The Other iPhone Revolution

Here at the Fool, we've already spotted several ways that the Apple (Nasdaq: AAPL  ) iPhone is changing the game for mobile devices. It's spurred other smartphone makers to step up. It's challenging the enterprise. It's even inflicting casualties without even trying. Now another trophy may be headed for the iShelf -- helping make mobile voice-over-Internet protocol (VoIP) mainstream in the U.S.A.

With the launch of the App Store and the iPhone 3G's debut, blogs and news sites are buzzing about a free application from Truphone, which uses the iPhone's Wi-Fi connection to make cheap international calls. Fellow Fool Tim Beyers presciently saw this revolution coming; he rationalized the value of VoIP on the iPhone even before it released.

The Truphone application allows calls to landlines in most countries for $0.06 a minute, and it cuts out roaming rates completely. Once a flush profit center, European carriers such as Vodafone (NYSE: VOD  ) and France Telecom have already seen international roaming rates slashed at the behest of regulators. With applications like Truphone, traditional roaming-call tariffs may now completely vanish.

Certainly, using an alternative mobile broadband connection to make cheap calls is not an Apple or Truphone invention. Vonage (NYSE: VG  ) and eBay's (Nasdaq: EBAY  ) Skype are already big favorites for travelers and frequent international callers. But the iPhone will likely give a huge boost to a rare but growing practice (at least in the U.S.) -- the use of Wi-Fi through a handset.

The ability to make a cellular phone call from a home or office used to depend on whether AT&T (NYSE: T  ) had a cell tower close enough to the residence. Now folks with a broadband connection and Wi-Fi access point can use their iPhone all the time -- both in and out of the home or office -- with this application.

Again, Apple isn't doing anything here that Research In Motion (Nasdaq: RIMM  ) or Nokia (NYSE: NOK  ) haven't already done; both rivals also have Wi-Fi capable devices. But Apple's doing so in combination with a "killer collection" of media capabilities that have captured consumers' hearts, minds, and wallets. With the iPhone raising the visibility of simple, intuitive applications to help users save money on communications, even champions of the status quo have an opportunity to come out a winner.

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Fool contributor Dave Mock is more of a revolution follower than a leader. He owns no shares of companies mentioned here, and he's the author of The Qualcomm Equation. France Telecom is an Income Investor selection. eBay and Apple are Stock Advisor recommendations. The Fool's disclosure policy was hands-free long before it became the law.


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  • Report this Comment On July 17, 2008, at 3:41 PM, Juandiquez wrote:

    Looking at your very last sentence in the article says that with the iPhone saving comsumers money, it will capture their hearts, ... I have to question if money-conscious consumers are going to sign a two year agreement to phone service that costs them $80 to $100 per month. 80 times 24 plus the initial 199 for the phone equals $2120. If we can use this Skype-like application with an iPod Touch (same OS as iPhone but no monthly fee), this really could be a money saver (provided you already wanted the iPod and aren't just buying it to make calls).

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