mac.column.ted: The First Coming of iPhone

Ted Landau's thoughts on the iPhone and its prospects for success.

[Published Friday, June 22nd]

Ted Landau
June 2007

[For full coverage of the iPhone, see our sister site iPhone Atlas]

With the expected arrival of iPhone next week, the media frenzy surrounding the device has escalated to such heights that I got vertigo just reading about it. I can't recall the last time (if ever) that there has been such intense speculation about the likely success or failure of a product that isn't even out yet. Adding further to the hyperbole are the warnings about how much Apple has riding on the outcome. Based on the tone of some articles, you'd think Apple is about to go bankrupt if it doesn't sell ten million iPhones in the first week.

Let's all calm down a bit.

The iPhone is a big deal to Apple, no doubt about it. The potential profits from success in the mobile phone industry outweigh anything Apple has done thus far. And the risks of failure are significant, although not life-threatening. Apple will survive regardless of what happens to the iPhone. Besides, the iPhone is not going to be a Newton-like failure. It will be a success, although exactly how big a success remains to be determined. Here's what we can determine at this point:

The iPhone is not perfect. So what?

If you are looking to criticize the iPhone, you won't have to look very far.

With a maximum of 8GB of storage, it is not the ideal alternative to those who value the 60GB hard drive on an iPod with video. With its relatively large physical dimensions, neither is iPhone an ideal alternative for those who prefer to take along a diminutive iPod nano when they go jogging. Still, as an iPod alternative, iPhone brings its own assets to the table: its unique multi-touch screen, its Mac OS X-based interface and the not-so-trivial bonus that it is also a phone and Internet device.

As a Blackberry alternative, many have speculated that iPhone's touch-screen keyboard will not be adequate for the extended typing needed when replying to emails. I believe the jury is still out on this. In any case, I'm not worried. Even if Blackberry users do not rush to convert to iPhone, there is a huge market of potential iPhone users?even at its $500-$600 price and even if it isn't ideal for email. I'm one such person. I don't own a Blackberry and I have no pressing need for one. But I will certainly buy an iPhone before the year is out. If nothing else, the ability to have full Web access without having to lug around my laptop is almost reason enough by itself.

The iPhone is not meant to be a a simple competitor for your iPod or your mobile phone. It defines a new category of device and as such will likely attract users from a new, as yet untapped, market.

As for criticisms that iPhone is just a "toy," not to be taken seriously?yeah, that's what they said about the original Macintosh back in 1984. And look how that turned out. Even if Apple had eventually gone out of business in the 1990s (as some predicted would happen), the "toy" interface that defined the Mac still would live on in Windows.

The key question is: Are the positives of iPhone enough to overcome the negatives? Definitely. The stunning interface, the convenient and unique combination of features, and Apple's attention to detail and quality will ultimately tip the scales in iPhone's favor.

There is no way that iPhone can live up to its hype. So what?

After June 29th, you can count on seeing numerous blog postings describing at great length exactly what each blogger finds lacking in his new iPhone. News reports will certainly point to such deficiencies like sharks moving in for a kill.

Don't get distressed. This is inevitable. Sure there will be glowing reviews as well. But you can expect the media to focus more on the complaints. As for more dire assessments of Apple's overall future, ignore them entirely.

There is a segment of the media that appears to thrive on predicting gloom for Apple. Happily, their accuracy leaves much to be desired. After Steve Jobs returned to Apple in the late 90's, how many pundits predicted the eventual renewed success of the company? How many saw the iMac as the kick-start for a reinvigorated Mac line-up? How many jumped on the iPod wagon after its initial launch, claiming that it would come to dominate the MP3 player market and revolutionize the music industry? Zero would not be far off the mark.

Third-party development options for iPhone suck at the moment. So what?

The solution Apple has offered to third-party developers, eager to create software for iPhone, is Web-based applications. In case it's not already obvious, a Web page is not an application. For starters, the fact that the software is unusable without an active Internet connection is a serious limitation. Developers are understandably unhappy.

