IPhone 3G Supply Can Meet Demand: RIMM Scared

The first IPhone, unveiled in June 2007, was an expensive gadget that gave some who could and would spend the money a little glance into the future of the mobile internet.

Apple, it seemed, had already disintermediated the entire music industry with the iPod, and wanted to give notice that it intended to do the same in the wireless industry. ATT, for reasons discussed earlier on this site, was something of a reluctant participant in this endeavor. Verizon Wireless was not. After the product gained some traction in the US, carriers worldwide became reluctant participants.

While Apple began its foray into the wireless industry, RIMM continued its own growth through further and further traction in the consumer market while consolidating its control of the corporate markets. While Apple's performance ovver the last year was spectacular, RIMM's was still more amazing.

Now, Apple has introduced the IPhone 3G, its second generation. There are many who still don't believe in Apple and in Steve Jobs - those who don't believe that he could possibly transform the industry. I am an industry insider, and I will tell you that it is now clear that the global phenomenon of the iPhone 3g will now transform the wireless industry unlike anything that this industry, or any industry, has ever seen.

The new device, in addition to accounting for all of the shortcomings of the previous and introducing new hardware functionality like GPS location, makes the mobile internet a reality. It can do everything faster. It also has the same business functionality that the RIMM products have, including push email capabilities, access to Microsoft Exchange and VPNs, which will be Apple's entry into the corporate market. It is a much better mobile development platform that enables developers such ease of producing new applications.

Not only is it more than hype, but because the device is priced effectively (well below the worldwide average selling price of a RIMM device and less than 2 times above the worldwide asp of the average Nokia), demand is extraordinary. The device was unveiled a week ago. Even now, the lines are extraordinary with waiting times to purchase at most Apple stores in the US are between 3 and 5 hours (some places longer). Extra staff have been added and the 15 largest stores are now each selling 1000 devices an hour. Added security has been added to control crowds. The inventory delivered to most ATT retail outlets has been so quickly exhausted that most outlets are taking names for a "will call" list saying that they will call in 15 days when it is your turn to purchase. Apple has cancelled all planned advertising.

I spoke with a senior contact at RIMM just before the launch and he gave the corporate line about how wonderful it is that Apple has increased worldwide awareness of the potential of the mobile internet. Today, he sounded a bit more concerned, suggesting that RIMM would be able to control the corporate market for some time and that things might change when RIMM unveils its new devices with more integrated multimedia capabilities.

Apple's moving ahead quickly now. This is real. It is transformational. It is rare. Don't bet against them.

Full disclosure: I use both RIMM and an IPhone. I hate touch screen, but that isn't going to cause me to deny where this is going. I am long a buttload of Apple stock. I also recommend that anyone who can wait to buy do so because I think that they will soon introduce a device with a better camera, more memory / or an expansion slot, and a removable battery.