iPhone 3.0: How Apple Can Make The iPhone A Worldwide Hit

On the day of the rumored return of Steve Jobs following a widely publicized health scare, along with a WWDC announcement that may (according to the Mac-obsessed blogs) reveal a new, enhanced Apple iPhone, the world is expecting big things from the Silicon Valley titan.

The twists and turns that have gotten us to this point in the history of the iPhone are riddled with what some may consider missteps, or alternately strokes of genius, depending on your vantage point. But in the face of new devices like the well-received Palm Pre, and the advancing fortunes of Google's Android platform, it's clear that Apple will have to offer an iPhone revision that once again trumps the naysayers and this time paves the way for the iPhone to not just succeed in, but dominate the world smart phone market. Perhaps then it is instructive to review the iPhone's recent history in the heart of global cell phone competition — Japan.

A recent article posted on Wired.com, stirred up a bit of controversy regarding the iPhone's fortunes, or lack thereof, in Japan. Inspired by SoftBank's promotional announcement that the "iPhone For Everybody" campaign would allow customers to essentially receive the iPhone for free, the article, titled "Why The Japanese Hate The iPhone," appeared to take the move as a sign of weakness in the Japanese iPhone market. Hitting all the now familiar notes, the story highlighted the vast differences in consumer culture between Japan and the United States that would make an iPhone success story in Japan nearly impossible. There's just one problem: the story relied more on anecdotal conjecture rather than up-to-date, locally researched pulse reading of the iPhone's adoption in Japan.

One expert cited in the article, Nobuyuki Hayashi, even posted his disagreement with the negative Japanese market trend perception on his blog. Hayashi wrote, "The perception of iPhone being a failure was created by a newspaper in Japan, Sankei Shimbun. Last fall, it wrote although Softbank tried to sell one million units by the end of 2008, they only sold about 200,000. This article was wrong on two fronts. One is that Softbank nor Apple never publicly claimed they would sell 1 million units. Second, their estimate of 200,000 units [was] also wrong. Although Apple nor Softbank releases the real number of shipments, today it is strongly believed that they have shipped more than 300,000 and possibly near 400,000 units in Japan. Interestingly, despite the negative press, Sankei Shimbun did release one of the most successful iPhone apps in Japan after that article, which you can read in the Sankei Shimbun newspaper."

So while the perception in the West is that the iPhone will have trouble winning in Japan, it's also reasonable to assume that Japan's top cellular handset makers are hoping Apple's upstart cell phone won't manage to break the consumer loyalty grip of Japan's native manufacturers. Now that the myth has been separated from the very real trends by a non-U.S. cell phone expert, let's look at how the iPhone may, or may not, ultimately woo the famously finicky Japanese cell phone consumer, as well as consumers around the world.

Access
One of the most glaring issues surrounding the iPhone is its spotty contract consistency. Some countries (like Italy and the UK) offer the iPhone via a prepaid plan, while others (like Japan and the U.S.) require that your handcuff yourself to an exclusive carrier. Until this exclusive carrier dam is broken, the iPhone will be competing against other smart phones with one hand tied behind its back.

Hardware
The lack of a good camera and video option on the iPhone is, at this point, ridiculous. Based on a brief glance at the competition, it's clear that this is not only possible on the iPhone, but probably deliberately held back features to boost interest in a later iteration of the device. According to widely reported rumors, this video issue may be fixed as soon as today.

Software
The App Store: The PG rating policies being held over iPhone application developers may (just barely) play in the U.S., but cultural standards and morals around the globe often make the entry bar to the App Store seem a bit silly. In order to truly penetrate the global market, the store policies will have to relax their rigid stance in regards to applications that fall outside of the domain of purely "kid-friendly" material.

Electronic Payment
If there is one issue that is indeed the Achilles' heel for the iPhone in Japan, it is this feature. Unlike many consumers in major Western cities, Japanese consumers have truly warmed to the concept of smart cards, and cell phones that can simply be tapped on cash registers and ticket gates, speeding the purchase process and eliminating the need for paper cash. There doesn't appear to be an iPhone fix on the horizon for this feature point, so if competing smart phone manufacturers want to figure out a way to defeat the iPhone in Japan, and around the world, they would do well to focus on this weak point.

In the end, it's clear to even the casual observer that there are a healthy amount of iPhones and iPods on the streets of allegedly tech-conservative Japan. In fact, after the launch of the iPhone last summer, SoftBank announced that the handset had boosted their net profit by 1.9 percent in the July-September quarter, and the number of new cell phone subscribers had increased by 521,400 in the same quarter. The long lines stretching from Omotesando to Yoyogi Park shown on Japanese television on the day of the iPhone's debut in Japan were not a mirage. The iPhone in Japan has a healthy fan base of loyal Apple devotees as well as new converts.

Despite the naysayers, Steve Jobs' iPhone has indeed worked its magic on the most competitive cell phone market on the planet. Now if the master of "insanely great" innovation can just address a few more glaring iPhone issues at today's WWDC event, we may see the end of any debate regarding which smart phone will rule them all.