It's too early to tell if the Apple iPhone will be a sales success; we'll have to see how the product actually works. But I think Apple's announcement is very promising, and whether or not the product is a best-seller, it resets a lot of the agenda for the mobile industry.
This post is in three parts:
--Information on the iPhone. What we know for sure about its specs and functionality, and other information that appears to be true but is not yet confirmed.
--Prospects for the product. Speculation on the iPhone's potential sales success. Who might want it and why.
--Impact on the industry. Who suffers, what the opportunities are, what to watch for next, and what to do if you're working at a mobile company.
Information on the iPhone
Before I even get into details about the iPhone, I want to acknowledge for the record that Steve Jobs does great announcements. The Apple faithful were appropriately awed. But the most impressive moment to me was his handling of Google and Yahoo. Both companies are posturing as the future dominators of mobile data, but Jobs managed to have each of them on stage, in order, catering to him. A wonderful power play, and a nice inversion of that first Macworld after Steve's return when he kowtowed to Microsoft. This is a long, multiyear exercise in personal and corporate redemption.
About the device. It's a small mobile device with a touchscreen-centric interface. It has a 160-dpi 320x480 screen, four gigs or eight gigs of memory, a quad-band GSM/Edge cellular radio (not 3G), WiFi (802.11 b and g), Bluetooth 2.0, and a two megapixel camera.
The device senses whether it's being held horizontally or vertically, and rotates the screen image appropriately. There's a proximity sensor to turn off the touchscreen when the phone is held against your face, and an ambient light sensor to dim the screen when you're in low light conditions.
The device weighs 4.8 ounces / 135 grams, and is nicely sized (not as thin as some phones, but acceptable size and weight for most phone users).
Battery life is supposedly five hours of talk and 16 hours of music playback.
There are no buttons on the face of the device -- dialing, typing, and all user interface is controlled through the touchscreen.
The operating system is Mac OS X. Bundled software includes the Safari Web browser, an e-mail, Google Maps and associated location-based services, iPod music and video playback, a suite of phone apps (address book, threaded SMS, calendar, dialer, visual voicemail [pick messages from a printed list on screen]), photo management software, and some widgets provided by Apple.
The visual voicemail feature is nice to see but also frustrating because we were talking about this feature at Palm roughly four years ago. Sigh.
The touchscreen interface includes multi-touch support, so you can use on-screen gestures to navigate the interface. For example, you can pinch two fingers together to shrink an image, and spread two fingers to enlarge it. This will be especially important to applications like the Web browser, which lets you zoom in and out on web pages.
Price is $499 for four gigs and $599 for eight gigs. That price apparently requires purchase of a two-year service plan from Cingular. The phone is exclusive to the Cingular network in the US for "multiple years." Availability is June in the US, late 2007 in Europe, and 2008 in Asia.
What it doesn't do. There are apparently some important restrictions on the functionality of the device.
No direct connection to iTunes. Time Magazine reports that you can't download songs and videos directly from iTunes; instead, you have to go through a PC or Mac and then sync the songs over. That may be a blessing since the phone doesn't have 3G performance, but it ought to work direct at least on WiFi.
No wireless sync. You have to use a cable to sync it to a PC, even though it has high-speed wireless. Again, why restrict this?
No third party apps. This one was a shock to me. Michael Gartenberg of Jupiter Research reports that Apple says the iPhone is a closed device -- only Apple will be able to add applications to it. Michael thinks it won't be an issue to the masses, but I think it's a huge missed opportunity for Apple. They have Mac OS X in there, they have the Widgets infrastructure -- if they turned the developers loose on it they could rapidly amass an incredible array of add-on features and system completers. I don't know if the restriction on third party apps is a temporary thing, or an intentional and permanent part of Apple's plan.
No Office enclosure support. Michael also reports that Microsoft Office files enclosed by e-mails can't be read by the iPhone. I lived through this sort of restriction at Palm, and it is a stopper for serious e-mail users. This is exactly the sort of thing that third party developers could fix if Apple opened the platform.
What we don't know:
--What's the processor and its speed? (Just curious about this; it doesn't make much difference to the user.)
--How powerful is the battery, and can it be replaced by the user? (This is important because I suspect that doing heavy media and maintaining a wireless connection will drain the battery fairly fast. I remember back when Palm thought the Treo didn't need a replaceable battery. Wrong.)
--Will the GSM SIM card be removable? (This might let you use the device on another network, although you'd still have to buy it with a service plan.)
--What's the price of the required Cingular service plan?
Prospects for the iPhone: Great, for a segment
As I've said a few times, I think the market for mobile data devices is split into at least four big segments: people who won't pay more for anything other than voice (65% of the population), people who will pay extra for communication features, people who will pay extra for information management features, and people who will pay extra for entertainment features (each of those three groups are about 12% of the population). The iPhone looks like an ideal offering for the entertainment-centric users. Steve says he wants one percent of the mobile phone market (for now). I think that the iPhone and its lower cost offspring could eventually get about 12%.
Is that a big number or a small one? Well, it's a hundred million phones, and would be enough to make Apple a top five phone vendor. So it's a big hairy number.
Of course, that's assuming the phone actually works. I think it will -- the demos today were very impressive -- but we can't really tell yet. Here are some thoughts on drawbacks and preliminary conclusions:
It's a segment, not the whole smartphone market. Jobs compared the iPhone aggressively to other smartphones, but that's confusing. There is no unified smartphone market. You can anticipate a lot of confusing articles and web posts in the next few months with people arguing over whether the iPhone is the ultimate mobile thing, all based on their own personal preferences. Here's the answer -- there is no single ultimate mobile device, let's talk about which segments will like it and which won't.
How good will the battery life be really? I'm very suspicions of the power requirements of a wireless + media device that's as thin as the iPhone. It's going to be bought first by enthusiasts who'll use it a lot. If the batteries go flat in a single day's heavy use, that's going to be a major issue. It's one thing when your iPod runs out of power; it's a very different thing when it takes your mobile phone down with it.
