The iPhone Cometh « Jason Devitt

The iPhone Cometh

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And so the iPhone cometh. For a thorough overview, see David Pogue, Michael Mace, and Russell and Carlo.

Forget about the ’specs’; several phones already on the market beat the iPhone on paper. This is all about the user interface. Every advanced phone in the world today is an ugly compromise, the unholy union of an elderly cellphone and a PDA. But the multi-touch interface on the iPhone looks as if it may be better than an iPod, better than any PDA, better than any tablet PC, and maybe an acceptable substitute for a plain old voice cellphone … if it performs anything like as well it did in Steve Jobs’ keynote address.

You cannot go by the press reports, or even the animated demos on the Apple web site. Until you can play with the thing yourself you will have to sit through the whole damn 90-minute presentation if you want to understand what I am getting at. Sorry.

The concepts are not new. You’ve seen this stuff in movies like A.I. or in the work of Jeff Han, and Go Computer had gesture-based interfaces (with a stylus) on commercial devices in the early 90s. But Go is gone, and OpenMoko is still vaporware. Apple will be the first to put this technology into the hands of millions of people, and for that they deserve all the praise that they are getting.

Forget about the price. $499 with a contract is steep, but this is Version 1.0. Version 1.0 of the iPod was $399 in 2001 and did nothing but play music. This year Apple will sell its 100 millionth iPod, and the most popular model is half that price. For the same reason, forget about the lack of 3G, the 2MP camera, and most of the other shortcomings on the feature list. Remember the leap from Version 1.0 of the iPod to the Nano.

Don’t blame Apple for going with Cingular instead of Verizon. Blame Verizon. Given Verizon’s refusal to support Bluetooth (beyond headsets) or WiFi or simple desktop synchronization and their insistence on Verizon-branded proprietary software (like their $4-per-song alternative to iTunes) there is no way that Verizon could carry the iPhone. Why do you think Verizon doesn’t offer any high-end phones from Nokia or Sony Ericsson? The iPhone and products like it will ultimately force Verizon open, as I have been saying for months now.

Why has Apple been able to leap so far ahead of Nokia with their first phone? Because Apple is the only company with the chutzpah to tell a major US carrier what a phone ought to look like. Nokia, Motorola, Sony Ericsson, RIM, and Microsoft have all bowed before them. So I think Tom Evslin is wrong; this is a revolution. And if Apple can really sell 10 million phones it will have even more control when it comes to Version 2.0.

As well as lamenting the Cingular deal, Fred Wilson thinks that the iPhone will have no impact on sales of the Blackberry and that the market was wrong to sell off RIMM. I disagree. True, the iPhone is highly unlikely to appeal to RIM’s core enterprise customers - it’s expensive, entertainment-focused, and won’t play nice with Exchange Server or support Office attachments at first. But RIM’s high valuation is a bet on their being able to break out of the enterprise market and sell to consumers. RIM’s legacy business is secure, but Apple just took their future away.

Even if Apple makes it very difficult to unlock the iPhone, they will have to sell unlocked versions in Europe and Asia if they want to make their sales targets. I predict that more unlocked iPhones will be imported back into the US than any handset ever sold - not just for T-Mobile customers, but for Cingular customers who don’t want to wait until their contract is up for renewal.

Similarly, it’s a mistake to think that the iPhone is not important because only high-end customers will be able to afford it. For one thing, this phone will set the design direction for the whole market and it and phones like it will cost $200 or less in a few years’ time. But more importantly, the high end is the most important segment of the mobile phone market, because it is the most profitable segment. Motorola and Nokia are selling more phones than ever but getting punished by investors because their phones are too cheap and their margins are collapsing.

Having said all that, Apple still has serious questions to answer:

Battery life: forget about talk time, forget about music playback, what is the standby time and why are you being coy about it?
Why would you even think about blocking third-party applications? If so, what is the point of having OSX?
Why do you need a cable to sync it when it has WiFi? Is it because you want to drive any possible games or downloads through iTunes and DRM?

