Smartphones, Xmas 2010: Apple competes with free

We’re heading into the Holiday season and the smartphone wars seem set to get a even more gritty as this season Apple will be competing not just against other makers, but against that big little word, “free”.

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We know Apple has an edge. The iPhone and iPad are way near the top of the list for most-wanted Christmas gifts in the US and the UK this year, but as economic worries and employment concerns hit the shopping season this year, Apple’s competitors are pushing out the hardballs to take a few more chunks of marketshare.

This ain’t pretty. It is inevitable that Apple will have to fight — hard — to maintain share this time round, though it holds the cards, all those marketshare reports don’t distinguish between those Android and other handsets which are literally given away and those which are sold at competitive prices. The end result threatens to be some statistically significant increases in marketshare for competing devices.

These examples should help illustrate what I’m attempting to say:

There’s several take-aways here: that AT&T/HTC and LG are already pretty much giving away Windows Phones scant days since the OS launched underlines just how inadequate Microsoft’s attempt on the mobile market has been.

AT&T must conceivably be subsidizing sales of these devices, so these desperately low prices may also reflect a carrier doing its level best to prepare for life after it loses its iPhone exclusivity status.

These discounts on Android also represent the shape of things in this section of the business. Android may have the share, but this doesn’t necessarily mean anybody (bar Google and the carriers) are making a huge chunk of money. Though conceivably carriers pay for the cost of the handsets.

Android phones. Take a look at the recent Consumer Reports data which cast Android phones as the most highly-regarded handsets on all four major US carriers.

Two grains of salt — despite the hype — is that iPhone’s are presently only available on AT&T, so wouldn’t even appear on the list for any other carrier. In addition to which, Consumer Reports still won’t recommend the iPhone 4 on strength of antenna-gate.

“The iPhone 4 is a fine performer. However, Consumer Reports’ tests found that if you touch a gap on the phone’s lower left side, you could lose your connection. Apple says to call customer service to request a free bumper to alleviate the problem.”

However, with all this in mind as we head into this Holiday Season, Apple may hold many cards in its hand, but this time round Cupertino’s world-class advanced smartphone isn’t just competiting with everybody: it is also competing with free.

A $29 special offer on the pre-era iPhone 3G may exist, but doesn’t change the innate situation.

We’ll see how this goes.

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