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Apple’s iPhone 4 Distribution Signals a Branding Shift

Presales of the much-anticipated iPhone 4 begin Tuesday, June 15, but unlike releases past, consumers now have a wide range of options for where to get the device. Apple Inc. is opening up its distribution strategy, and, under pressure from Android, its changing its brand identity rather significantly in the process.

Notably, its not just Apple stores and the Apple website that will take preorders starting Tuesday; Best Buy and Radio Shack will be doing so as well (the latter with a $50 deposit required). And, a new app in the App Store will let current iPhone owners easily request an upgrade, direct from the handset. Meanwhile, on launch day, June 24, the phone will be available at Best Buy, Radio Shack and Wal-Mart. The latter will have the iPhone 4 in stock at 1,500 of its 2,500 locations.

Offering the iPhone 4 in thousands of big-box retail outlets on launch day marks a big shift away from the limited, lines-around-the-block-inducing release strategy that Apple has employed for every other iPhone release. While AT&T Inc. has subsidized the iPhone to make it competitive with other smartphone offers in the market, Apples brand is an elite one. Apple assumes that its fanboys will pay more much more for excellence in design and user experience. Its also a company famous for exerting an extraordinary amount of control over how and where the product is presented; Apple has always taken pains to distinguish the product down to the sales experience as more rarified than other gadgets on offer. Best Buy and Wal-Mart have been allowed to sell iterations of the iPhone in the pastbut only once the initial, sales-driving release hype has died down.

The iPhone for all strategy is in part a counter to the success of Google Inc.s Android mobile OS, which has taken its mantra of open, multi-smartphone distribution to the bank: Android phones are steadily gaining on the iPhone for mobile Web consumption in the North American home market. Analysts also say that Android devices cumulatively boast a higher overall market share in North America than Apples star gadget. The plethora of Android devices overwhelm the iPhone by sheer ubiquity; multiple carriers and multiple retail deals make it difficult to avoid Andoid when shopping for something new.

Research firm NPD reports that Android had a U.S. market share of 28 percent in the first quarter, behind RIMs BlackBerry (36 percent) and ahead of the iPhone (21 percent). Meanwhile Quantcast has released its North American mobile OS market share report for May 2010, showing leaping gains by Android. The iPhone dominates mobile Web consumption, at a 58.4 percent market share. Android boasts 19.9 percent and RIM claims 10.4 percent. But Androids market share has increased by 12.2 percent, while the iPhones decreased year-over-yearby 8.1 percent.

Apples new willingness to embrace the masses might also be a result of carrier pressure. The aforementioned numbers disproportionately benefit Verizon Wireless, which does not carry the iPhone, but boasts the Motorola Droid and Devour, the Droid Eris and the HTC Hero and Incredibleall considered top-of-the-line Android devices. Meanwhile AT&T has been less quick to embrace Android, perhaps in deference to its iPhone exclusive, perhaps due to its network congestion issues. Either way, it hasnt been able to capitalize as much as Verizon on the Android armys advance and may be looking to the iPhone 4 to shore up that fact. It does offer the Dell Aero and the Motorola Backflip (both locked down devices that dont allow apps downloads outside the Android Market), and this week introduces the higher-end, more Droid-like HTC Aria.

Theres also the fact that smartphones are no longer just appealing to the upper range of income brackets. More and more, even non-tech-savvy consumers want to adopt a smart device, making for new opportunities in what is, for now, a very saturated market. In some ways then, future success is tied to getting as many devices on the shelves as quickly as possible.

Apple apparently expects its strategy to pay off in bigger sales; the company has ordered a run rate on parts of about 3 million per month.


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