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Three reasons why the iPhone won’t be as mega as some think
Alright so the news is out that Apple will be offering a new mobile device called the iPhone this summer. It is a very cool device. Mike has a good overview (more on TechMeme) of the device and why he is going to buy one. But see, Mike is not the average consumer. And that is why I think there are 3 reasons why the iPhone won't see the success that some think it will. Feel free to disagree with me!
Reason 1 – Price
The entry-model is $500, the mega-model is $600. This is not an iPod at $249. Can the average American (you know the ones who own an iPod) afford this? I think not. I am sure there will be some incentives to switch but overall the price will be a barrier to entry. But not to the early adopter crowd. Walk down 43rd street in Manhattan from 5th ave to 6th ave. Ask every person with an iPod if they will get this device. I bet maybe 3% will say yes, and thats a very aggressive figure.
Reason 2 – Locked to Cingular
I am a Cingular customer. How many are not? Will you switch to get this phone? Some will, many won't. Assuming it is GSM, I am sure someone will hack an unlock code but many won't know how. What about those who recently signed deals with the other carriers? Will they spend the $200 or so to break their contracts? Doubt it! I can't wait to read the posts on Consumerist.. they will go something like this "my wireless provider won't let me out for free because I want an iPhone."
Reason 3 – Data Rate Plans
I wrote about this last week with the MySpace deal. The data rate plans will kill this phone. I hope Cingular gets their act together and becomes an industry leader with regards to data pricing but today it is absolute crap. This device will use a lot of data when using the Cingular network (I understand it gets WiFi but that's not available free everywhere!). Can the average American afford $600 for a device and then another $30ish over their normal rate plan for some data? Nope.
I certainly hope my reasons can be addressed before launch so that the iPhone sees the same success for Apple that the iPod has had.
Allen, if even only 2% of current ipod users bought iPhone in the first year & a half, that would represent a huge initial success!
To enter an established space as a newcomer, and rack up the numbers that 1 or 2 % of ipod owners represents in that space would be huge.
this will be one of these fun posts to look back on a year from now and see how wrong some people were.. ala’ “Why is Apple making music players?!” few years back.
the pricing cannot transfer over to the uk.
most people here get the latest phones for free with their phone contract. also 3g is big here, I have never heard of edge.
also I am not that sold on buying first gen products. 32 gig version will be the one worth the money they are asking for it now.
Darren – same here in the states… the free phones are the killer app right now. I still believe the average iPod owner won't move to this device.
I haven't read anywhere that this will be available in the UK (or frankly anywhere else) — even though the data plans are better everywhere else.
This looks way too expensive for most European consumers particularly business users
The main message here is that Apple is still all about the end consumer and not the enterprise customer. They will sell their millions of units to their current, affluent, “gotta have the latest Apple toy” customers but it won’t help them in getting Apple technology into the enterprise or into the pockets of executives. The reasons; pretty simple – only sourced from one carrier, no connectivity to Exchange, and no removable battery.
It will also be interesting to see how well the first version of this new touch UI works out. I’m sure it will need to mature and it will be interesting to see how the whole idea of constantly touching the screen is accepted. Screens on current phones already get pretty nasty after a few calls. If you add touch dialing and navigation I can see a downside. There will be a quick followon product opportunity for convenient wet wipes to clean things up.
I love the innovation that Apple creates through their bold design moves but I don’t see the iPhone having near the impact the iPod had. Too expensive, not enterprise friendly, and limited features.
it was in the keynote that europe would be quater 4 in 07 and Q1 in 08 for asia
Reason 1: This is similar to iPod’s initial price. Yes, it’s high, but it will come down.
Reason 2: Carriers have done nothing to inspire loyalty. Coverage varies, sure, but everyone HATES their carrier.
Reason 3: Could be spot on–cingular has the power to kill this unless it gets it’s head straight on data pricing.
I disagree. I like my carrier- a lot. I LOATHE Cingular and actually sued them and won. Heh. I refuse to use the iPhone for the first two years until after the stupid Cingular contract is over. The maybe I will switch to Tmobile and then maybe Tmobile will have better coverage.
I don’t think the price will be an issue. People spend $300 on ipods and $200 on cell phones, or $600 playstations. People will buy. I now my company will be picking up at least 3 when they come out.
