I have already written that I think the signficance of the iPhone will be its impact on the nascent hand-held personal computer market.

But there is another huge change out there, a dark cloud looming over cell phone industry.

what have you done for me lately?

Like the cable companies, the phone and cellular phone industries began life as soul-crushing monopolies and "monopoly" is still how these industries think about busines. They provide a service most people need, they lock you into a contract and then bleed you to death with excessive monthly charges.

But monopolies invariably lose touch with their customers as they (rather transparently) put their own needs ahead of their customer's needs. Over time customers come to resent them even if they continue to pay. (Know anyone that loves their phone or cable company?) All of which creates an opportunity for competition.

Along comes that series of tubes we know of as the Internet, ready to ruffle yet another business model.

With an Internet connection for data transfers and VOIP software, suddenly one doesn't need a phone company anymore. So why pay $80, $120, $200 a month for one? We have all seen this technology in action - the question now is when someone will be able to deploy it in a way that provides a genuine alternative to cellular phone companies.

Vaitkadamas is starting to see that competition potential in a Google+Apple play.

Apple - the phone company

Apple has released the iPhone. Apple will gain experience in the cellular industry. They will build a brand for their telephones. When their exclusive contract with ATT will ends, will they flip the switch? Not a big stretch of the imagination since we already know Apple hates traditional cell phone products and the industry.

An iPhone with wifi+VOIP and GPS would make a nice platform for... Google.

Google air

Over the past month or two there have been a steady stream of comments from/about Google and "spectrum". Google has talked about buying spectrum and they have talked about having "open spectrum" to provide free wifi connections in all major cities. They have also unveiled plans for a Google phone.

When you have a consumer electronic company like Apple making hot phones and you have the big giant heads of google buying radio frequency spectrum... things that make you go "hmmm, this could be good for me".

The Google phone itself is worth a special mention. It would be a cell phone that shows ads but would also be free to users. A free cell phone would free up a nice chunk of monthly income to buy stuff - on your cell phone. Others disagree, but I see a big demand for this phone and I think the value proposition would be a win-win for consumers.

Especially interesting is the opportunity for location-based advertising on a cell phone using Google Maps. (Have you seen how nice Gmaps works on an iPhone?) Some complain that more advertising in our lives is a bad thing but the basic mission of marketing is a beneficial one: match customer needs with providers.

The GPS+Gmap solution could be a fantastic new service.

So keep your eyes open. Unlike Microsoft, Apple and Google have consistently sided with the customer to provide new features at lower costs, even if it hurts other traditional industries.

a long time coming

On the other hand, both cable TV and cell phones are in a bad spot. Instead of innovating, they choose to use legal methods and lobbying to cling to their historical position of power. They provide a generic commodity product with very little value-add yet they charge huge fees - and they are in an increasingly indefensible position. Cable will need to fight off attacks for on-demand entertainment via Internet TV (ipTV) while the cell phone carriers will need to justify their own existence against ubiquitous wi-fi and VOIP.

Change or die. Its a fundamental principle of capitalism.