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iPhone Faces Uncertain Market
48 hours have passed since Steve Jobs's MacWorld keynote and the reality distortion field is beginning to wear off. Lists of the drawbacks of the announced iPhone are sprouting all over the Net (and there is the occasional defense by true believers). Now narramissic writes, "The iPhone may be poised to take over the high-end cell phone market, but is it a market worth taking? Not if an InStat survey from July is any indication: Of 1,800 consumers surveyed, just 21 had spent more than $400 for a cell phone. Prices for the iPhone, admittedly more of a handheld computer than a cell phone, start at $499 for the 4G-byte version with a required two-year contract with Cingular. So, is Apple pricing it right? Analysts quoted in this article seem to think Apple's going to have a hard time getting the 1% of market share that Jobs called for."
That most people won't spend over $400 on a phone because there aren't any phones worth spending that much on? The high end market may be small... but there's no reasoning given for not spending so much... maybe it's just because nothing (until now, IMO) has been worth the extra $$?
If you are looking for an iPod and a phone, or if the phone is a bonus, the price may be worth it to you.
I'm not familiar with the specs of the iPhone, but it isn't as simple as "this is a really expensive phone."
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
Just remember what everybody was saying about the iPod when it first came out. You may not like them, but I'd say Apple has been pretty on the mark over the last 5 years or so...
Taking guns away from the 99% gives the 1% 100% of the power.
This report fails to take into account the added capabilities of this phone. People will be much more willing to spend 300+ dollars on a phone from a company that has a impressive history in the mp3 player department. This is not just a phone. Remember that. Prof
If you look at Cingular's current plans for blackberrys, their voice and data packages start at about $80 per month. You can bet they will charge at least that for the iPhone service, if not more. even if it is just $80 a month, you are going to wind up paying $2520 over two years (including $600 for the phone), and that's before fees and taxes.
So that $600 price tag is really closer to $3000.
If Apple is really smart, they've already locked Cingular to a reasonable cell plan. They might be able to capture the high-end market with the iPhone, but without cheaper plans, they will never get the majority of people.
I'm having deja vu reading this article and comparing it to very similar articles on Slashdot (for iPod) few years back.
Personally, I think the iPhone sounds cool but I will never buy one (or at least in the near future) ... There are two reasons why I dislike "do everything" or "convergence" hardware, usually the hardware is average or bad at every task and very expensive, forgetting (or losing) a phone/MP3 Player/PDA is bad but forgetting (or losing) your phone and MP3 Player and PDA is awful.
Something as small as having a touch screen to dial your phone, and display everything, means that you're either going to have to carry around a stylus (which you will probably lose) which will scratch your screen, or your screen will have fingerprints; either way it means images/videos/text will be hard to read.
> Of 1,800 consumers surveyed, just 21 had spent more than $400 for a cell phone.
This could simply mean that there were no phones good enough to justify the higher price tag. I mean, is there a phone with a few GB of memory, big touch screen and really good software? What kind of phone can you buy for $500 right now?
Think about it. Most people who buy phones just want a phone that works. That's not the market Apple's going for. They're going for the guys that keep upgrading their expensive iPods with more expensive and newer iPods. Now, they'll get the latest "iPod" but it'll have a phone built-in too. If you look at the sales of the most expensive iPods, you'll see that there's more than enough people there to get Jobs' 1% market share that he wants out of the gates. Don't underestimate the loyalty that the Apple brand garners. It's much like Nintendo's. They'll buy whatever is the latest and greatest.
AirSpeak - http://itunes.com/apps/AirSpeak
And how much was the ipod when it first came out? Wasn't it viewed as a "high end" MP3 player compared to players like Rio etc.? How about the historical price progression of flat panel TV's?
Cutting edge products like this always start out on the low end of the demand curve at high price points. Over time, prices come down and demand picks up.
The key right now is not how many can Apple sell, but can it win the competitive battle in the Swiss-phone market so that when the time comes where price and demand are more properly aligned, it has the mindshare of the market as being the product in the market to buy.