Apple can sidestep the problem partially if the battery can be replaced by the user. If not, watch battery life really carefully.
A lot depends on the multi-touch interface. Since there are no buttons, there's no familiar interface to fall back on if people can't figure out the interface. Multi-touch looks really cool when demonstrated by someone who knows it well, but will the average user be able to figure it out? Will the system be able to distinguish well between a tap and the beginnings of a gesture? For example, what if I'm trying to expand an image in the browser, and the system thinks I tapped on a button in the web page? This could create the sort of mess that makes people throw devices against the wall.
Would you like a side order of grease with your phone screen? In the mobile industry, the general belief is that it's bad to have the phone's screen pressed directly against your face -- it'll pick up oil and/or makeup from your face, and get smudged very quickly. Apple's going to test whether that's a real problem or just a superstition in the industry. (David Pogue says Apple came up with a screen coating that minimizes the grease problem.)
This design may not go over as well in Europe and Asia as it will in the US. In the US it's easy for Steve to give a speech saying how stupid it is to type using a phone keypad. In Europe and parts of Asia, a lot of phone users are very used to doing it for SMS, and no matter how stupid Steve tells them they are, they kind of like doing it. I think they may not be happy trading in their physical keypad for a screen where they can't feel the keys. That forces them to look at the screen when they type.
For these people, Apple's product is like trying to get touch typists to use a keyboard that's just a flat glass surface without moving keys. With the single exception of the sets on Star Trek, this has never been accepted by anyone because the ergonomics are bad.
I think Apple is at risk when it tries to change the established habits of users.
This is a poor device for communication-centric users. RIM's stock was hammered today, but I think that's a mistake. Yes in the long term there's a risk to RIM from any new competitor, but stock market valuations are not generally driven by multi-year trends. The iPhone as currently designed is a lousy device for RIM's communication-centric users because it doesn't have a keyboard and because it can't handle Outlook attachments. It has a lot of features those communication-focused users don't care about and won't pay extra for.
Trashing RIM stock because of the iPhone is like trashing the stock of Caterpillar Tractor because someone brought out a new sports car.
Impact on the industry
The immediate impact of the iPhone is that it changes the terms of the debate for everybody. Every new mobile data device will be evaluated against the iPhone's specs, which is going to become very irritating for a lot of vendors because the iPhone isn't shipping yet. It's like boxing a ghost. I suspect that may have been Apple's intention. Supposedly it had to announce now because the device would have leaked when it entered FCC testing, but an interesting side benefit will be that Apple can stall sales of all its competition. I think this is likely to be a very unpleasant time for Microsoft Zune, a moderately unpleasant time for Palm, and an intense annoyance for everyone else.
Curious side thought -- will this also stall sales of traditional iPods? I think there's a chance it will.
Microsoft looks foolish. Robbie Bach, the president of Microsoft's entertainment and devices division, made a big mistake at CES. He got roped into critiquing the iPhone the day before it was announced. Some of his very off-base comments include:
"The latest rumor we hear is that it is going to be a MVNO phone and there hasn't been a lot of successes in that MVNO space for a lot of different reasons."
Speculating that Apple won't sell through a carrier: "Historically, working with partners hasn't been a strong point for Apple, so maybe it will find a way to work around those relationships."
"You have to find out what it's great at. Is it great as a phone or is it great as music player?....If it's great as a music player, then it's just another iPod trying to be a phone."
He ended up sounding both arrogantly dismissive and out of touch at the same time.
Two suggestions, Robbie:
1. Repeat after me: "We can't comment until we know what they're announcing. It's a big market and there's room for a lot of companies in it. We're just focused on making the Zune product as great as possible, and taking wonderful care of our customers."
2. The best way to respond to Apple is to out-innovate it. There's no reason you guys couldn't make a product as interesting as the iPhone. Do you have the vision to build it, and the marketing skills to make people buy?
Apple is focusing enormous effort behind this one initiative. Jobs devoted virtually the entire Macworld keynote to this product -- so much so that a number of Mac fans are bitching that he ignored the Mac. Can Microsoft put the same focus on Zune and its future siblings, or is Zune just one of fifty other Microsoft initiatives?
The impact on Palm is hard to read, but potentially very serious. The core users of Palm Treos tend to be communication-centric and information-centric users. Without third party apps and without a complete e-mail solution, I think the iPhone is not a great substitute for a Treo today for most users.
If I were at Palm I'd be pounding those issues relentlessly in my marketing for the next six months.
However, the Treo has benefited mightily in the US from its image of being the coolest smartphone. It has been a status symbol in Silicon Valley and beyond. Judging from the reactions of the people I spoke to today, I think that position is profoundly at risk. Check out David Pogue's enthusiastic iPhone comments in the New York Times. Pogue is a longtime Palm fan, and before he started at the Times he was a traditional keynote speaker at Palm's developer conferences.
The Treo is still a practical choice, but it's not necessarily the emotional choice.
I think there's a danger that Treo will turn into a tweener in the mobile market -- not as credible for e-mail as RIM, not as good for entertainment as iPhone, and not optimized properly for information management (screen is too small, not enough storage, no note-taking). Palm needs a stable niche it can dominate, so it will have enough money and time to grow its product line.
I don't know if Palm wanted to make Jeff Hawkins' new product a test of the company's ability to innovate, but like it or not that product is going to be compared intensely to the iPhone, even if they don't attack the same problems or sell to the same people. It's Jeff Hawkins vs. Steve Jobs for the title of mobile visionary.
That should be entertaining.
Nokia must be frustrated. It has been doing all these experiments in tablets and media phones, and Apple waltzes in with its first phone product and resets the dialog in the mobile industry. Nokia wants that sort of leadership role, and I'm sure it'll invest heavily in pursuing it.
