Apple's iPhone expected to attract high-end consumers in Canada

Luann Lasalle, THE CANADIAN PRESS
MONTREAL - The hip, fashionable and much-anticipated iPhone is finally on its way to Canadian consumers, who will likely have to dig deep into their pockets to pay for the high-end smartphone.

Telecom giant Rogers Communications Inc. (TSX:RCI.B) announced Tuesday it will be the exclusive carrier to bring Apple Inc.'s iPhone to Canada later this year.

There's no word yet on pricing for the iPhone, which has a touchscreen keypad and allows users to play music, watch movies, surf the Internet and manage personal information.

But it's expected to be pricey for consumers, say analysts.

"This will go to someone who doesn't blink at paying $100 per month or more in subscription fees for both voice and data," said analyst Carmi Levy.

"It's absolutely a high-end product targeted at a high-end consumer and at a high-end, style-conscious consumer, which has been AT&T's experience in the U.S.," said Levy of Toronto's AR Communications Inc.

The iPhone went on sale 10 months ago in the United States through an exclusive agreement with carrier AT&T. It also has been for sale for several months in Europe.

Canadians who have bought iPhones in the last 10 months have had to get them cracked - or unlocked - to get them to work on domestic carriers.

An eight-gigabyte model goes for US$399 and a 16 gigabyte model sells for US$499. Data plans start at US$59.99 and consumers must sign a two-year service agreement with AT&T.

"This is for somebody who already either has a smartphone and wants a better experience or wants to take a whole lot of multimedia movies and music with them on the road and isn't happy with the kind of device that has been available up until now," Levy said.

Rogers and Apple (NASDAQ:AAPL) provided few details about Tuesday's announcement.

"We're excited to be working with Rogers to bring the iPhone to Canada later this year, and we can't wait to get this revolutionary phone in the hands of even more people around the world," Apple spokeswoman Jennifer Bowcock said from Cupertino, Calif.

Apple is forecasting that it will sell 10 million iPhones worldwide by the end of this year and Rogers currently has the only GSM networks capable of handling Apple's first phone in Canada.

Apple is working to create the next generation of applications for the iPhone, which could be why the phone's introduction to Canada will be delayed until later this year.

The iPhone's upcoming Canadian debut will also challenge Research in Motion's (TSX:RIM) BlackBerry, bringing new competition for consumers' hearts and wallets.

UBS analyst Jeffrey Fan said there's plenty of opportunity for both the BlackBerry and the iPhone.

"The wireless data market in Canada and also globally is still very under-penetrated," Fan said from Toronto.

"So there's more than enough room, in my opinion, that both Apple and RIM can be successful in that market given the low penetration and opportunities," Fan said.

Fan also noted that he expects the iPhone to generate revenue for Rogers because of the kind of high-end customer it will attract.

"We think the iPhone attracts higher data users," he said. "We would expect that the average revenue per user coming from the iPhone for Rogers would be higher than the average revenue user that they have within their base."

New York-based ABI Research Inc. has said the "iPhone effect is truly filtering through the handset market" as competitors try not to lose any edge.

"Features that look set to proliferate and become central to enhancing user interface experiences include touchscreens, touchpads...." said ABI, which looks at the impact of emerging technologies on consumers and business markets.

ABI also said that by 2013, one in every three phones sold will be a smartphone.

Smartphones allow users to do things such as send e-mails, surf the Internet and watch videos.

Levy added the BlackBerry vs. the iPhone debate is good for the smartphone market and shows these phones are here to stay.

"This is a market that's in its very early stages and there's huge opportunities for both Apple and Research in Motion to find audiences that they haven't previously found."

© The Canadian Press, 2008