It's just like the progression with the ipod really.
Just like how the iPod was initially only for the high end market, right? When Apple released the ipod, it created new demand that didn't exist before and didn't show up in the data. People didn't want "expensive," high end music players simply because they were hard to use an inaccessible. Apple fixed that and created new customers many times over.
No amount of two-bit analysis predicted that expensive HD-based players would blow up as they did. Apple showed these "analysts" that they were morons.
The iPhone will do the same.
1. Apple releases iPhone 1.0 (ApplePhone after Cisco gets through with them?) in 4GB and 8GB sizes
2. Apple Fanboys will buy this version because "17 50 7074||y ru|35 4nd w1|| pwn 7h3 m4rk37 dud3!"
3. Apple will release version 2.0 with way more storage (1.8" hard disk or SSD) for half the price. This will happen in about 18 months, But not actually ship for another 4 - 6 months after it is announced. (so as not to piss off Cingular)
4. Joe Sixpack will buy that version in droves. Fanboys who have version 1.0 rush to upgrade because "17 50 7074||y ru|35 4nd w1|| pwn 7h3 m4rk37 dud3!"
5. Profit!
This is my opinion. To make sure you don't steal it, it's covered by the DMCA.
Businesses do.
Except for gadget geeks, probably 80% of the Blackberrys, Treos, etc are purchased by companies for employees or by business owners.
Apple is hoping to extend that market by taking a typical consumer/parent who is about to buy a $300 iPod anyway and convincing them spend another $200 for a phone that has unique internet capability. The reasoning behind this is that a person who is ready to by a $300 device is far more likely to spring for a $500 device.
The typical phone buyer considers the phone to be almost disposable. If you come into a store to buy a $50 RAZR after rebate, you're not going to get them to spring for $499. So Apple is taking advantage of the iPod buzz to upsell iPod consumers (the average iPod buyer has already owned 3) into iPhones.
This is sales 101. That's why half the people who show up to buy a Toyota Corolla drive away with a Prius. ("Hmm... $5000 more and I have a hybrid AND get bluetooth and that neato screen")
On the flip side, they'll get businesses to buy some too. Enterprises will stick with Blackberries because they use Exchange and like the security aspects of the device, but there are plenty of mid-level managers with purchase authority to spend $500-600.
Conformity is the jailer of freedom and enemy of growth. -JFK
Honestly, I really hope that Apple released the device without a ship date to pay attention to additional requests. No Camera flash/zoom? Maybe they'll go back and add it. No GPS? Maybe they'll release an option for GPS. Who knows, but I hope they're paying attention.
[%] Cingular Ringtones
Apple has always cost more because they take the risk of using modern technology and open a new market. Most critics said the iPod would never sell because it was too pricey but there was a need for the product. Now with digital media players costing $200 to $300 dollars, iPod and other audio devices another $200 to $300 and smart phones again are in the $200 to $300 market it makes sense that a product that combines the three will be priced at $600. But this doesn't mean anything. How many people bought the first iPods? The iPod took off on the third Generation three years after the iPod was introduced. The phone changes the technology and will start us on a new course. The question isn't if you will or can afford the product now? It is more of a question will this product change the way we communicate? And only the fools will by the first generation especially when Flash based memory is increasing in size and the costs and functions of these devices will only increase with time.
Well, that's more than 1%...
Exactly. The key complaint about the iPod was that it was too expensive. That no one would buy one when they could have a Creative r579X250 or whatever instead. i'm amazed that these complaints KEEP showing up. Apple is in the business of selling people hardware/software combos at a premium. it is WHAT THEY DO. The powerbook and ibook lines were both much more expensive than the direct competition, but they sold poorly when the software/hardware mix was diluted or uncompelling (early/mid nineties) and exceptionally well when the mix was more distinct
The iPhone will be the same way. This isn't apple fanboyism, this is grudging respect. look at the iPod. look at the cheif complaints about mobile phones in general. Not the slashdot complaints, but the complaints among the predominance of users.