SonyEricsson has a problem. I've been impressed by SonyEricsson's media phones, but the iPhone is aimed at exactly that same market. Luckily for SonyEricsson, most of its franchise is in Europe, where I think Apple will find sales a little tougher. It also helps that Apple's shipping in Europe later than it is in the US. But I think SonyEricsson will find it harder than ever to penetrate the US, and it will have to innovate rapidly to hang onto its emerging franchise in Europe.
And now, the opportunity. Apple did an exclusive deal with Cingular. I'm sure it will do other exclusive deals with a small number of other operators around the world. That will create intense demand for an alternative product among the other operators. Verizon, Sprint, and TMobile US must all be desperate for answers to Apple's product. That means phone companies that can produce media phones, and software developers creating apps that can duplicate some of the iPhone's functions, have an important opportunity. Samsung probably spun up a team today to copy the iPhone, and LG probably spun up a team to copy whatever Samsung copies. And so on.
I think the issue isn't getting around Apple's multi-touch patents; you don't have to have a touch screen to make a great entertainment product. The key question is whether anyone else can integrate a wireless entertainment device (services, apps, and hardware) as well as Apple can. It won't be enough to just dump a bunch of apps into a device, and unfortunately that's what most of the mobile phone companies are organized to do.
What comes next? Michael Gartenberg made this point, and I think it's a good one. Apple undoubtedly plans a mobile product line, not just a single product. It's possible that the other products to come will plug some of the gaps, and attack additional targets.
I'm sure there is a lot more to think about in this announcement. Please post your comments and questions; I'm very interested to see what you think.
33 comments:
Hi Mike,
Thanks for a very insightful piece about the iPhone. Its going to be very exciting indeed. For the comment about the iPhone being locked away from third party developers, Apple will try to keep it locked for as long as they can. Remember that Apple will be the one who's going to do the tech support for this product and not Cingular. They don't want to complicate things by allowing people to develop their own stuff and screw the system. Its also important to remember that the iPhone will target a market beyond what Palm and the rest have. For this reason, I truly respect Apple in doing this despite my craving for more third-party apps.
More power to you and your readers!
-Winston
Hi, Mike.
Three questions :
1) Not to be MVNO : I think, as Tom Evslin, that being a MVNO, especially at zero margin (like iTunes for music), would have incredibly reinforced the value proposition. Why not Apple ?
2) Battery : yes, people have come to think that a device should have multi day battery life. But as we actually sleep at night, why bother ? Is a full day "at sure" device not better that a device you won't think to charge every night and that drops you after 3 days in the middle of the day ?
3) Hawkins : Do you have any (sharable) information about Hawkins's next mobile computer ?
Thanks for your enlightment,
Julien
http://www.u-blog.net/syd1980
Excellent post. I disagree with the 12% market share bit - yes that's the potential market, but I think they'll struggle to make 1% of new sales and definitely to get 1% of handsets in use (reasons here), but future products could change that. The rest is pretty spot on, but I think SE won't struggle so much against a single Apple model unless the subsidies change massively for Europe.
Julien - in response to your comment on battery life, do you ever travel? I do regularly, and I could never live with a phone that lasted 16 hours standby+music. It often just isn't practical - my current Samsung with 2-3 days of standby is bad enough.
Hi Mike,
Great article as usual. Just wanted to chime in on the multi-touch thing. A couple years back, a company named Fingerworks closed doors and stopped selling the keyboard I love, the Touchstream LP. It had something called "multitouch" technology. I heard through the grapevine that the guys had moved to Apple. They didn't (and probably couldn't) tell why they closed doors. They were brilliant, and their outstanding gesture-recognition software was absolutely great.
It's pretty clear now what they went working on. I have a Touchstream LP, and the simple gestures that Steve demonstrated during the keynote are the first one you learn on these keyboards. Easy to perform, and the software never misinterpreted them. The touch-typing technology they had developed for the TS keyboard also included the self-correcting thing, so I'm pretty confident that what Apple has in the iPhone is really solid.
I'm very excited about the iPhone. As a mobile software developer, I'd sure love an SDK but I understand why Apple would like to keep it closed for the time being. I'm sure they'll offer their own add-on software in due time, like they do now with games for the iPod. Maybe they'll let a few select developers in there too, I'm sure Astraware is already hard at work!
I'm still holding out a small amount of hope that third-party applications will be allowed, although that hope is dwindling... The analyst at Jupiter doesn't mention his sources for that information.
We started receiving messages from our customers during the keynote asking us to port our software to the iPhone! It will be a huge disappointment for us and for them if this is not possible.
But it's not looking good so far. There's nothing about the iPhone on Apple's developer web site, and my query to developer support has only received a "We are currently reviewing your inquiry and will get back to you very soon."
I agree that this phones brings a lot of opportunities for smaller software developer, and will help them to access manufacturer more rapidely.
But I think that Sony Ericsson is probably one of the best positionned to take advantage of this, and "reuse" the best ideaes of this phone. They have an open developper approach, a very good user interface awarness, and extremely good knowledge of mobile device!
http://blog.landspurg.net/the-show-is-other-so-when-iphone-clones-will-comes
Thomas
Excellent analysis, Mike. Only thing I think you overlooked is just how fragile this device might be. One big scratch on that touchscreen, and you may suddenly be out $600 bucks -- not to mention without your phone, contacts, music & podcasts. The iPod (a.k.a. the diePod) is well known to be a fragile device, with a huge aftermarket in cases and protectors of all types. But it'll be all but impossible to put a case around the iPhone, since you need access to the screen.
Thanks, Mike. As always, this is interesting and informative.
I was at first surprised by the "no third-party applications", but the more I think about it, the more I realize that this means that Apple can allow any third-party apps they want, just ike they do now with the iPod. (I'd bet they end up with games and nothing else.) They can commission the games, and be their publisher, setting the price and having complete control. If they want to have more games, they just commission more, or even open up the device a little. But that's a lot easier than closing the door once they've allowed third-party apps.
