The Apple phone flop

CNET News.com's Michael Kanellos says Apple should think again if it believes it can make a phone to match iPod's success.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
Michael Kanellos
4 min read
I just looked at the calendar and realized that:

(a) It's only a few weeks to Macworld, where Apple Computer is expected to release a smart phone similar to the BlackBerry, and:

(b) I haven't antagonized Apple fans in a while. It's my birthday this week, after all, and I need to get more fun out of turning 45 than just counting the new moles on my back.

So, anyways, Apple is slated to come out with a new phone. Reports say that it will have a slide-out keyboard, 4GB or 8GB of storage, and work on CDMA or GSM cellular networks. It will start at $249 before subscription rebates.

And it will largely fail.

Initially, of course, it won't look that way at all. As with any Apple product release, it will be ushered into the world on a wave of obligatory gushing. "It's the greatest advance in communication since cave painting," some will proclaim. "Like Star Trek, but without the clingy Qiana shirts."

The iPod looks like it may turn out to be a non-repeatable experience

It's predictable. If Apple got into medical devices, people would come out of Steve Jobs' speech proclaiming "The iBag is the easiest, most user-friendly colostomy device I've ever encountered."

Sales for the phone will skyrocket initially. However, things will calm down, and the Apple phone will take its place on the shelves with the random video cameras, cell phones, wireless routers and other would-be hits. Remember the Mac Mini? It was supposed to ignite a revolution for small computers. It didn't. The flat-panel iMac? Some predicted that Apple's price tag would drive other prices higher. Whoops.

Why won't the Apple phone succeed? It will be a great piece of hardware that, if I wasn't the cheapest man in North America, I might buy. The entire strategy, however, is based on what I call "iPod magic." Apple succeeded with the iPod, the theory goes. Therefore, they can break into other categories and turn them upside down.

Single shot?
But the iPod looks like it may turn out to be a non-repeatable experience. Look at the historical record. When the iPod emerged in late 2001, it solved some major problems with MP3 players. At the time, such music devices came either equipped with a nominal amount of flash memory--like 64MB or 128MB--or a large 2.5-inch hard drive. Sony, the once-king of portable music, remained in love with portable CD players.

Apple opted to adopt the 1.8-inch hard drive, a piece of hardware spurned by other manufacturers. That was the world's mistake. The 1.8-inch drive let Apple put a huge amount of storage--the real problem with MP3 players--into a small form factor. The first iPod sported 5GB of storage, or nearly 40 times as much as the upper crust of flash players. The company even locked up supply of 1.8-inch drives for a while, so no one could copy it.

The iPod also conquered the problem of small screens and cheesy navigation. With its newfound popularity, the company was also able to get music publishers to agree to its terms.

Unfortunately for Apple, problems like that don't exist in the handset business. Cell phones aren't clunky, inadequate devices. Instead, they are pretty good. Really good. Why do you think they call it a Crackberry? Because the lumpy design and confusing interface of the device is causing people to break into cars? No, it's because people are addicted to it.

Samsung has scoured the world's design schools and hired artists on three continents to keep its phones looking good. Motorola has revived its fortunes with design. KDDI, a Japanese carrier, has a design showcase in the teen shopping area of Tokyo just to be close to trends. And Sharp doesn't skimp when it comes to putting LCD TVs on its phones.

Apple, in other words, won't be competing against rather doltish, unstylish companies like the old Compaq. The handset companies move pretty quick and put out new models every few weeks.

Second, Apple has to face the issue of trust. Music players are fairly easy. Songs come out of memory and must be amplified. With cell phones, consumers care mostly about quality of service. Who, really, doesn't expect a new company to conquer all the static and connection issues with their phones? Granted, Apple will use contract manufacturers to assemble their phones, but designing these phones takes experience and talent. And the cell carriers are far deeper into it here.

So when consumers get to that counter at CompUSA, they will debate buying the Apple phone, and even hold it up for a look. But when they whip out the credit card, they'll probably opt for a Motorola.