1. Poor UI
2. Poor or shoddy design.
3. inability to use features on the phone, or limitations on the interoperability of those features.
Apple fixes these problems for a living. They fix them and then establish the solution at a high pricepoint, and people pay for it. No. it's not going to be unlocked, it's not going to run linux, it's probably only going to support limited software development, if any at all. But people will buy it, at least 10 million people, if not more.
...and the iPhone is exactly what I want. But I'm not buying it. It's cool, but it's not $500 cool.
/. say they won't pay, since in many cases the readership seems to want stuff for cheap or free (I know I am generalising, so don't take this personally). The market is not about the sort of people who say they love a Mac, but wouldn't even fork out for a Dell because it costs too much. The market is about people who are willing to a price for a well designed product, that works well, looks good and is easy to use.
Well I am not going to make any analysis based on what people on
Jumpstart the tartan drive.
I think Apple isn't all that interested in 'taking over' the high-end cellphone market as much as they're interested in defining a new category of communications device that's not thought of as a cellphone.
This thing is just a first stab, and it's being aimed at the high-end cellphone market, if only because that's a market that exists, and to communicate, you've got to have people to communicate with. But perhaps Apple's betting that, though it may make phone calls, the gadget of the future won't be though of as a phone.
Posted from my Android phone. Oh, I can change this? There, that's better...
You mean the FUD campaign initiated by frightened competitors is flaring up. This story makes it seem like everyone is suddenly deciding not to buy the iPhone after "coming to their senses." Hardly the case. This thing will sell like crazy, and the fact Slashdot is posting a story saying it won't just means it will. Remember the iPod? The iPod mini? Slashdot said they'd fail.
"Sufferin' succotash."
As The Register points out, we should all be cheering for the iPhone because it'll kickstart competition. Finally, someone is showing RIM, Palm, Sony-Ericsson and Nokia that nobody buys smartphones because their smartphones *SUCK*.
If this brings some innovation into a pretty stale market, that's great for everyone.
It's brainless to think that Apple will not come out with a simpler, cheaper model in six months. Everybody knows they've been working on two different phones. The surprise with this annoucement was that they brought out the smartphone first.
This makes sense (IMHO). You launch your product in a small, dedicated, technical market first and then bring out your average joe consumer market product when you've got the wrinkles ironed out.
As for that dedicated market, people like me have been waiting for a phone like this for a long LONG time. I've spent well over $1300 on smart phones in the last 9 months and have been disappointed with them all. I couldn't give a damn what it costs - I just want it to work really well.
I am not interested in articles about life extension advancements.
I seem to recall that Jobs said it was "1% by 2008"
By 2008 several things will have happened. First, I'd anticipate that the price will have dropped by then. Second, anyone want to take a bet that the "multiyear exclusive deal" with Cingular is 2 years? Third, it will have undergone at least one revision (possibly with an "iPhone Mini" or somesuch in the middle). Finally, a lot of people will be buying new cell phones and possibly changing providers.
1% sounds extremely high to me as well, but it has to be kept in mind that they aren't talking immediately and this thing does a lot more than most smartphones.
Integrate Keynote and LaTeX
Clever signature text goes here.
I think it's completely misleading and off-the-mark to compare the iPhone to a cell phone, at all. The only reason we're tempted to do so is because it has "Phone" in the name. But that's almost as absurd as looking at a $2000 "Apple" computer and calling it expensive because you can get an "apple" at the grocery store for 50 cents.
They had to name the product something. But the fact is, you could remove all the phone-related features from this product and it would still be worth $499. It's a PDA and a music and video player and a web browser and a digital camera. It's practically a desktop computer for all the things casual users need. And it's 10 times easier to use than most products in any category you want to put it in. I mean, you point with your damn finger. This is a fucking amazing device. It was amazing yesterday, and it will still be tomorrow.
* Not possible to install external software
* No battery Replacement
* No MS exchange
Can you quote your sources on these? As far as I can tell, they're all unsubstantiated rumors.