I see a lot of people using their phones and mp3 players outside - I wonder if the iPhone controls will work with gloves on? The iPod's don't.
Mike,
As usual, excellent review.
Internally we have spent a lot of time over the past day discussing this device's impact on other smartphones. We came to many of the same conclusions you did, until I heard no third-party app support. I think this hurts Apple's approach to prosumer markets, since it takes excellent hardware and innovative vertical applications for adoption. At a minimum, no Word/Excel sync and email integration will be bad. (Wasn't there something about syncing that was one of the major problems with Newton -- and the thing that got Palm early applause?)
In my mind, it also opens a huge door for MS or others, if they can figure out how to make a competent, competing platform that supports 3rd party apps appropriately. I hope it is no 3rd party app support in the short-term as they get dev tools, emulators and distribution together, and not an outright ban. If a ban, ugh for tech support!
I couple of dev options:
1. Apple could decide to release some level of support -- maybe widgets or something similar -- but not full Mac OS X apps.
2. I also have to admit I wondering how web-delivered apps will be handled -- things like Java, Flash, Shockwave -- that technically run locally but appear to be in the browser? Java, etc. also could be a back door for developers and maintain consistentcy with reasonable smartphone/cell phone platforms, if supported.
Elia Freedman
One correction - the iPhone actually has one button on the front - the "home" button.
It would be nice if that button was a 4-way pressure sensitive nub - it would make scrolling around one-handed a LOT easer.
I do worry about the one-handed usability of the iPhone. The more I look at the video, the less one-hand-friendly it seems.
One thought about keeping the battery charged:
Thanks to the iPod there is already a huge deployed infrastructure of iPhone compatible chargers and battery enhancing accessories.
A ton of new cars even have iPod charging / playback hook ups.
The existing iPod infrastructure will make a nice trojan horse for Apple.
- chris // www.radven.net
One of the reasons 3rd-party apps are not allowed could be the lack of a memory card slot. One can fill up the that 8gb pretty quickly if you install all sorts of apps. Aside from storage limitations, applications also need memory to actually run.
Yesterday was an interesting day for me. Spending two hours refreshing various live update pages every 5 mins. While reading I belived the iPhone was going to be something truly amazing and innovative. But I found out about the battery life, the lower res than expected screen (I want at least 800*480 in any device I am going to use on the web), it has only 8 GB memory which you can't really call an iPod designed to play video, and o course the cingular contractual obligations.
After thinking about it and reading about it I realised something. There is nothing innovative about this product. It doesn't even copy off of innovators.
I epected itunes on this device, I expected to be able to swhich to VOIP in wi-fi I expected the devices to be able to interact more with eachother. I want to see IRC and MSN and such chat. I want it to be able to do everything Apple TV can do.
Now for allot of these things it hasn't been said that it can't do them. But many competitors can do those things. And many developors are probabily working on devices that can do most of them.
I don't doubt apples ability to reach their sales target but I don't think that their customors will be impressed with the devices they wil hold in their hands for at least two years.
One thing is for sure. The iPhone will be great for the consumer and for the people who want a one all device. Because it will stimulate developement by its competors.
Congratulations and thankyou apple for releasing a truly non innovatiove product that is so innovative it will stimulate innovation accross the industry.
Wow! What a great article as usual! Very informative on covering what the device is, does and everything else.
Regardless of how popular (or not) this device ends up, this has got to be a good thing for consumers in the PDA/smartphone arena. Hopefully, this will spark some life back in this space and force the players to innovate and come up with something different, rather than push the same thing with slightly better specs.
I'm not sure whether I like the iPhone but I definitely like the prospects of what this could bring to the industry.
Thanks for another great article!
Excellent post Mike.
Beacuse this is a pre-ship, pre-FCC approval announcement, I think some of the specs could indeed change by June, especially since much of the device's interface, which would be buttons on other phones, is software.
I do think the iPhone represents the next phase of the iPod ffor Apple as well -- I suspect all of these innovations will filter down the chain to other iPhones and iPods as time goes on. This is a platform shift for sure.
It may take time, as the iPod took a few yerars to hit stride, but I do think this iteration process will happen faster, since iTunes is already established and iPods already provide a pretty solid foundation for Apple to build upon.
As for the Treo problems, I think you're right on -- it won't be that the Treo is any less effective for what it ddoes, but the perception of it as "coolest" is starting to face more and more challengers. Treo may get boxed in between RIM, Apple, Nokia and Sony-Ericsson -- especially if those other phone makers attempt to come up with something in the next 6 months.
What's interesting is, Apple's dedication and long-term devotion to this project. They've invested 2 years in development and have kept it somewhat shrouded from the world, which allows them to launch this device that leapfogs and puts every other device maker on the defensive.
2007-2008 are going to be interesting years! :-)
Michael,
I enjoyed your analysis as always and cited you in my own post:
http://www.brash.com/brash_dot_com/2007/01/and_so_the_ipho.html
I have a question though. While 65% of people may not be prepared to *pay* anything more for voice, does this really mean that 65% of the mobile phone market will always be voice only?
You could argue that very few people are prepared to pay more for a color screen. But it is almost impossible now to buy a phone without a color screen, because the cost of the tech has fallen so much that there is no competitive advantage in selling a phone without one.
Similarly in the future I would argue that all phones will be entertainment focused, information focused, or communication focused, with no market remaining for voice-only phones, because manufacturers won't be able to shave enough off the price of a handset by leaving these features out to make a voice-only phone compelling. (Same reason you can't buy a dedicated word processor anymore, you have to buy a computer.)
If that's the case, then Apple will ultimately be competing for 33% of the market, at a $100 price point.
Jason
Good analysis as usual, Mike.
