So Macworld is over and Apple, as expected, released their much anticipated iPhone; a cell phone, web browser, photo viewer, touch-screen PDA, iPod and computer all-in-wonder machine. It’s nice! And it looks even better (from the pictures I’ve seen). However, as good as the device seems, I do not foresee myself getting one anytime soon nor do I see it being even remotely as successful as Apple’s iPod.
Now before I really get into why I think that, let me say that I am aware that the point of the device is to combine the iPod and cell phone. I get that. And I think it is generally a smart move. I just think Apple did it badly. OK, now lets get into it what is wrong with this device.
[So what’s included in the package?]
The first problem I have with the iPhone is its ‘includes.’ What this means is that when you purchase the device it includes a phone, includes an iPod, and my personal favorite, includes service with Cingular (this may change in the future, but they said multi-year agreement…). These are all non-negotiable items that you get when you purchase the device whether you want them or not. So if you want just a wide-screen touch sensitive iPod, or if you just want an ultra-portable Macintosh computer, sorry, you’re out of luck. You get them all. Take it or leave it.
Now I know there are people out there that want an iPhone. I know this. However, I truly believe there are more people out there who want the device sans-phone. This could be because they are locked into a different carrier but want a new iPod, or perhaps because they want to use their iPod to watch movies on a long flight (you have to turn cell phones off on airplanes remember). I know personally both of the above are true which leaves me with little need/want for the phone portion of the device.
But phone/ipod ties aside, the worst inclusion of them all is Cingular. Because while tons of people love their iPods, I’m willing to bet that they hate cell phone providers even more. Every person I have ever met over the age of about 15 has a serious opinion about providers. They love provider X and despise provider Y, and very very few will ignore those opinions to gain access to a specific phone. Personally, I am of the like Sprint dislike Cingular camp. And as much as I would like an iPhone, I don’t see myself going back to Cingular anytime soon. And I simply dislike Cingular and refuse to switch. Imagine the people who hate Cingular.
So what we are left with is a very niche product. Not only does someone have to want an iPod and phone in one package, they also have to want (or be willing) to put up with Cingular.
[Now how much does this thing cost?]
The iPhone is not cheap. I wouldn’t say that the price is unreasonable, but it also is not cheap and will definitely play a major factor in the adoption rate of the iPhone, or the lack of adoption I believe. As it stands currently, you can get a 4GB iPhone for $499 or an 8GB for $599. Keep in mind that this INCLUDES (there goes those inclusions again) a 2-year contract with Cingular. There has been no price announced to purchase it without a 2-year contract, but if it is similar to typical cell phone deals, you can figure another $200 to buy the phone outright. That is expensive. Very expensive. Too expensive.
The price may not seem bad for some, but to most I think it will be. I know I personally have about $400 worth of electronics in my pocket right now (iPod Nano and LG Fusic), but the difference is that these items were purchased separately. I bought my 4GB iPod Nano ($250) and then some months later bought my LG Fusic ($150). And while the totals are close, the affects the two would have on my financial situation is not. Spending $250 today and $150 in six months is not as financially burdensome as spending $500 tomorrow. This is why I opted to pass on the Treo I really wanted for the LG Fusic that would get the job done.
But what about the fact that you get the iPod AND a phone together? Well, even then the numbers do not seem to add up to me. I can currently get a 4GB Nano for $200 (I’m using the Nano because of its size, not its features. Comparing the iPhone to a $300 video iPod makes the iPhone seem even worse due to the huge difference in capacity), which means I would be spending $300 for just the phone component. That is an expensive phone. And unfortunately for Apple, most people do not have expensive phones. In fact, the only expensive phones I see people with are the ones their company purchased for them. And I know that this phone also includes an OS and other goodies, but really that just won’t matter.
Smart phones, albeit expensive and a touch difficult to use for some, do not sell in big numbers. Why? The cost and the features. Sure, people would like to have extras (calendar, Internet, IM, etc.), but nobody really wants to pay for them. Consider the RAZR. Everyone wanted a slim design phone when it first arrived on the market, but it only started selling once it came down to the $150 price range. Another example is the Treo. It’s a great device that works well, but does not sell in huge numbers due to its price point.
Lastly, you have to consider the cost of Internet access for the phone. And currently, Cingular is charging ~$40/month for unlimited access. That is on top of the normal voice plans. That is expensive. Especially when Sprint is offering unlimited access for less than half that ($15/month). I know this was one of my deciding factors in choosing to drop Cingular as my carrier. And while Cingular’s charges are not necessarily a fault of the phone, the phone is only available on Cingular, so it has to be taken into consideration.
[Who exactly are they marketing this device too?]
If you read the numbers, or walk into an iPod store, the iPods market is predominately people between 12 and 28: teens, college kids, and first generation business folks. This sounds like a huge market, and it is, which is why the iPod has done so well. Unfortunately for Apple, if you look at each segment of the market individually the iPhone is not marketed very well to any of them. In fact, it almost alienates the majority of the typical iPod / cellphone demographic.
Teens: Apple has a lose-lose problem with the teen market. First, most teens do not have cell phone plans of their own. They are bundled with their parent’s plans. Therefore, they get whatever service their parents get. Therefore, having the phone be Cingular exclusive is going to be a problem for the teen demographic unless their parents already have Cingular service. Secondly, parents are not likely to buy their teenage kid a $500 cell phone.
College: The cost of this device is going to be a huge hurdle for the college crowd. Typically, college kids live life on a very tight budget, and while you can visit almost any campus and see kids walking around with iPods, I challenge you to find a handful of college kids walking around with valuable phones (Blackberry’s, Treo’s, etc.). It’s not going to happen. Yes college kids go for style, yes they go for cool, but more than anything they go for price. And $500 out of a students financial aid reimbursement check for the quarter is NOT going to sit well with them.
Business: This has to be Apple’s ideal market because here you have a good amount of middle-aged can’t quite let go of being cool individuals with expendable income (umm, yeah, I guess you could include me in this category minus that last detail). Therefore, this is the demographic most likely to pay premiums for a ‘cool’ device. So what is the problem? The problem for Apple will be that this is also the group likely to have the most definitive opinions about providers. They know who they like, they know who they do not like, and they are willing to pay more to get the service they feel they deserve. So if that individual prefers Verizon, they will stay with Verizon, and purchase a Motorola iAlmost instead of jumping ship or wait until Apple releases the iPhone on Verizon’s network.
[And all of this means…]
In closing, what this means is that while the iPhone is an impressive device, it is unfortunately an extremely niche product that will enjoy an exceptionally slow adoption rate. So while it will be talked about heavily and make other manufacturers rethink their future releases, it won’t be nearly as successful (and thus revolutionary) as the iPod or the mouse (Apple’s other revolutionary products according to Steve). The other two products enjoyed success because they solved problems such as an individuals need to easily navigate a computer or need to transport/listen to tons of music easily, without adding many hurdles. The iPhone however, throws several hurdles in front of its attempts at solving people’s need to combine their phone/music player into one product.