Finally, I believe that Apple has made at least one deal with the devil, and it’s in their implementation of SMS. But I will save that for another post.

***

Happy New Year … Summer and I took a break to visit friends and family in Dublin and Brussels. Now back to work.

Comments to “The iPhone Cometh”

fred wilson says:

January 10, 2007 at 7:59 pm

first, i like your flickr photo better than mine Jason. i didn’t see that one when i browsed for photos to decorate my post.

i’ve read a bunch of stuff on iPhone today and I generally agree that iPhone has set a number of important precedents; a full os on a handheld, a stunning UI on a phone, CE taking control of the device back from the carriers, and certainly a number of others.

granted i have not touched the device, frankly it doesn’t even exist in its final form, but i can’t imagine how a touchcreen keyboard is going to be a solution for people like me who send and recieve 100s of messages on my mobile device a day. that’s email, im, and text. it’s just not going to happen.

RIMM is not the company that should fear iPhone. Motorola, Nokia, Samsung, Danger, those are the ones that should be thinking hard about competing with iPhone.

Jason Devitt says:

January 11, 2007 at 3:05 am

Fred,

The point is that heavy email users like you are a tiny fraction of the market. There are roughly 2 million Blackberry subscribers in America, and 2 million Treos. That’s out of almost 200 million cellphones.

To justify its valuation, RIM has to garner a much larger share of the market than that. If they thought a proper qwerty keyboard was critical for their success, they would never have shipped the Pearl. I wrote more about this here:
http://www.brash.com/brash_dot_com/2006/12/the_qwerty_myth.html

Thanks for the link.
Jason

Andrew Parker says:

January 11, 2007 at 7:53 am

Some of the best commentary on the implications of the iPhone I have seen to date, particularly the “blame Verizon” part.

I’d be curious to know what you think about the positioning of the iPhone relative to the iPod. I think consumers were so excited about the possibility of an iPhone (prior to its arrival) because their iPod was the same size as their phone and they so no reason to carry two devices if only one could do the job of both. However, iPod made a intentional choice in limiting the iPhone storage capacity such that it does not cut into their core business of iPod sales. I (and I think most consumers) want an iPod replacement, and I don’t think Apple has built that in the iPhone. This is both expected and disappointing.

I know that you say to ignore the specs to date because it will all change going forward, but I am skeptical that Apple will ever build the iPod replacement that I want because their biggest competition will be themselves.

Greg Clayman says:

January 11, 2007 at 8:06 am

Absolutely could not agree more that we should keep in mind the “1.0″ nature of this device. I agree w/ Andrew, though, that at 8 gigs this does not replace my iPod by any means. Esp. if i want to fill it with video.

I do wonder if they’ll come out w/ a device that has a similar form-factor, no phone functionality, and more storage. Although if they do I imagine that it will be after they’ve given the iPhone a chance to sell out of stock…

Not sure I blame Verizon for the the closed nature of the iPhone as much as I blame the GSM/CDMA dichotomy in the US. Without making two devices they simply had to make a choice. More here: http://twofones.typepad.com/twofones/2007/01/post.html

Jason Devitt says:

January 11, 2007 at 9:03 am

Greg and Andrew,

On the iPod - I wish I knew how sales broke down for the range. But Jobs mentioned that the best-selling iPod is $199 - the 4GB Nano. This suggests to me that 8GB will be more than enough memory for most people, again remembering that this is Version 1.0. (The original iPod had just 5GB.)

If memory were all that mattered, no one would choose the 8GB Nano over the 30GB iPod. They are the same price.

No matter how many versions the iPhone goes through, there will always be a dedicated music/video player with more memory at a competitive price - it is not an Apple marketing ploy, it is just cheaper to build a single-purpose device.

Greg, thanks for the link. I maintain that regardless of network technology, there is no way that Verizon would carry this phone given their current strategy, which includes dictating the entire UI to handset manufacturers, crippling Bluetooth, and openly competing with Apple in music downloads.

Jason