First I'll admit, I pretty much am a zealot. But many people's dismissal of the product before they see or use it in person is very typical of the telephone game we call the Internet. I saw over here somebody saying this so I'll take it as fact. The truth is we still don't know very much about the product. So let's stop assuming things and think they're set in stone.
My number 1 gripe with people's assumptions is that the iPhone will be a 100% closed-product. This is bunk. Firstly, nobody official has said anything close to that. Just that development kits are not available at this time. Why is that? Let's think about it.
MacWorld is very much Apple's own personal CES. Takes place at the same time for more or less the same purpose: to introduce new products. This show is not so much about the developer because Apple already puts on a giant show just for them, WWDC.
As is widely known, Apple went to great lengths to keep the product a secret. So duh, no development kits were given to even the most tightly NDA'd partners. This thing was even kept secret to most of Apple's OWN employees. So it stands to reason they didn't want to mass-produce developments kits to have available at announcement. Beyond that, third-party software will undoubted bring up alot of flaws in the iPhone-specific parts of the OS and API. I'm sure they don't want somebody else's software mucking with the device at launch that could make it unstable or worse. That isn't to say they don't want third-party software running on it -ever-. Just not at first.
And I'm perfectly okay with that. This is a first-generation device. An Apple first generation device! These tend to be flakey. It does take time to work out the kinks and I'm okay with that too. I'm fairly sure that a dev kit will be available at or shortly after WWDC (hey, that's in June too... hmmmm). They just want time for people to use the device as they intended it.
Concerns about battery life are irrelevant at this point. We don't know how long it will really last. Could be better or worse than everybody is touting. But you know what I couldn't care less either way because I don't spend more than 5 hours per day mucking with or talking on my cell phone. I'm lucky if I can get an hour on even the most smartest of smartphones (and believe me, I've gone through alot of them). I'm willing to be most people won't either.
As for price, puh-lease. Go buy a Cingular 8525 (the super-duper 3G pda-phone that runs Windows Mobile). Aside from WM5 being the most sluggish piece of software on the planet, you'll find that it costs $585 (granted without 2yr contract). That's the same ball park. Same with the Blackjack which is $350 (again, without 2yr contract) but both phones come with negligable internal storage so add on another $100 for 2GB Micro-SD and you're still not close on storage. Some people like removable storage because you can swap cards. I have -never- owned more than 1 memory card for a format, so again, I couldn't care less. Especially considering 8GB is fairly substantial.
So I think most people's fears are overblown. The concern that could be given weight is the QWERTY touch keyboard. But that is a philosophical thing that has to be one way or another. Either you have dedicated tiny buttons or you go virtual and have a large screen. My side on this one is the large screen & virtual keyboard. That's just my preference. I have no need for tiny, fingernail splitting buttons so small that I accidentally press the wrong ones so I much prefer a keyboard on a large pretty screen that I accidentally press buttons on. Even if I wasn't such an Apple whore, I'd side with Steve on this one. Dedicated, ugly micro-keyboards suck (I'm looking at you, Blackjack). The 8525 was, for the most part, comfortable and quick to type on though.
Anyway, I'm sure the next few months will be filled with iPhone bashing as people speculate till their heart's content. I know I'll get one (I've gone through 4 different phones in the past month looking for one that doesn't suck) but the iPhone could very well disappoint me in use, but I won't know that until it comes out in June.
I just wasted your mod points! HA!
I agree, but... I am not a marketroid. What the 'troids understand and I do not, is that normal people need to "get" what it is before they will pay for it. The iPod was clearly a music player, a well-established class of device, so an abstracted brand name works. The iPhone, on the other hand, may very well be an entirely new class of device, in which case "iFoo" is a terrible branding decision.
"What hell is an iFoo?"
"Well, it's a kind of super-phone."
"But it looks like a video player."
"That's because it *is* a video player."
"...huh?"
