SAN FRANCISCO – Apple Inc. may face plenty of competition from wireless phone makers when it launches its iPhone this coming week. But when it comes to the high end of the market, it largely has the field to itself.
Granted, the segment of cell phone users willing to pony up more than $500 for a new device is limited - especially in the U.S. market, where consumers are accustomed to getting their handsets for free in exchange for entering a contract with wireless service carriers.
And yet, Apple (AAPL) enjoys a distinct advantage over other device makers targeting high-end users -- the support of a major carrier, something lacking among its most notable rivals on the market.
When the iPhone goes on sale on June 29, the device will be sold through Apple as well as AT&T (T) , whose wireless arm was formerly known as Cingular. High-end devices from LG Electronics (LGEAF) , HTC and even wireless phone giant Nokia (NOK) are still awaiting carrier support.
Much is at stake both for Apple and AT&T, especially after the initial hype dies down.
"A significant number of consumers want to have one source to deal with, which in the case of cell phones is the operator," said Hugues De la Vergne, an industry analyst with Gartner Inc. "So the traction for phones not launched through an operator will be limited."
To be sure, consumers can choose from an array of other devices, with a wide range of features. And people who want e-mail and Internet capabilities still have plenty of smartphone options such as the BlackBerry, Treo and Blackjack.
For those drawn to the iPhone's music playing capabilities, all of the major U.S. carriers offer a wide assortment of phones. The Upstage from Samsung has proven popular. Sony Ericsson has debuted a new line of phones under its well-known Walkman brand.
Some carriers may try to stand out vs. the iPhone through services, such as mobile TV, which is offered by Verizon (VZ) in more than 30 different markets. If you're thinking of trying to get an iPhone on launch day, some preparation may pay off.
According to Lawrence Harris, telecommunications analyst at Oppenheimer, the iPhone may actually help other device makers in the long run by showing that consumers will pay premium prices for the right product.
"Don't underestimate the willingness of consumers to pay up for a high-end device," Harris said. "Look at the Razr, which sold for $500 when it first came out. Consumers will pay a premium for exclusivity and the right feature set."
For now, customers seeking an all-in-one device that also sports some of the iPhone's most notable design features -- such as a touch-screen - have relatively few options.
When it comes to style, the LG Prada may come the closest to competing against the iPhone. This touch-screen phone was introduced in March as a collaboration between Korean electronics giant LG and Prada, the Italian fashion designer. Since then, the product has earned raves for its design, which is often called sleek and sexy.
Like the iPhone, the Prada has few external buttons. Instead it relies on a three-inch touch-screen for its main interface. It also boasts a 2.0 megapixel camera -- on par with the iPhone -- and plays music and videos. One potential benefit over its Apple rival is that users can expand the device's memory with a flash memory card, as opposed to the fixed memory of the iPhone.
Also like the iPhone, the Prada isn't cheap. In fact, the device carries a price tag ranging between $700 and $900 on various Web sites -- putting it well above the most expensive iPhone version.
The biggest knock against the Prada, however, is the lack of support from U.S. wireless carriers. Consumers can buy the phone in an "unlocked" version and use a SIM card from an existing GSM-based carrier such as T-Mobile or AT&T, but doing so means paying full price for a phone without subsidies from a carrier.
There were rumors that Verizon, AT&T's rival, was preparing to bring the Prada to the U.S. market before an injunction by the International Trade Commission regarding wireless phone chips from Qualcomm, which are used in the device. Verizon officials wouldn't comment, and LG representatives didn't respond to requests for comment about the company's plans for the Prada.
This touch-screen device was just launched this month. But like the Prada it's not yet available in the U.S. The Taiwan-based company says it will be launched in this market some time in the second half of this year.
Reviews haven't been as strong as for the Prada. While the Touch uses the professional version of Windows Mobile to offer e-mail and Web access, many gadget reviewers have noted that the touch-screen's keyboard is so tiny that it requires the use of a stylus, which makes the device more like a PDA in terms of operation.
The Touch is also a GSM-based phone, so domestic users may be able to swap out SIM cards to make use of the device. Unlocked versions on eBay are listing at prices ranging from $500 to $600.
Otherwise, the Touch features a 2.0 megapixel camera and comes with a 1GB removable memory card.
Nokia doesn't yet have a touch-screen device on the market, but it has aimed its N95 phone at the high-end segment.
This device was launched on the U.S. market in April, after being showcased at the CTIA Wireless trade show in late March. Among the N95's most notable features is a 5.0 megapixel camera that can also take video recordings. The camera lens is situated in the back of the phone, allowing the user to hold the device like a regular digital camera.
Like Apple's Steve Jobs, Nokia has billed its device as "multimedia computer" rather than a cell phone. The handset slides open two ways -- one to reveal a keypad while another position yields controls for the music and video player.
Where it may have some strength against the iPhone is in some of its features. Reviewers have praised the built-in GPS locator, which can plot the user's position on a map. Users can also edit their pictures and videos right on the phone, and upload them to a blog or Web site.
As with the other iPhone rivals, no U.S. carriers support the N95. And it's pricey - unlocked models range from $700 to $850 on the Web.
The other iPhone
When Apple debuted the iPhone, it faced an immediate hurdle: Networking giant Cisco Systems (CSCO) had already trademarked the name for an Internet-based phone from its Linksys unit. The two companies settled their differences, in a deal that allows both to use the name on their respective devices.
Under the Linksys brand, Cisco has several versions of its iPhone. Some are like a household cordless phone, designed to be hooked up to the Internet. The company also has a mobile line, which can make calls in areas where a Wi-Fi connection is available, but cannot use regular cell networks, which severely limits its range.
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