“Our analysis is that the iPhone and App Store constitute a vertical platform for the delivery of advanced mobile services that will be developed in a similar manner to how Apple developed its digital music platform, which included the iPod and the iTunes Music Store," says says Andrew Sheehy, head of research at Generator. "Outsiders are rewriting the mobile industry’s rulebook for how to deliver mobile services and the new rule #1 is that you need a fully-integrated service development platform that has a rich application programming interface, which is open to third party developers on favorable commercial terms. Right now, Apple has the best platform and the best-looking forward roadmap."

Generator’s research finds that with cash reserves exceeding US$25 billion, 33 percent gross margins and the iPhone just about to enter its fastest-growth phase, Apple has the resources, competencies and motivation to invest in the mobile sector just at the time when the economic climate is forcing many established players in the mobile industry to cut back on product development. The impact on some incumbent players could be substantial, with Nokia’s share of the smartphone market falling from 40 percent today to 20 percent by 2013.

“We think that Apple will use its financial strength and revenue velocity to try to get one or more design cycles ahead of the competition," says Sheehy. "The result could see Apple shipping as many as 77 million iPhones in calendar 2013. By that time the iPhone will include a range of different models, each addressing different market segments and the App Store will have developed to the point where third party developers have access to network assets that will allow them to write programs that can send messages and establish voice calls between different iPhones."