I’m going to cover the new Apple iPhone in several articles as there are many different angles to consider for this device. I’m going to start by laying out my assumptions on the product and the industry in this first article.
Apple Computer had built up a great many years of experience in the personal computer industry that they helped launch after receiving a vision of what the personal computer could be from Xerox PARC. That early vision and many years of dedicated hard work and marketing led to the successful launch of their 1984 campaign. Yes the marketing was key, but it was backed by almost twelve years of research and experience.
Apple later offered up the iPod in 2001. They moved into a market full of many different MP3 players and devices. They later settled a lawsuit with Creative over technologies that they had apparently received a vision within the creative devices. Apple leveraged this vision from Creative along with its excellent personal computer platform, marketing skills, and product design skills to launch the product and the iTunes service, convincing its customer base that it was cool again to pay for music at the pre-established industry rates of approximately $12-15 per CD. The primary difference came in the form that buyers could by one song at a time.
Apple has now watched for several years as cell phone makers have begun to offer MP3 players of many varieties including an iTunes variety have entered the marketplace. Apple had to enter into the cellphone business or face a converging force of cellphone MP3 players that would eventually remove the iPod to a level of obscurity recently witnessed by Palm PDA’s.
Apple made a serious false start in this direction stumbling over the iRokr in a collaboration with Motorola, that left both companies embittered and pointing fingers at each other. Almost two years later Apple has now offered up an Apple iPhone and immediately launched itself into controversy. A new lawsuit from Cisco, that owns the Trademark to the name iPhone is reminiscent of the 25 year legal battle between Apple Computer and Apple Corps.
It should also be noted that Apple has not been entirely on its game this last year. Its been restrained by a legal quagmire that has brought to light a stock options scandal. The scandal led to an internal review by Apple, which has absolved Steve Jobs of any wrong doing. However, the Justice Department of the United States, an external legal body that does not play to the tune of the Apple Board of Directors, announced that it is investigating the situation further as they prepare to question lawyers no longer employed by Apple.
Regardless of whether or not this new external legal investigation turns up anything, the entire scandal and investigation has been a large distraction for Steve Jobs and for Apple as a whole. With these distractions occurring at almost the same time the company has prepared to launch what Steve Jobs considers a device as important to Apple as either the Mac or the iPod, we have to wonder if Apple may have missed something in this new device.
Many people have held MP3 players up to the standard of whether or not they will be iPod killers. The truth is probably one that the iPod like any consumer electronic device has a predestined product life cycle. It is not necessary to kill the iPod as it will die a slow and natural death of its own. The iPhone will only serve to slightly extend this life cycle if it does anything at all.
In addition to all of these background items, its important to consider that Apple partnered with Cingular Wireless, which will be rebranded under the AT&T name this year. Cingular as a brand name has held up a certain cool factor with youthful buyers. However, AT&T, while it has a huge amount of brand recognition, definitely does not have a coolness associated with it. In fact it could more aptly be associated with the dinosaurs of technology. Apple has provided some undisclosed exclusivity arrangement with AT&T(Cingular) and this apparently has constrained the design and functionality of the device, a fact that we will cover in future installments.
Since the iPhone will be limited in distribution to AT&T customers, we have to wonder right away if the product will have much impact at all. AT&T’s wireless business is large, but it does not cover the entire USA not to mention it has very little play outside of the United States. This leads us to wonder if Apple in its distraction may have sold its soul to get the iPhone project out with a carrier that would accept it, under a trademark name owned by a different company where negotiations had failed, and at a price that will cost $400-$600 to get the device out of the store with a minimum two year contract at a monthly service fee of at least $80 per month.
At the end of the day how many people really will buy an iPhone for close to $2,400 when they could just as easily buy a Nano and a cell phone for less than $200 total on a $30 per month cell phone plan for a total 2 year cost of $920. Is the iPhone really going to be worth a $1500 premium for Early adopters? For Anyone?
We’ll explore this greater detail as we proceed forward covering the Apple iPhone.