Verizon has been beating out Cingular for the last two years, I am a Cingular customer and the service is so so…..This I Phone is between 4 and 6 hundred bucks…would you take an early termination fee from your current carrier? I Think not….Cingular is looking for customers
and what a way to do it! I know for a fact that the 1st 2nd and 3rd gen I Pod owners will wait around to see what happens, we learned our lessons with that battery bull****! and the class action suit that followed. I own a 3rd Gen I pod other than the battery problem it works great, good product, My son recently brought a Nano, No Problems so far
People are just getting used to their blackjacks and other PDA’s and here we go with this expensive…..thank you very much but I will wait…dont want to give Cingular and Apple andy extra money!!!!!
Get the bugs out first!!!
Sorry, but more than 3% have answered yes in my own survey. I won’t tell you which demographic I am from but suffice it to say that Apple will be sold out!
The hype for iphone is to much. I’m very skeptical. I don’t think projected sales will be met.
Enterprise customers? Business customers? Are you guys checked out or something. Apple is a consumer company. Cell phones are a consumer market. Very few people have company issued cell phones. VERY few. In fact company provided cell phones is only slightly more common than company provided cars (see http://tinyurl.com/2abf6u). Any of you guys have a company car? None of the current phone manufacturers even give a rats ass about selling to the enterprise. It is a fraction of their revenue compared to the consumer market. Ever been to a mall? Ever stumble over the dozens of cell phone accessory, cell phone service, cell phone device kiosks? I doubt you ever see business men/women there. It is because they DON’T care. Their IT group issues them and the providers cut blanket deals with the fortune 500 companies to get a particular model and a particular service plan. The phone is a loss leader for the providers.
As to the price (1 & 3)? non issue. The data plan is totally reasonable. Only $20 basically for unlimited. The phone? umm, what demographic buys and uses cell phones more than any? Teenagers 15-17 (74% of them own a cell phone), do you think they have disposable income? duh. Do you think they will buy them. Duh. They spent that much on XBoxes and PSPs in a year.
Bottom line. Steve Jobs is frickin’ genius and you are all bitter cuz you don’t own an iPhone and lots of Apple stock.
Wow.
I’m sure glad this is still floating around the ether.
Surprised, too.
Allen Stern, eater of crow.
-KPR
funny to read that now that the iphone is such a success.
[...] Three reasons the iPhone won’t be as mega as some thing [...]
While Cingular isn’t heavily promoting it, they are rolling out their EVDO 3G competitor, HSDPA (High Speed Data Packet Access). It’s supposed to be faster than EVDO (based on the spec), though apparently it’s only running at EVDO’ish speeds right now.
If Cingular can have a broader roll-out of HSDPA by June, have the speeds up in the higher ranges it’s supposed to support, and offer a decent rate plan for HSDPA access, that could combine with the iPhone to create a fairly attractive package for road warriors, particularly if they’re not cutting people off for “excessive use” on an unlimited use plan.
Yes, the price is high, but so were early prices on the Treo, and that’s had pretty good adoption. I think it will start high, but come down within 6 months to a year after early adopters have picked it up, fallen in love with it, and created “social proof” buzz for its wonderfulness.
Honestly, though, I would have preferred it to have a 1.8 inch hard drive like the 30-80 gig iPods, rather than a 4 or 8 gig flash drive.
Greg – thanks for the data overview – interesting stuff!
But I must disagree on one of your points. The iPhone is not a competitor to the Treo or the BlackBerry. A Fortune 100 company is not going to replace their BB/Treo devices with the iPhone. Nah.
This is a device for the macheads and for those with disposable cash. I am sure we will see a Lindsay Lohan and Paris Hilton edition within a few months of launch.
iPhone doesn’t support HSDPA!
Well, when I saw the iPhone day before yesterday, I wanted it.
Now that I really get down to think about it seriously, the Nokia N95 looks better.
5MP Camera (I’ll never need anothe digital camera)
Quad band
GPS (maps readily available so that you have a travel navigator with you)
4GB miniSD Card
Great N9X music (Who needs an iPod)
Beautiful graphics and video (Who needs a Video iPod)
All the beautiful software support of 3rd party (and there are plenty in that department)
WiFi (VoIP programs available in the phone)
Google Earth (Comes in handy when you get lost)
Geez! Apples a lost cause, man!
Never bought an apple, never will!
I only eat apples! Great for my skin!
i love the iPhone and i do want it but i do not think it will receive the same success as the original ipod did.
Its price is very costly and very few people are willing 2 spend that much for the phone. The cheapest phone there is 50$ and this might be the most expensive phone ever known. The sidekick 3 is just as good and some even say better. It has a lot of the same things in the phone and its about half the price of the iphone!!!
