Daring Fireball details how to compete with the iPhone:
As the iPhone goes mass market, it’s creating a vacuum at the high end of the market for a high-quality exclusive phone. Remember when the iPhone was new and novel? Now it’s common.
Don’t aim for the middle of the market. That seems to be what all the other Android manufacturers are doing and it’s the road to NobodyCaresAboutYourPhoneVille. So instead of trying to sell half a million phones to anyone, try to sell half a million phones to a specific target: people in the market for the latest and greatest phone in the world.
The profit margins are nice and fat in that rarified air, too.
I’m a satisfied iPhone user, and plan to upgrade my first-generation 4GB model for a 3GS just as soon as my extended warranty runs out. But I can’t help thinking that if somebody would really do something with Android, or if the Palm Pre wasn’t such a near-miss, then the 3GS would be a better, smarter and cheaper phone than it is today.