So I think the strategy is this: call the sucker an iPhone, so that everyone on the entire planet "gets it" instantly. Apple is all about simplicity, so this makes sense. The weird gadget with no buttons is a PHONE! It's like a Treo, but 100 times cooler. And, hey.... wait a minute... it's also... it's a friggin' COMPUTER! It's a pocket Mac that makes phone calls! Whoa, dude!
Then, after everyone has had time to wrap their heads around it, declare that you could not resolve trademark disputes with Cisco, and stop calling it the iPhone. *NOW* you can rebrand it as something entirely new, because you've created the category awareness - you've got everyone knowing that it is not simply a phone, but a phone replacement. You pay off Cisco for their unwitting contribution to this guerilla marketing campaign, and you've just instantly (well, almost) established an entirely new class of consumer electronics that everyone wants before it's even available for sale, which is very, very, very difficult to do.
It's worth mentioning that 21/1800=.0117 which is over 1%. Sheesh.
I remember everyone saying how the original iPod was too expensive, feature poor, no way it was going to compete in a market that already had the Rio, etc...
The iPod redefined the market for MP3 players.
As a long time Mac user, I've been listening to people predict the demise of Apple, the failure of it's products for decades.
The iPhone may be a disaster, or it may be as disruptive a technology as the iPod. Only time will tell.
Sara
Designer, Gamer, Macgrrl in an XP World
My guess is that if this were sold as the new iPod without the phone feature but still the connectivity and $100 less, it would be "the next HOT thing". Look at this as a nice connected iPod with a phone thrown in...
(Caveat: I'm the Sr. Systems/Data Engineer for one of the top cell phone OEMs...)
Narramissic is probably a marketing wonk; the question he surveyed is skewed. While a small percentage of people buy top tier handset that retail at $400 or more, if you surveyed the question "have you spent $400 or more for BOTH your music player and your cell phone", THAT percentage would be much higher.
Devices that integrate two separate functions and allow the user to have to carry/hassle/charge one device rather than two typically initially sell at the premium the added convenience conveys to the user.
We have been manufacturing handsets that function as music players for some time now, but the US domestic carriers have attemped to channel music sales through their OTA interfacing at a premium and force the user to jump through hoops to "side-load" music for playback. When you add the iPhones ability to easily interface with existing iTunes player setups and be the ONLY alternative to playback DRM'ed iTunes music content, AND the superior design, Steve may just do better than 1`% of the market before he's through, and I'm no fan and would never purchase an Apple computer...
Honestly, I think that the naysayers just don't get it. So few people understand what it is that makes Apple so successful (including a couple past CEOs). Again, this is not a phone, it is a different kind of device that allows us to interact with our data and with eachother in new and revolutionary ways. People already pay this much for an ipod. With millions of ipods sold why would someone NOT guy the iphone at only a marginally higher price considering the incredible wealth of extra features. People are going to buy this just to get the touchscreen interface for their ipod. Even if they don't watch movies or tv on the iphone or even use it to make calls or connect to the internet people will still buy it. Once again, inserting the iphone into the present concept of Cell Phone is clearly exposes the complete lack of understand most people have for the potential market and uses the device has. The iphone redefines the Cell Phone, and yes, whether it's the iphone or not, in 10 years THIS is what your phone will look like and do (unless the telecoms can kill the concept by not comprehending the promise in the business model). Personally I think that if apple opens up the phone to third party applications (widgets) the device will be successful no matter what.
As far as I see it Apple made two mistakes here.
1. Calling it anything with "Phone" in the name (stupid stupid stupid... it isn't a phone, why call it that?)
2. Locking themselves into the "Wireless Provider" business model which for lack of a better way of saying this isn't about innovating it's about exploiting near monopoly status to make bucket loads of money at the expense of their customers and service quality. The iphone clearly relies on the availability of broadband wireless data access and wireless companies today clearly relish the opportunity to so overcharge these services that only companies and not individual customers can really think about paying for them.
