm created the handheld computing market, but it lost the plot and the company is now seeking to re-establish itself.

Apple is undeniably a little worried about losing market share to Palm. On a base level many Palm employees are ex-Apple staff, and this makes the battle personal for some at Apple.

But, on a more important level, Apple is seeking to ensure that it is still the handset of choice for those moving to mobile internet use. The future of the internet is mobile, and in less than a decade the majority of internet users will be regularly accessing the web from a mobile device.

But this is more than just a fight between Apple and Palm. RIM is looking to expand from its core business of enterprise users into the consumer market with offerings like the BlackBerry Storm. Nokia, too, is playing catch-up after dropping the ball in North America, and is betting big on its N97 handset.

One way in which Apple has changed the game in the handset market is in its policy towards service providers. In Europe, most people are used to platform-agnostic handsets, but in the US Apple has made the idea of tying a consumer to a service provider fashionable again.

This has led to an unseemly scramble by network operators to secure the best handsets to lock in their subscriber base and encourage people to switch to them. AT&T has benefitted the most in this respect by hoovering up iPhone subscribers, and Sprint is hoping to do likewise with the Pre.

So where does this leave the buyer? Well, in some ways it helps and in others it is a hindrance. For businesses, the news is generally good. Companies with a large mobile user base are in a strong position to negotiate with their service provider, and great benefits can be achieved if they unify on a single platform.

Although the iPhone is not really a business phone as yet, that day is coming and the savvy office manager can offer the carrot of AT&T instantly gaining thousands of high-paying subscribers in order to get a good deal.

For consumers the deal is less good. If you want an iPhone or a Pre you have little choice but to pay up and sign a two-year contract. If you can live without the latest fashionable phone you will not pay so much, and have more freedom of choice.

Ultimately, Apple has done a great favour to the smartphone market by taking it out of the enterprise space and into the consumer sector. How long it keeps its lead depends on its policy to the new market, and the whims of the fashionistas. If Apple fails, there are plenty of contenders to pick up the pieces.