Analysts: Hold The iPhone

UPDATED: Despite its gorgeous display and addictive appeal, Apple’s iPhone isn’t an instant home run just yet. For starters, there’s the name problem.

Cisco Systems  filed suit against Apple in the Northern District of California today, seeking an injunction against Apple using Cisco’s iPhone trademark with its latest product.

Cisco said it obtained the iPhone trademark in 2000 after completing the acquisition of Infogear, which previously owned the mark and sold iPhone products for several years. Cisco’s Lynksys division also recently launched a new series of dual phones that connect traditional calls as well as Internet-based telephony.

The suit came after Apple apparently went ahead and launched the iPhone before negotiations with Cisco over the trademark were finalized.

“Cisco entered into negotiations with Apple in good faith after Apple repeatedly asked permission to use Cisco’s iPhone name,” said Mark Chandler, senior vice president and general counsel for Cisco. “There is no doubt that Apple’s new phone is very exciting, but they should not be using our trademark without our permission.

The negotiations continued up until the night before the iPhone’s release, according to a Cisco spokesman, John Noh. “As of this morning, we have not received the approved agreement from them,” he told

Apple was not immediately available for comment.

In addition to the legal question, analysts noted that it would be a while yet before the phone causes sleepless nights for cell phone giants.

“As beautiful as the iPhone design is, physical design isn’t what handset vendors are lacking,” Current Analysis analyst Avi Greengart told

After the iPhone — which combines iPod functionality with a touch-screen smartphone — is available this summer, “there will be some reevaluation of the usefulness in the market,” Greengart said.

Goldman Sachs enthusiastically said the iPhone’s introduction was “setting the bar higher for competitors to hurdle,” but the Wall Street analyst questioned whether consumers will accept the product.

Analysts said the iPhone won’t hurt RIM’s prosumer Pearl. Research in Motion, maker of the BlackBerry e-mail device, saw its stock drop 8 percent following the iPhone’s introduction. However, by mid-morning, RIM stock had rebounded, rising nearly 2 percent.

While the iPhone will be popular with some consumers, for a number of reasons, the handset “will have very little impact on the business community,” according to Greengart.

Convergence of the iPod with a phone will not be important, particularly in companies hesitant to buy a consumer-oriented device, Kitty Weldon, analyst with Current Analysis said.

The iPhone
Not touchable enough for you?
Source: Apple

The touch-screen design will turn off business people accustomed to buttons. Although the iPhone’s design is very efficient, Greengart said few devices in the U.S. have been all touch.

Unlike the BlackBerry, the iPhone doesn’t include secure corporate e-mail or other corporate-level controls, according to the analyst.

And unlike the Treo, the iPhone can’t import applications, and the Apple device lacks 3G support, as well as mobile TV capabilities offered by a number of carriers.

Even with its new design, the iPhone lacks the user base to compete with cell phone giant Nokia.

Palm’s reo and Sony Ericsson are Apple’s closest competitors, he said. Palm has held the lead in design innovation, and Ericsson sells touch-screen units in Europe.

“A lot of the innovation we see on the iPhone we’ve seen first on the Treo,” Greengart said. Compared with Ericsson, the iPhone offers smoother on-screen scrolling.

The iPhone’s introduction “makes the incredibly crowded smartphone market even more crowded,” Greengart said.

Apple shares reached 97.22 in afternoon trading, up more than 5 percent from the morning, before the lawsuit by Cisco became official.

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