I, for one, think there is way too much hype surrounding this iPhone launch. It is a $500+ phone that requires a 2-year contract and maybe even an additional $40 monthly data charge. I wonder how many $500+ phones are sold in the U.S. in 2006. Perhaps Apple will change that landscape, but I remain skeptical.
And one thing I hear over and over again about the new iPhone is how cool and sexy the UI graphic and display is. Great, but I actually prefer using my smartphone to call, text message, PIM, email more than anything else. In my view, iPhone is only average, if not below average, in those departments. Two major problems - virtual keyboard and two-handed operation.
All in all, iPhone is like that sexy and emotional girlfriend we all had one time in our life, but it is the girl with the pretty smile and great personality whom we end up marrying.
Hi Mike,
I sat with my wife who doesn't much care for gadgetry save for her 'perfect little' Treo 90 pim pad.
The emotional appeal and Star Trek awe of the future in multi-touch was compelling. Each Jobsian sleight of hand with that magical UI left us transfixed. Aside from the geeks and early adopter hard core who needs 3G HSPDA-EVDO-R3D4-DADA-DO speed and power, I think the ability for Apple to have Goggle, Yahoo, and Cingular support was remarkable even if Google just played the same game with Samsung. The old and continued push for the carriers to pimp their networks with value ad data services via Google and yahoo web 2.0 stretching of the web landscape ensures that Apple's is poised in the right direction. Developers, who? :-(
I too am miffed about the closed "OS X", permanent battery, exclusive carrier but damn this is a widescreen iPod, no wait a great phone, opps no make that an Knowledge Navigator; indeed a leapfrog wrapped up in battered fried bacon goodness that has everyone buzzing. The Buzz. Remember that? Face it most of the stuff before iPhone seemed all mundane variations of the same HTC, [insert Asian Manufacture]. I had the Kyocera brick in PalmSource 2000 and got Danger-ous with HipTop, but really 2.5 years of secret R&D has really been literally 'climatic'.
I haven't felt this good since waiting for the new Palm releases circa expandable memory HandEra era.
The client doesn't need the apps. Yahoo and Google and the OSS world will be fulfilling that with more Web 2.0 vehicles to broaden the ad space. Apple, Inc. is fashion, media, a bit of religion. Kudos to the Faithful. May they bite the 1 or perhaps 12%
:-)
Best,
tony
Wow, splendid comments everybody. Keep it up.
Before I answer questions, I wanted to share two things.
The first is a thought experiment: If there had been a cellular radio in the TapWave Zodiac, would TapWave have delivered the iPhone three years ago?
I know I'm exaggerating a bit, but think about it.
The second is a little anecdote from today. At Rubicon, we spent the day doing a strategy session with the sales staff of a major enterprise hardware company (picture a roomful of guys in dark sports coats and shiny shoes). They all had RIM Blackberries, which is not surprising because sales road warriors are one of the core markets for RIM.
I asked them if they had heard about Apple's iPhone announcement. Of course they had. They knew all about it; this is Silicon Valley. Then I asked them if they would feel comfortable carrying the iPhone into a sales meeting with one of their customers.
Long pause.
"Well, maybe if the customer was in Seattle or California..."
Exactly what I expected to hear. Apple is a consumer electronics company. If you carry its products in a business setting, you brand yourself as a maverick and probably a Libertarian to boot. That image sends exactly the wrong message to serious corporate types -- the core users of Blackberry.
That situation will never, ever, ever change, because it's rooted in Apple's brand image and has nothing to do with its products. That's the same reason you won't see a corporate sales rep wear Mickey Mouse ears to an important meeting. It just sends the wrong message.
So I do not believe the iPhone is a serious threat to RIM, no matter what strange comments certain people make in the LA Times.
On to your comments...
Winston wrote:
>>Remember that Apple will be the one who's going to do the tech support for this product and not Cingular.
Hmmm, interesting point. You're probably right, although this is different from the situation for most other so-called smartphones. In general, phone users call the operator first.
>>They don't want to complicate things by allowing people to develop their own stuff and screw the system.
Excuse me, but isn't OS X based on Unix? I thought I remembered Apple saying it was so robust that third party apps couldn't mess up the system...
>>Its also important to remember that the iPhone will target a market beyond what Palm and the rest have.
I'm sure that's what Apple is thinking.
But I think Apple's attitude is a mistake and a vulnerability, and I believe competitors can and should use it against them. An open product, if properly managed, can evolve faster. I believe it's possible to have third party apps and still keep the device stable and simple to use. Palm did that successfully for many years. There were other things Palm did wrong, but its devices were not debased by the open APIs.
By the way, Apple's use of its own OS in the iPhone continues the trend toward each phone vendor having its own unique OS. This is starting to look more and more like the reality of the future.
It must drive Microsoft nuts.
Julien wrote:
>>yes, people have come to think that a device should have multi day battery life. But as we actually sleep at night, why bother ? Is a full day "at sure" device not better that a device you won't think to charge every night and that drops you after 3 days in the middle of the day ?
Good point. I think the issue is that it needs to get through a day of pretty heavy usage. We'll have to wait and see if it can deliver on that.
Low battery life is one of those things that can cripple even an otherwise wonderful device.
>>Do you have any (sharable) information about Hawkins's next mobile computer?
I don't have any non-shareable information, unfortunately. The few rumors I've heard are collected here.
raddedas wrote:
>>I disagree with the 12% market share bit - yes that's the potential market, but I think they'll struggle to make 1% of new sales
Good catch. I should have said their total available market is 12%. The share they get will be less than that, especially since they're selling through only one operator.
But there was a report out of Taiwan that Apple ordered around 12 million phones, so I think they need to find a way to get to 1%.
Florent wrote:
>>Fingerworks....They were brilliant, and their outstanding gesture-recognition software was absolutely great.
Ohhhh yeah, I had forgotten about that. Thanks!
>>Easy to perform, and the software never misinterpreted them....I'm pretty confident that what Apple has in the iPhone is really solid.