Those two mistakes are going to hurt potential customer's ability to see the iphone for what it really is and prevent iphone owners from using it in the way it should really be used. People who want an awesome new ipod will go and buy a new ipod rather than the iphone because they won't perceive it as being an ipod. Those who want to use all the amazing communication features the phone offers will discover that those features are so prohibitively expensive that they can't afford to think about using them for fear of Cingular also charging for doing that. Quite honestly, I'm not concerned about the price (I'd buy one today at that price) but the astronomical costs for wireless service are going to kill people's willingness to adopt the new phone. I was hoping that Apple could use that magic ability they have had to whip the Content Providers into doing their bidding into turning the Wireless Providers towards a contructive and viable new business model for 21st century communications. But... we'll have to wait and see.
You can go ahead and join the apple naysayer club but they've introduced an astounding number of innovative new products over the years. Some have failed, others haven't, but almost all those concepts are tremendously popular today in some shape or another. In most cases Apple simply jumped the gun by a year or two. Hopefully the iphone isn't another similar case. People have been saying Apple is going to fail this year for almost two decades. It's getting ridiculous, Apple is one of the few companies that get that innovating can actually be profitable. Now if only they can clone Steve Jobs and keep him on for the next few centuries they'll be fine.
The difference being that almost no non-gadget-geek had a portable MP3 player when the iPod was released, while the cellphone market is already saturated.
"Anyone else who considered buying a iPhone having second thoughts upon hearing there will be no 3rd party apps?"
Yes... I wish I could know for sure now, and I'll go ahead and get another phone if it's truly a closed platform. There's no way I'm spending that much money on a computing device that can't run the software I want. If they allow 3rd party development as an open platform, then I'll sign over my first-born son for one of these things.
"I like systems, their application excepted", George Sand (French)
I am making a statement that does NOT in any way represent the opinion or policy of my employer, nor disclose any confidential policy information.
That being said, I sell Cingular for a living, and deal mainly with "high end" customers. In the past 48 hours, virtually every customer I've had has asked about the iPhone, whether they ultimately bought a Blackberry, a Windows phone (which sell in spite of my best efforts), or a "basic" phone. At $499 with contract, it will be the most expensive handset ever sold by Cingular in any significant volume, and expect the monthly service to be the same as a 3G PDA- probably about $50 a month on top of the voice plan. And you know what? It will sell like iPods and it will pay my bills. The two objections most people raise about premium phones are price and ease of use. The iPhone promises to solve one of those, and I would not be surprised if the exclusive agreement between Apple and Cingular solves the other. While the device price is very high, it would not surprise me if the data plan on it were discounted similar to a Blackberry. (Cingular "discounts" blackberry plans to $10 below comparable PDA plans, despite the service being much more useful and reliable.) How many people purchased the iPod Photo when it came out at the same price as the iPhone? How many parents have bought Sidekicks and Blackberries for the same teenage children they buy iPods for?
The strangest thing about the phones, in my experience, is that so far, the speculation has not seemed to slow down the rest of the smartphone market; in fact, if anything, it has had almost the opposite effect, and I can't make any sense of that. The new Windows GSM Treo has actually been selling (somewhat) despite being priced just $100 below the iPhone. The Blackberry Pearl is as popular as ever, with customers casually discussing the iPhone (and their plans to upgrade to it in a year or two) at the point of sale. Of course, the lack of 3G should hurt the iPhone, but the strange thing is, if you talk to the average prospective customer (the one in the store... not the one on slashdot) 3G just isn't compelling enough to matter. For every 3G device I sell, I deliver 10 to 15 Blackberries and GPRS phones. The technology just isn't deployed enough for people to care. Maybe once video calling hits people will start to care, but until then, watching TV and surfing the web on a 3.5" or smaller screen just doesn't justify a megabit downlink for most people.
Of the slashdotters here, though, who actually has a data phone already? Who is planning to buy an iPhone despite it's $500+ cost of entry and three figure monthly cost? (Raises hands both times) Worst part for me will be having to come up with the cash for two, because I think my sigificant other will bludgeon me with mine if I don't get her one.
Just my $.02...