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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.
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.
Quite honestly, we don't know enough about the device yet to make any informed commentary. We're going to have to deal with six months of analysts talking out of their ass about it, and Apple fanboys/haters blathering on about how wonderful/awful it is without more than a basic overview of its functionality and no hands on UI experience. The 'specs' from Apple are a joke, and don't reveal the most basic of needed information. The details of the restrictions that will be placed on the device by Cingular are completely unknown. Until those things are known, it could go in any direction.
Anybody who talks about what is going to happen with the iPhone in certain terms at this point is an idiot.
Apple tend to launch a product and then fork it into a product family that covers a nice price range. This format could expand to include a hard drive and become a real portable hand-held, the new Newton. It could also shrink to become a simpler phone. Expect the actual release model in June to have much more memory, and better battery life.
The biggest problem with all smartphones today is that UI design is generally terrible. If Apple can get this right, and make a family of phones that react quickly and are fun to use, they will sell a lot of them.
Further, it seems to me, phone or not, that this is what the iPod will look like in 2 years time. The wheel is no longer needed, and this format makes video a pleasant reality.
So it's quite possible that the "phone" part of this product is less significant than the large-screen, no-button, Apple-inside format.
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When the iPod first came out, the mp3 market was still very small and still is in comparison to the cell phone market. There are over 2 billion cell phones in use today, with the big players having huge market share; Nokia's is currently over 30%. It's a low-margin, commodity business... not an area where Apple has expertise (niche products, high margins).
SO, I wouldn't base the past success of the iPod as an indicator of the future success of the iPhone.
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
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
If anyone knows how to achieve a 1% market share, it's Apple.
Well, that's more than 1%...
The iPod line needed a reboot, and the iPhone was splashiest way to do it. In fact, this device is the logical evolution of the Newton MessagePad. Think about it. Apple realized that boring contact lists, calendars and handwriting recognition won't encourage the Unwashed Masses to adopt portable computers. People are far more media-centric than that.
The rejuvenated iPod lineup will tempt you with music, movies and games, while offering an addictive combination of go-anywhere Wi-Fi browsing and email. And you can bet that Apple is planning to open up third-party development as quickly as possible.
As for the iPhone device, the bleak reality is that it is slightly larger than a 5G iPod. Too big to slip into the pocket of my jeans, which means it's too large to use as my everyday phone. My hard drive-equipped iPod usually lives in a messenger bag on my shoulder or in a jacket pocket, simply because it's too bulky to function as an "everywhere" communications accessory. I wouldn't be willing to carry something as large or expensive as the iPhone with me everywhere I go. I'd look like a dork with my calculator on a belt clip. Besides, mobile phones are expensive enough to begin with and many people (especially students) will balk at the idea of committing to a 2 year $1000+ mobile voice/data/voicemail contract after shelling out $599 for the iPhone itself.
No, the real magic will happen when Apple releases a $299 version of this device - the next generation iPod - that retains everything but the GSM + EDGE phone technology. At that point, the iPod will be perfectly positioned to become everyone's favorite teeny-tiny ultraportable computer.
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.
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."
In order to meet their 1% goal they need to sell 10M phones in 2008 (the first full year they are available). That is directly paraphrased from Steve Jobs during the keynote. It may be hard to sell a $500 to $600 phone in those quantities. But Steve Jobs himself said they are going to continue developing iPhones (3G...). Does anyone really think that this is the only phone Apple will be selling for all of 2008?
I think Apple will sell a lot more than 10 million iPhones in 2008 when they add the iPhone nano to their lineup a year from now. I predict the iPhone nano will be physically smalelr and drop some of the pricey "smart phone" features of it's big brother. But it will still have the great interface and importantly, style, of it's big brother. Probably will come in colors too. $200-$300. That will fly off the shelves.
You heard it here first.
Spyky
It's true that it isn't quite the same situation as MP3 players, but there is a similarity in the relative suckiness of the product being sold. Before Apple entered the MP3 market, the players available were all terrible. The technology was ok, more or less, but the user experience of the devices was ridiculously awful. Likewise with the current cell-phone market. The technology is pretty well established and good enough, and everyone I know has a cell phone. But everyone I know *hates* their cell phone. The experience of using them is just terrible.
You say Apple has no expertise in the commodity business, but where they seem to excel is in entering a commodity market, selling high-end products that offer an excellent user experience, and making a killing from being the prestige brand in that otherwise commodity market.
Yes, but most people hate cell phones because of price, contracts, and service areas. The iPhone is more expensive than most phones, has a mandatory contract attached, and is only as good as the Cingular service. The iPhone does absolutely nothing to fix most of the major problems people have with cell phones. Then it adds a couple of problems other cell phones don't have... like having a battery that is not user replaceable. In return all you really get is a slick touch screen interface. Sure, it may make playing music and browsing the web a litter easier, but many people really don't give shit about that stuff on a phone. In the end I think it will sell well thanks to the rabid Apple fanbase and people's desire to own status symbols, but it won't actually be a good value or that much better than what is already out there.
"For all practical purposes you can expect no 3rd party apps."
Am I the only one that thinks Apple skipped shooting themselves in the foot and just shot themselves in the head with this one? The iPhone seems ripe with endless 3rd party app possibilities, it's counter-intuitive to not allow developers to create apps for it.
This isn't a iPod where it plays music and plays it well so there's no need for 3rd party apps, this is a convergence device that should have software that takes advantage of all it's functions. After all, what's the point of a fancy menu if you can't add anything to it?
Far as I know the iPhone will be the only $500+ cellphone that's doesn't have 3rd party apps. All the other ones I can recall are PocketPCs or Blackberries that allow 3rd party apps.
I think I speak for everyone when I say: Apple, get a clue, allow 3rd party apps. I'll admit it, I'm part of the 99% that has never bought a $400+ cellphone, but I have a PocketPC, cellphone and iPod and I was considering replacing all three, even my PSP and digital camera would likely get a lot less use depending on photo quality and 3rd party games. But hearing that there's no 3rd party apps is giving me serious reservations to the point that I'd have to say no, I will most likely not pay $500+ for a device knowing I'm locked into using only what few apps that are included.
Anyone else who considered buying a iPhone having second thoughts upon hearing there will be no 3rd party apps?
my karma will be here long after I'm gone