Did you hear about HiPhone? It’s a knockoff iPhone made in China, here is one I found through Google Product search. Since US consumers are in recession (as wisely pointed out by Buffett and Bill Gross lately), this is not a bad choice if a person wants to impress his/her friends but don’t have the kind of money to buy a real iPhone ($399) or sign up the AT&T plan (starting $59.99) . In this case, the HiPhone costs $240, and no plan is required.

So what’s my point? Apple can not really out-smart the Chinese manufacturers too much on hardware. No wonder Steve Jobs came out the iPhone SDK this week, as shown in this USA today “Apple opens up iPhone for business“. Essentially, Apple is encouraging developers to come up with killer applications for iPhone, so that people will get more excited about iPhone. This also includes the functionalities for business users: MS Outlook email, MS Exchange Servers etc. This seems very much like the Microsoft encouraging the partners to develop 3rd party programs running on Windows. So called Windows eco-system.

It will be interesting to see how this strategy works out eventually. One thing puzzles me is Apple is airing this iPhone ad on TV (again and again) lately. TV ad is not cheap. If a product is so hot (as they claim), why can not they spread it by word of mouth (or blogs)?

I also understand Apple desparately needs to sell more iPhones for its high margin revenue growth.