Tuesday, January 09, 2007

Apple's iPhone

So Apple finally unveiled the iPhone today. It looks and sounds very nice. I am curious to see how and if it's going to take off. According to this review at PC Mag, it has an uphill battle.

What does this mean for everyone else in the industry? Not all that much, really. Apple is trying to invent a new niche: the consumer smartphone. It's something Motorola, Samsung and T-Mobile have stabbed at somewhat with the Q, Blackjack, and Dash, but those are serious power-user products; this hopes to replace an iPod as a consumer accessory.

Existing smartphone vendors and operating system developers are mostly focused on either the enterprise market or intense e-mailers/text messagers. The iPhone isn't: It's a multimedia/Web access device.

Apple also isn't playing in the mass market here, the millions of people who don't want to spend more than $100 for a cell phone. This is a niche product, a revolution for the few. Hopefully, the innovations seen here will spread over the next few years so more people can enjoy them.

Fair enough, the trend in cell phones seems to be toward smaller, more powerful smartphones, not PDA-like devices. But after reading this, I did wonder - what did people say about the iPod? And I found this 2001 review -

Analysts offered mixed reactions to the iPod--especially to its $399 price tag.

IDC analyst Bryan Ma said Apple may take some heat for entering the consumer electronics market, which typically has lower profit margins than Apple gets from its computers. But, he added, the iPod could serve an important function: convincing people to buy a Mac instead of a PC.

"It's another incentive for them that can convince people to buy a Mac," Ma said.


Technology Business Research analyst Tim Deal dinged the $399 price as "a little high." But he noted that the iPod's FireWire connectivity allows for faster song downloading than USB. The iPod also sports "a significant battery life and a fast recharge speed," he said.


The iPod is another stab at Sony's success in the consumer market, Deal noted.

"Clearly Apple is following Sony's lead by integrating consumer electronics devices into its marketing strategy, but Apple lacks the richness of Sony's product offering. And introducing new consumer products right now is risky, especially if they cannot be priced attractively," Deal said.

Stephen Baker, an analyst at NPD Intelect, said that the iPod will likely stand out for its large storage capacity but predicted that the device may have trouble digging out a niche in the market.

The most expensive MP3 players that use flash memory sell for around $249 right now, with the average player selling for less. Many are also adding features for playing mini-CDs. Sonicblue's Rio 600, for instance, sells for $199. It comes with 64MB of flash memory for storage. Apple's new device has far more storage--enough for 50 hours of music--but it costs twice as much.

The iPod has "good features, but this is a pretty competitive category," Baker said. "The question is whether people want that robust of a feature set with that high of a price."

What I take away from this is that we can pretty much ignore most of what "industry analysts" have to say.

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John Howard said...

I read a lot about this today, and it looks great. The whole time I was reading your excerpt, I was thinking, yeah and what did they say about the iPod? This phone is a real breakthrough if it does what it says it's supposed to, and it will do fine. All you have to do is look at the iPod, which isn't any more impressive than other mp3 players, then listen to all the people who would tell me I'm wrong about that, to see how Apple can create demand for something like this. And from what I've read this phone looks to be a lot more unique when compared to its competition than the iPod ever was.

Chris Howard said...

Yeah, I found that review and thought that they don't give anything much of a chance. I thought it was hilarious that both the iPhone and the iPod had similar complaints from the analysts. I can easily see someone who's thinking about getting a video iPod giving this phone a try. It's not that much more expensive. I love my phone, and I can play music and video on it, but it's not very good at playing music and video. That's why I got the Zune. If the iPhone plays media and has good voice and signal quality as a phone, it may very well drive up sales for high-end phones.

John Howard said...

Exactly, there are a lot of people that have both a phone and a media player, and I can't imagine anyone wouldn't want to combine the two as long as it actually does both things well.