Apple iPhone Thoughts

By Richard Menta 1/10/07

As the rumors swelled over the past year over the introduction of an Apple iPod phone I commented that the best way for such a device to succeed was not for Apple to make a better music phone, but just to make a better phone. Now that the iPhone has finally been unveiled it looks like Apple did just that - and oh yeah, made sure the iPhone was also an impressive media player.

Shipping this June, Apple first dispensed with those annoying little buttons that are the bane of us big-thumbed users. The iPhone introduces the touch-screen interface to an iPod device with a patented technology called Multi-Touch. Sensors disable the touch-screen when it senses the users face come towards the speaker's mouth to avoid accidentally setting off the operative keys. The large display is sharp, with plenty of real estate to hold several clear navigation icons. Navigation looks impressive too, though we'll need to test them to confirm that.

Apple iPhone

Did I mention the iPhone was thin - razor thin. The height and width dimensions are broad though, so we'll have to wait an see what men think when they bend down or sit with an iPhone in their front pocket. Because the unit is so thin, the back pocket concerns me. Users might have to exercise a bit more care with the iPhone's faceplate too, though hopefully a new compound is used to reduce the scratching so problematic in earlier iPods.

As a personal media player the iPhone looks compelling. We discussed the odds of a widescreen iPod with touch-screen appearing, but we had no idea they would roll it as part of the iPod's mobile phone concept. Part of what we felt was holding the widescreen iPod back was the need to entice more major studios to sell their films through iTunes. During Steve Jobs Keynote introducing the iPhone he announced that Paramount pictures would now supply feature films.

The iPhone is a powerful little device, powerful enough to run on OS X. It is also an expensive device. An iPhone with 4 gigabytes of storage will cost $499; with 8 gigabytes, the price is $599. Those who purchase a 2-year contact with Cingular, the only service you can use an iPhone on in the US, will let you have the iPhone for $299 with a 2-year contract, still a hefty price.

But Apple has been on target with regards to pricing on its other portable products so it waits to be seen how well the iPhone sells. Jobs says Apple's goal by 2008 is to take 1% of the worldwide mobile phone market. If that sounds modest it is 1% of a huge market, equal to 10 million phones. At $500-$600 per phone that 5-6 billion dollars of revenue! That's much more that what iTunes has pulled in since its inception. The European market which is standardized on GSM protocol should prove a vibrant market. Also, companies like Archos have successfully, though modestly, sold PMPs for $500. An Apple branded PMP that is primarily a mobile phone has a very reasonable shot of selling well. Wall Street certainly felt the device and price point were compelling as Apple's stock price shot up to new highs.

And if the iPhone is a smash? Then the other big winner is Cingular who is the exclusive carrier for the device. If enough consumers switch carriers just to have access to the iPhone it will be interesting to see what the folks at Verizon and Sprint do. Those two carriers have music download services that compete directly against iTunes, selling songs for two to three times more. The pundits say they are hostile to any iPhone that does not cut them in on iTunes revenue and that is why Apple worked the exclusive deal. If the iPhone succeeds in luring away customers the money lost in monthly service fees will dwarf any revenue derived from music sales.

Other MP3 stories:
The Digital Media Winners of 2006
The Digital Media Losers of 2006

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