I dont think the iphone will have a wonderful success…some might like it while others are not. The LG CHOCOLATE is kind of similiar to this iphone and the LG had many problems,people were returning the LG bc it was confusing and very hard to control. I just hope this same thing happens to the iphone itself.
G00D LUCK !!!
( every opinion counts )
i don’t think those 3 reasons won’t matter too much. if you look back at when the iPod first came out there were plenty of naysayers. It too was the most expensive player. It was “locked in” with the Mac. Subscription models for “buying” (aka renting) songs were all the rage. Apple managed to make good deals with the infamous Music Industry, and more recently the Movie Industry. Google and Yahoo are making strides to provide free city-wide wireless through the US (though such a service probably won’t be free for roaming devices). That can only be awesome for the iPhone’s future.
The number 1 reason why the iPhone won’t work for me is because I don’t want/need all those features together in one device. I hope Apple continues to develop the video iPod separately.
I mostly agree with Anonymous there. Though I think the Cingular thing is more of a stumbling block than anything else. Yes, the first iPods were locked to Mac, but Apple didn’t sign an exclusive deal with itself and pretty soon iPods were available to PC users. There’s no Verizon iPhone on the horizon.
I posted a more detailed rebuttal on my blog … click my name to read it (this post seems similar to one Allen made on TechCrunch now ;)).
I do not believe that price is an issue as Apple has been able to charge people way too much for their products and basically get away with it. The fact they are locked into Cingular is a big issue and you are correct about the plans as well. But as we all know Cingular is on the way out and AT&T is in (weren’t they a cell provider player before?) I think their biggest downfall is time to market and think that they are behind the times to join the telecommunications game…
Personally I think their biggest win will be with the Apple TV. But it is not 100% there yet but they are going down the right path going after the streaming market for TV’s. As I said before I want an HTPC solution just like my Tivo that doesn’t have a monthly fee and has lots of cool features. Although Apple TV is not a HTPC it is going in the correct direction and I look forward to seeing them develop that product.
It’s about entering the ultra mobile computing market. Once people use their iPhone for everything from calls to music, to movies, to whatever else can be done on OSX, they’ll want it to sync up with their other computers…and what better way then with a Mac?
Reason 1 and 3 are essentially the same…and are quite obvious to ppl…but does US lacks riches? no. It’s a HIGH END…think about Nokia 8801 whiched started with $1,000…and guess how rational the price of this is.
Hehe.
A lot of people paid a premium for the Moto Razr when it first came out and the iPhone makes it and everything else available today look like a beige PC.
This is going to sell big time.
Why wouldn’t it be possible to buy an unlocked version of the iPhone in the same way you can buy unlocked versions of any other phone (?).
Sure you pay more for them (full retail), but personally I’ve only ever purchased unlocked phones which I can take with me to any network.
Sorry Charles but here in the states you are not considered the norm… the average person does not have an unlocked phone.
Ignoring the price, the iPhone is perfect for the college student with WiFi access anywhere on campus, forgoing the need for a data plan. However, if I get the iPhone I’m sure I’ll be stuck on getting the data plan as well. The thing about most people with Treo’s/Blackberry’s is that it’s paid for by their company so anything goes. Unfortunately I don’t think the iPhone is as “business-oriented” as the others and unlikely to become the phone for business people.
Unfortunately at my university, St. John’s in Queens, NY, you can’t gain access to the internet unless authorized. Every student at St. John’s is given a laptop which is authorized for internet usage. When I tried to use my own laptop, however, I was unable to connect to the network. I had to take my laptop to the computer center in order to gain access. I wonder how this thing will work with such a closed network.
Also, yes Cingular’s data plans suck. They’re horribly overpriced. I would pay $20/mo. for unlimited date (web, SMS messaging, Instant messenger support, e-mail, etc) but Cingular charges separately for a lot of those things so realistically you can be dropping at least $120/mo for a service that utilizes everything the iPhone offers. I would love it if Cingular reworked its pricing a bit.
On a business card, stay at the Ritz.. on your own dime, stay at Motel 6. Same thing here. While my story got buried on Digg, I still believe my reasoning is valid.
Yes, at GT you will get a nice WiFi access, but what about when you travel to Augusta – that trip on 78 won't have WiFi, now we need the data plan at $40 a month? Sheesh!
Go GSU Panthers – sorry had to get it in :)