Originally Posted by addabox
I don't know of anyone that would argue, in good faith, that the iPhone is "competing" with basic free phones.
That's because the iPhone is a small, hand held computer that includes a phone app (as are several other smartphones on the market).
You might as well argue that laptop sales should be viewed against LCD tv sales, since laptops can be used to view video. By which you could prove that Samsung is destroying Apple's notebook business.
I mean, I realize you're not arguing in good faith, and don't care about what makes sense, but I just thought I'd point it out.
This is a simple business process, one that you seem to miss, maybe this is why the business world is in the position that it currently is in. When a consumer has the choice between two items, and there is a high chance they will only buy one of them, that makes the items competitors. This is regardless of the price, and the category they fall in to.
I could buy a netbook, or a MacBook Pro, they are at different ends of the market, but most people will only buy one or the other.
The same thing with phones, most people will buy one at a time, and there is a range of devices they can choose from across the cellphone category, to which the iPhone, and the 'free' phone are members.
And remembering the whole competition thing runs between categories as well. The majority of the people in the world cannot afford an iPhone, or any cellphone really, so there are other items competing for there money.