The First Million Will Be EasyMonday, June 25, 2007
Perhaps I should have formatted this as a memo to Steve Jobs, but I decided to turn it into a blog entry. We are about to see how much of a success the iPhone is going to be. As the title indicates, I think selling the first million iPhones is a foregone conclusion. However, I think the next 9 million (Jobs says they will sell a total 10 million iPhones within the next year) will be a lot tougher than he expects.
From all reports and the ads, it looks like a cool device with a great graphical user interface, an iPod and a phone, and the world is drooling as it waits for the day it becomes available. There is no doubt that Jobs is a genius when it comes to developing products, everything he has touched has been a success, that is everything but NeXT, which he sold to Apple, and Apple TV, which is slow out of the starting gate. But I am not convinced that the iPhone will end up being the home run he and the world expects it to be. There are already several music phones on the market that are selling well and download music over-the-air including the Sony Ericsson Walkman phone and the Chocolate by LG.
I am certainly not the only one who has commented about not being able to download music over-the- air and that the system is basically closed when it comes to applications, a number of industry analysts have voiced the same concerns. Although, I now understand that if and when applications are developed using Apple's Safari, they might be made available for download, which might help the iPhone moving forward.
There is, of course, the iPod community, just waiting for the next iPod in the form of the iPhone, but I have to wonder how long it will take for the rave reviews to turn sour as customers find out that the ads on TV that make it seem quick and easy to surf the Net are not based on reality. The reality is a slow data connection via EDGE, which runs between 80-110 Kbps when receiving information and is slower sending information. Since I expect most iPhone buyers to be in the 18-25 year-old range, I don't expect many of them will have the tolerance for slow Internet connections, nor do I believe they will be happy with the experience provided by the browser.
Because everything is done via a touch screen, I am not sure it will pass my one-handed test-the ability to make and receive calls, send text and perform other functions when you only have one hand free. I will have to wait and see if it can be used in this manner.
There are a lot of firsts for the iPhone. It is the first wireless device to be introduced by a non-wireless operator. Its price is not discounted, it is the most expensive phone introduced (with the exception of some designer-brand phones) and the network operators (AT&T in the U.S. and Rogers in Canada) have had little if any say in the way it will be sold, where it will be sold (AT&T admits it does not have the right to sell the iPhone except in its own company stores) and now I am hearing rumors that the SIM card is permanently locked into the phone, as opposed to most GSM phones that are locked but still permit you to remove the SIM card and use it in another device. My assumption is that if this is true, it is to keep total control of the iPhone and prevent it from being used on any other network.
The real bet by Apple is that people want an iPod that, by the way, is also a phone. Another first for Apple, which I touched on above, is that this is the first phone I am aware of to be sold in the United States that is being supplied and distributed by a consumer company and not really by the network operator. I have said in several articles I have written that I believe this will become a trend in the future, that consumer companies will enable their products wirelessly but retain control over the device and its distribution.
AT&T will certainly benefit from the iPhone, I am sure that in the first three months of sales it will see a surge in new subscribers, people leaving other networks and moving to AT&T, but I believe it will be a short-lived surge and will not have a long-term impact on the other network operators. Verizon Wireless and Sprint Nextel already have a number of phones that are capable of over-the-air music downloads and video reception. Then there will be competitors to the iPhone that we have not seen yet, all of which, I believe, will provide more over-the-air functionality and capabilities.
I still maintain that the iPhone is an iPod that happens to have a phone built in, with little crossover between the two. Yes, it has a great user interface, but I believe that a device like this should have better integration on the wireless end of things. The hype preceding the iPhone has been intense; Jobs has always been a master showman. The day is nearing when the stampede headed for Apple and AT&T stores will start. The must-have device for the summer will be the iPhone, but come fall, I wonder if the demand for the product will continue or if reality will have set in.
It is not this iPhone that I believe will change the way we view wireless devices, but the iPhones and other devices that will follow this one. Steve and Steve changed the world with the introduction of the Apple II, then again with the introduction of the Macintosh, both Steves left, Apple failed with its first attempts at notebook computers and then with the Newton. But Steve Jobs is back, the iPod has been a great success and the expectations are that the iPhone will be a smash hit.
Jobs is once again changing the world but not with this device―with the way this device is being positioned and the fact that a consumer company, not a wireless company, is in charge. We won't be able to judge the success of this iPhone on the first million units sold, but we will be able to judge it on the next 9 million. I, for one, believe this product will not live to see the 10th million sold.