Great info. Thanks.
>>I'm sure they'll offer their own add-on software in due time, like they do now with games for the iPod.
The thing is, I think they've made iPhone too general-purpose to get away with pretending it's just an appliance. The demographic that wants a music phone or a video phone also wants to play games, and to have a good selection of them. The iPhone doesn't have to be a PSP, but it's vulnerable to competitors with games.
Anyway, that's what I think.
Stuart wrote:
>>I'm still holding out a small amount of hope that third-party applications will be allowed, although that hope is dwindling... The analyst at Jupiter doesn't mention his sources for that information.
Give up. Michael would have been briefed by Apple itself. He was out at Macworld this week.
I think the remaining question is whether the apps ban is temporary or permanent.
Thomas wrote:
>>I think that Sony Ericsson is probably one of the best positionned to take advantage of this, and "reuse" the best ideaes of this phone. They have an open developper approach, a very good user interface awarness, and extremely good knowledge of mobile device!
I hope you're right. Apple needs the competition. (And maybe I should revise my earlier prediction -- if Sony Ericsson does a good job of competing with the iPhone, maybe it'll convince tMobile to carry them in the US...)
Jeff wrote:
>>Only thing I think you overlooked is just how fragile this device might be.
Good point, that's probably one of the things to file away under "things to investigate once the product ships." Although, out of fairness, we should remember that a number of smartphones have reputations for being fairly fragile.
Ellen wrote:
>>Apple can allow any third-party apps they want....They can commission the games, and be their publisher, setting the price and having complete control. If they want to have more games, they just commission more, or even open up the device a little. But that's a lot easier than closing the door once they've allowed third-party apps.
All true. But this does require Apple to out-think the rest of the industry, so it can anticipate the right apps to allow in.
I'm sure Apple believes it can do that. I'm not so sure.
Elia wrote:
>>no third-party app support. I think this hurts Apple's approach to prosumer markets, since it takes excellent hardware and innovative vertical applications for adoption....In my mind, it also opens a huge door for MS or others, if they can figure out how to make a competent, competing platform that supports 3rd party apps appropriately.
I know, maybe Microsoft could create a music store that other companies could license, so they can compete with the iPhone. Oh, dang, just killed that. So now Microsoft Windows Mobile is trying to be a licensed standard while Zune is trying to be a proprietary product, and Apple has just pitted those two parts of Microsoft against one-another.
If you tried to create a screwed-up strategic situation, it would be hard to do one uglier than this.
>>I also have to admit I wondering how web-delivered apps will be handled -- things like Java, Flash, Shockwave -- that technically run locally but appear to be in the browser? Java, etc. also could be a back door for developers and maintain consistentcy with reasonable smartphone/cell phone platforms, if supported.
Yup, that's exactly right. If you look at the way Web 2 apps are developing, the line between a website and an application is becoming completely blurred.
This will, by the way, also affect every operator who thinks they can offer an open browser but a walled garden for apps.
Chris wrote:
>>I do worry about the one-handed usability of the iPhone. The more I look at the video, the less one-hand-friendly it seems.
I hadn't thought about that. Good point.
Laurens wrote
>>One of the reasons 3rd-party apps are not allowed could be the lack of a memory card slot. One can fill up the that 8gb pretty quickly if you install all sorts of apps.
Wow, there's a reminder of the difference between desktop apps and mobile apps. You could probably fit the entire library of 20,000+ Palm OS apps into a single gigabyte.
I wonder how large iPhone apps will be...
Edward said...
>>I want at least 800*480 in any device I am going to use on the web
On a device this size, that'll mean a dot pitch of about 300 dpi (like a first generation laser printer). That will make for spectacular looking text, but will you really be able to use that resolution for something that's meaningful to the average user? I know you and I want it, but I'm not sure how much value it would bring to others.
maceyr wrote:
>>this has got to be a good thing for consumers in the PDA/smartphone arena. Hopefully, this will spark some life back in this space and force the players to innovate and come up with something different
I agree.
Mike R. wrote:
>>Treo may get boxed in between RIM, Apple, Nokia and Sony-Ericsson -- especially if those other phone makers attempt to come up with something in the next 6 months.
Yeah. It's going to be a very interesting scramble.
>>What's interesting is, Apple's dedication and long-term devotion to this project. They've invested 2 years in development and have kept it somewhat shrouded from the world
Quite an accomplishment, isn't it? I am starting to suspect that some of the "leaks" over the last six months were deliberate misdirection by Apple, designed to hide any real leaks in a sea of contradiction. Besides, they built up anticipation nicely.
Anonymous wrote:
>>What's interesting is that isn’t EVERYTHING you were frustrated and critical of in the Blackberry Pearl ( http://mobileopportunity.blogspot.com/2006/09/rims-pearl-splendid-hardware.html ) solved in the iPhone?
Funny that you mentioned the Pearl. I was thinking about it today, and I believe that a trackball interface properly implemented might give the iPhone a worthy competitor. But the software has to be written specifically to use the trackball, and I'm not sure which mobile phone company could do that work well. Maybe SonyEricsson. And of course Palm cold do it...
Jason wrote:
>>I have a question though. While 65% of people may not be prepared to *pay* anything more for voice, does this really mean that 65% of the mobile phone market will always be voice only?
Good question, and the answer is no, for a couple of reasons:
--Tastes evolve gradually, over time.
--Many of the folks in the 65% will use features if they're free or save money. For example, the cameras in a lot of cameraphones are essentially free. One of the non-value added users will accept a cameraphone and will take pictures with it, but will not send any of those photos to someone else via MMS because that costs money.
>>I would argue that all phones will be entertainment focused, information focused, or communication focused, with no market remaining for voice-only phones, because manufacturers won't be able to shave enough off the price of a handset by leaving these features out to make a voice-only phone compelling.
Fair enough, but that's cold comfort to the manufacturers who made all that investment and then had to give away the features. Not a great ROI.
