Wednesday, July 11, 2007

My iPhone Hype Contribution

Now that the dust has somewhat settled from the most hyped and anticipated product launch EVAH! EVAH!! EVAH!!!! (until the next one) I figgered I'd throw in my $ .02 about the iPhone.

No, I didn't buy one. Are you kidding? A guy who spends a week deliberating over whether to buy a $19.95 mouse? Besides, I'm allergic to cell phone contracts.

Briefly, I wanted to respond to a few of the iPhone criticisms I've seen bandied about.

1. The iPhone is too expensive.

I refer the reader to any tech magazine article about the launch of the iPod, circa autumn 2001. The common wisdom then was that the iPod was way too expensive, that Apple was entering a market already crowded with MP3 players, and that other players could provide the same features at a lower price point. Plus the iPod required the proprietary iTunes software, locking consumers out of the choice of which music player program they would run on their desktop PC. Who in their right mind, the pundits asked, would pay so much for a product they could get more cheaply elsewhere, especially with the accompanying software limitations?

I trust these critics have their answer by now. Honestly, why doesn't the tech industry have anything resembling a long-term memory? This was only six years ago! It's not like everyone who was alive when the iPod was launched has since died, and their hard-won lessons have been lost to history. Sheeesh.

2. The iPhone's memory capacity is too small.

This one does seem a bit baffling, as 8GB max is really kind of puny for a device that's supposed to hold all your music, play full-length movies, and also run different kinds of software. But I think it's only baffling for people who have no long-term memory and therefore can't understand the launch of the iPhone as part of a much longer strategic initiative by Apple.

My prediction is this: You may consider the iPhone as a "do everything" device, and for now, Apple may want you to consider the iPhone a "do everything" device, but I'm betting that this designation is only temporary. Along about Halloween, Apple will drop the "do everything" idea for iPhone and begin to position it as a "team player" with the as-yet-unannounced next generation of iPods.

You may want to carry one device that does everything, but why would Apple want you to do that? Considering how lucrative the iPod is, Apple's got to be concerned about it losing market share. Replacing your iPod with an iPhone maintains the status quo, but doesn't lead to net growth for Apple. Better to have a strategy where people will buy iPhones in addition to iPods, rather than instead of iPods. By limiting the capability of the iPhone, they reduce it's ability to undercut iPod sales, and they have an automatic market for a next-gen iPod.

These next-gen iPods will have huge storage capacity, very small size and speedy Bluetooth networking. They'll serve as the "offline storage" for your iPhone, wirelessly streaming your hundreds of movies and thousands of songs over to your iPhone for playback. You won't need a lot of storage on your iPhone, because storage will be handled by your (new) iPod.

The small capacity of the iPhone also provides an incentive to upgrade earlier, but that's just icing. I think Apple is counting on summertime sales of the iPhone to help drive Christmastime sales of a new crop of iPods.

3. The iPhone only works with AT&T and only uses the slow EDGE network

I think this one is just history overtaking Apple. Given their tendency to want to control every aspect of their product line, it must have been a long and difficult process deciding who would handle the "back end" connection to the iPhone. Given how torpid, corrupt and just generally awful American cell phone companies are, I imagine Apple's people walked away from many meetings holding their noses.

But short of becoming a cell phone carrier themselves, Apple had to get into bed with somebody. Cingular must have given them the best combination of terms, but required some compromises as well. I'm guessing "EDGE-only" was one of these. It IS a crowded market, and other, more proven vendors were already occupying the 3G space, and probably guarding it jealously. They sure weren't about to just roll over and show their bellies because Apple sat down at the table. It's likely that Cingular already had exclusivity contracts with one or more of them when Apple came calling. And then of course Cingular got bought by the saggy, reeking, hideous corpse-shell of old Ma Bell. (I wonder if Apple knew this deal was in the works when they were talking to Cingular.)

Anyway, I somehow find it a little comforting to know that even the mighty Apple, Inc.can't find a decent cell phone provider. I guess you just can't pull a princess out of a viper pit.


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