For every one else, however, this is no big deal. How many iPod users have third-party software on their iPods right now? Aside from an occasional game, my estimate would be close to zero. How many mobile phone users have third-party software on their phones? Again, aside from games, precious few. As of now, the availability (or lack of availability) of third party software will have next to no impact on iPhone's success.

Eventually, I expect the demand for third-party add-ons will grow. After all, given that the device is in many ways a computer running Mac OS X, I can easily imagine a host of "shareware" applications that would improve the iPhone experience. Which leads me to the next point...

iPhone will get better over time. Have some patience.

The iPhone will eventually become more open to third-party software. Trust me. Similarly, don't fret too much about iPhone's price. It will come down. Look at what a Motorola Razr costs today (free with a 2 year contract), compared to what it sold for when it first arrived. Apple may try to control the price of iPhone and, as long as there is enough demand, it may succeed for awhile. But I doubt it will able to do so for too long in such a highly competitive market. Finally, don't worry that only AT&T sells iPhone. That will eventually change as well. These criticisms will all be addressed within two years, probably much sooner.

The initial version of iPhone merely has to be good enough not to be a failure. That is, as long as it is successful enough for it to have time to grow and mature, all will be well. That should be easy for it to do. The ultimate measure of its success will not be how many units are sold in the first quarter, but how many units are sold in its ninth quarter. Two years from now, after iPhone has turned the mobile phone industry on its head, we will look back at this initial launch and wonder how we ever had any doubts.

On a related note, I expect there will be a downtown in Apple's stock price in the days immediately following iPhone's release. This will be the result of Wall Street waking up from its dreams and discovering that iPhone is not capable of time travel after all. Once again, the more critical question is where will the stock be a year or two from now. I am betting it will be significantly higher than it is today.

What about technical support?

If I have one lingering concern regarding iPhone, it is about technical support. iPhone will be sold through AT&T/Cingular stores. Mobile phone owners are used to depending on their phone carrier for support. That is, if you are having a problem with your AT&T Motorola phone, where do you first turn for help? AT&T or Motorola? Given how completely new iPhone is, and given what a complex device it is, I am not at all sure that AT&T is prepared for the task of dealing with the likely upsurge in customer demands for support.

Perhaps, the solution here is that most or all iPhone support will be shunted to Apple, making iPhone a departure from ordinary mobile phones in yet another way. As with so many other aspects of iPhone, we are still lacking in details here. Wait-and-see is the watchword for at least another week or so.

The Mac is now just a division of Apple Inc.

There was a time when "Apple" and "Macintosh" were synonymous. Just about all Apple made were Mac computers, Mac software, and peripherals to be attached to a Mac. That has all changed. The Mac is now just one of three divisions of Apple Inc. iPod/iTunes represents a second unit, with iPhone rounding out the trio. In terms of revenue, the Mac division may eventually become the smallest one.

This is not your parents' Apple. Get used to it.

Will I be getting an iPhone on launch day?

I have been having an internal debate about this for the past few months. It would be easy for me to justify getting an iPhone, if only as a business expense?so that I can write articles about it. And I may still succumb to this temptation.

However, for the moment, I have decided to defer purchasing an iPhone. With so much still unknown about how the device actually works, with demand likely to exceed supply initially, and with revisions, additions and upgrades expected over the next several months, I prefer to wait for the dust to settle before I plop down hundreds of dollars (plus additional monthly expenses). But, as I said, I know I will have one before the year is over.

I am confident that many others will be less hesitant than I am.

On the other hand, I bought my first Mac in January of 1984, the day after the Super Bowl commercial. And I have never regretted it. I may yet decide to take a similar risk on iPhone. I'll let you know.

To send comments regarding this column directly to Ted, click here. To get Ted's latest book, Mac OS X Help Line, click here.

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