Meanwhile, the value added users will trade up to more expensive phones with more advanced communication, entertainment, or info management features. There is still a ton of innovation to be done in each area.
Anonymous wrote:
>>I wonder how many $500+ phones are sold in the U.S. in 2006.
Hey, excellent question! Anyone know the answer?
I think Apple's response would be that the right answer is to add the number of people who buy both iPods and phones. But I know that won't be the real market, because people are more willing to buy when you cut the purchase into smaller bits.
>>one thing I hear over and over again about the new iPhone is how cool and sexy the UI graphic and display is. Great, but I actually prefer using my smartphone to call, text message, PIM, email more than anything else.
Based on what you said, you are probably a communication-centric user and are not in the target market for the iPhone.
>>iPhone is like that sexy and emotional girlfriend we all had one time in our life, but it is the girl with the pretty smile and great personality whom we end up marrying.
Ouch!
I think you may hear from some female readers of this blog...
Tony wrote:
>>I think the ability for Apple to have Goggle, Yahoo, and Cingular support was remarkable
You're right. Some others online have pointed out that Cingular was apparently willing to throw out a lot of its phone requirements in order to carry this product. That is pretty danged remarkable. If you want to sell something through the operators, create demand first and then the operator will be much more likely to play along.
>>this is a widescreen iPod, no wait a great phone, opps no make that an Knowledge Navigator; indeed a leapfrog wrapped up in battered fried bacon goodness that has everyone buzzing.
I think I'm going to start calling it a "TapWave Zodiac with a phone built in." ;-)
>>Face it most of the stuff before iPhone seemed all mundane variations of the same HTC, [insert Asian Manufacture].
You are so right. Part of the reason for the big reaction to the iPhone is that we've been starved for really good new phone designs, especially in the US. There are a lot of feature-stuffed phones out there that don't work well; the iPhone is a great counterpoint to that (or at least I hope it will be).
Bear with me but this iPhone announcement reminds me of the fate of the British motorcycle industry. In the 1960's Triumph, BSA and Norton thought they had the UK market sown up. Why? Because they knew what motorcyclists wanted and were continuing to design machines that were attractive to that well researched market.
Then, they were wiped out overnight by Japanese motorcycle manufacturers. The Japanese weren't designing motorcycles for motorcyclists. They were designing motorcycles for everybody.
Apple are looking at the market in a different way. They've ignored the segments.
Personally the interesting thing about this announcements is one key comments that Jobs made about email: "IMAP is, of course, the best". And then he went on to show an email client that looks fun to use.
How galling this must be to mobile phone manufacturers who have consistently failed to ship usable clients with phones. Especially Nokia, their N770 (which I have) and N800 (which I was considering buying) have the capability and screenspce to make email anjoyable on a mobile device but have married that hardware capability with just about the worst email client you've ever seen.
I just ran across a very good commentary on the iPhone, worth reading. It's posted as a forum comment on Mobile-Review.com. Follow this link and scroll down to the comment by a user named "Nokia 8100." I have no idea who this person is, but I think he/she has some good insights.
Good commentary, Michael. It'll be interesting to see how this all shakes out.
Problems I foresee: the battery is not user-replaceable, i.e., you need to either void your warranty (at best) or send your cellphone back to Apple to have the battery replaced. Since I suspect that the "five hour battery life" is not realistic, that means that those batteries are going to be getting recharged a lot.
I also see the lack of a third-party developer proposition as a big inhibitor in many spaces. It limits what the phone will be able to do; as long as you're willing to use your iPhone the way Steve thinks you should, things will be fine. Otherwise...
The iPhone is real p-u-r-t-i-e, but I can't help thinking that it's just another iSolution in search of an iProblem. Let's step back from the hype for minute - they have taken an iPod, increased the screen size, added a phone, camera, browser, wifi, etc. Fine. But we have seen various combinations of these many times already.
Informative post, thanks.
Thought your readers would like the following couple of links:
It would be an interesting intellectual exercise in high tech product strategy to watch iPhone's evolution particularly because it's part of sch a rich ecosystem. Whether the product goes boom or bust, it's bound to be a fascinating journey.
My question for you Mike: Given Apple's history, it's likely that iPhone will remain a closed system. Do you think that this will hurt Apple in the long run? Why or why not? It didn't seem to hurt them with the iPod but the wireless industry is arguably more complex.
Oops. I meant to post these links.
MOT CTO's post on the subject:
http://blogs.motorola.com/author/padmasree-warrior/default.asp?item=426849
Equity analyst perspective
http://blogs.barrons.com/techtraderdaily/2007/01/11/apples-iphone-could-it-flop/
Demos are designed to highlight a product's strength and hide its weakness. Steve Jobs has certainly mastered the art of demo.
Case in point: during his demo, Jobs was listening to music, surfing the web, and talking on the phone all at the same. Well, unless you are at a wifi hotspot, this is not possible. The iphone has EDGE, which is not capable of simultaneous data and voice. You need 3G(UMTS) for that.
Just a minor detail but Apple knew what it was doing.
I am afraid that Apple may be setting the public expectations so high that no phone will ever meet them.
I am also surprised to learn from NYT that the iPhone shown was only a prototype. There is still much to do between now and June. I guess there will be many sleepless nights for Apple engineers in the next few months.
Great comments! Keep it up.
Stone Mirror wrote:
>>those batteries are going to be getting recharged a lot.
Yup. This is one we'll just have to wait and see.
Anonymous wrote:
>>it's just another iSolution in search of an iProblem.
Or it's the ultimate mobile device for entertainment hounds. I want to hear what 24-year-olds in Chicago and Hamburg think of it. Those sorts of people are the target audience, in my opinion.
Next question: How many of them have $500 to drop on a phone?
Adi wrote:
>>Given Apple's history, it's likely that iPhone will remain a closed system.
