Apple's lead position in smartphones is not guaranteed

When Ellie Turner decided she wanted an upgrade from her iPhone 3G, she expected to pay more for Apple's new iPhone 4S than for the other leading smartphones on the market.

When Ellie Turner decided she wanted an upgrade from her iPhone 3G, she expected to pay more for Apple's new iPhone 4S than for the other leading smartphones on the market.

Instead, Turner, a public relations specialist in London, got it free.

She consulted Phones4u, a bulk discounter of cellphones and data packages, which offered her a free iPhone 4S and data plan for £2, or $3.2, more than she had been paying each month. She returned to her operator, O2 UK, which had been selling the 4S for £99 with the same plan. She told people there about the rival offer.

The mobile computing industry that Apple has conquered in just five years is changing rapidly, and not even Apple's trend-setting image appears guaranteed.

Unlike in the US where competitors find it difficult to price a comparable phone lower than an iPhone, in Britain, the iPhone 4S costs at least £170 more than the Samsung Galaxy S II. At T-Mobile in Germany, the Samsung model costs about 80 euros, or $108, and the 4S 130 euros.

Apple's rivals — Samsung, HTC of Taiwan and Huawei and ZTE of China — are making smartphones for much less, and the iPhone is becoming ubiquitous, threatening its cachet.

For now, said T. Michael Walkley, an analyst at Canaccord Genuity, the iPhone lineup has momentum and Apple should be able to pad its lead over rivals this year.

'But I cannot say with certainty that five years on, Apple will still be on top,' Walkley said, noting that Apple and HTC did not even make smartphones six years ago. 'It is difficult to predict anything in this dynamic market.'