Sadly, you are probably right.
>>Do you think that this will hurt Apple in the long run? Why or why not? It didn't seem to hurt them with the iPod but the wireless industry is arguably more complex.
Great question, Adi. You are tapping into one of the great unanswered mysteries of mobile data: Are these things appliances or computers? In other words, can third party applications matter?
The evidence so far is mixed.
My personal opinion: Applications matter a lot to information-centric users, because the information they want to manage is very vertical and you often need specialized apps and databases.
Applications matter very little to communication-centric users, which is why Blackberry sells so well despite having an anemic apps base.
Do applications matter to entertainment users? Well, it depends on what you call an application. Games matter incredibly to game users. Having a great supply of music matters tremendously to a music-player. So in some ways, the music is the apps base for an iPod.
But as you noted, the iPhone is more general purpose than an iPod, and I think that creates a potential expectation for additional apps.
There's also the expectation created by the browser. As web apps become more and more like applications, people will expect the iPhone to run them. That eventually puts Apple in the situation of either allowing what are in effect full applications, or crippling the browser.
So do I think the lack of third party apps is a fatal flaw of the iPhone? No, I don't.
However, I think it is a vulnerability. If a competitor creates a product that's almost as good as the iPhone, but has third party apps, I think it will kick the iPhone's butt because people will feel it is more flexible and therefore a better value.
This is a weakness of the iPhone that a competitor could exploit.
I wrote more on the mobile apps situation
here.
>>Oops. I meant to post these links.
Thanks -- very interesting stuff.
I loved this quote from the Motorola blog:
"Remember most people use a cell phone to make calls, especially when they are driving. I reserve judgment on how easy this will be for making calls or texting while we are moving at high speeds."
You lawyers out there can copy that one down and file it under "Motorola designs its phones to encourage texting while driving."
Yeah, I know a lot of people do that, but usually the phone companies are very careful not to acknowledge it for fear of creating liability problems.
The Barron's article had an interesting link to a Cisco blog post on why they sued Apple over the iPhone trademark. Cisco says all it wanted was interoperability for its product with the Apple iPhone.
I think it would have been easier to get a few hundred million dollars out of Steve.
Anonymous wrote:
>>I am also surprised to learn from NYT that the iPhone shown was only a prototype.
Don't read too much into that -- you need to get the product pretty much done before you can submit it to the FCC for testing. They might still be tweaking the software, but I think the hardware must be virtually finished.
Mike,
I think knowing the processor running the iPhone is more than a futile detail, because it may have lots of implications. Here some:
1. If it runs OSX, it could be that it's using an Intel desktop X86 derivation. I doubt, since these processor are generally power-hungry.
2. An ARM processor, similar to ones used in cellphones and PDAs. This would be quite interesting, because it would be the third platform supported by Apple, after PowerPC and X86 (Intel).
This last scenario however creates lots of problems, as far as the software is concerned. Flash player plugin for desktop OSX are developed by Adobe (not Apple) and included in standard Safari. However they are compiled and optimized for the X86 platform, there is no version for ARM. Same for Java plugin. It's impossible that Apple did their implementation of these pieces of software simply because they are proprietary. So how does the iPhone perform in terms of Flash and Java?
Could it be that these limitations in the processor are the reason to keep the platform closed, so you can't really add desktop OSX optimized software to the iPhone?
Good read here: http://communities-dominate.blogs.com/brands/2007/01/handicapping_th.html
Hi Michael,
Very interesting post, as usual.
One thing that surprises me is that no one seems to have noticed that the so-called revolutionary multi-touch touchscreen is something that has already been seen in the past.
In 2004 a French company hs launched a "TDA" (Tactile Digital Assitant) called the Jackito, which could be operated without stylus, using both thumbs at the same time on the screen.
The launch was probably not as sucessful as it could have been (very expensive device, IMHO) and the website now doesn't provide anymore technical detail about the Jackito, but this multi-touch screen is old news. Only thing is Apple has the potential to market it correctly... ;-)
http://www.mobileread.com/forums/showthread.php?t=1986
http://www.mobileread.com/forums/archive/index.php/t-3526.html
http://www.jackito-tda.com/index.php
A very interesting and practical article. Thank you for your hard work on this!
Just chiming in to say that the iPhone definitely stalled a sale of Verizon's SV6700 Pocket PC. I forgot what a PITA the PC interface is. The interface on this phone was ridiculously difficult to navigate -- not the least bit intuitive. I threw my hands in the air and returned the phone after five days.
I'll let the early enthusiasts be the guinea pigs for the initial iPhone release, but it is likely that Verizon will lose a 10-year customer because of their pig-headed business practices and software crippling habits.
Hurry up, Apple, Inc. I'm waiting!!
You've pretty much summed up what I was thinking about the iPhone. It's not going to be a phone for everyone. It targets a specific audience, and even Apple is only sending out 10 million units by 2008. It's not the super all-in-one phone people expect, but it'll be good for those casual users that love the iPod.
Check out my blog for my preview of the iPhone features
Hi Michael,
I have really enjoyed reading your sites, on the iphone and technology generally. Thanks!
I have a question, regarding the target market for the iphone other than entertainment centric users, do you think ealry adopters (traditional apple market) will pay the price initially or will they wait to hear what the media and millions of web bloggers say first. The release in Australia is not till next year so surely the target will change slightly with the information avaliable from around the world???? Sorry for the long question. :)
Anonymous wrote:
>>do you think ealry adopters (traditional apple market) will pay the price initially or will they wait to hear what the media and millions of web bloggers say first.
I think the first buyers of the iPhone will be a mix of tech enthusiasts and loyal iPod users trading up.
The rumor mill in Silicon Valley (totally unconfirmed and irresponsible) says Apple has a million pre-orders and is very worried about its ability to get enough phones built by shipment day.
Almost all rumors about Apple are false, except for the ones that turn out to be true, so who knows...
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