Over the past two days there’s been a whirlwind of opinions, speculation, and additional news around Apple’s iPhone. As I pointed out on January 9th Cisco has more than an opinion; it has a lawsuit. But the focus here is not to argue over the name and how that plays out, but challenge the conventional wisdom that has appeared in the press and in Wall Street comments since Tuesday, as Apple and its iPhone are anything but conventional.
There are a number of firsts in Apple’s announcement to point out. It’s the first major device announcement made before an FCC filing and the first with multi-year operator exclusivity. It’s also the first phone with an accelerometer, with no front buttons, and first to be all fingertip controlled. Again, it’s an unconventional approach from an unconventional company. There is no voice dialing, which should have been included, so true hands-free operation could be an issue as states in the U.S. mandate it. Sure there are execution hurdles ahead, but what groundbreaking product doesn’t have them? Yes 10 million units in 2008 is not a slam-dunk; things have to fall into place.
Motorola’s RAZR and LG’s Chocolate phone pricing when they came out is just din. These phones were heavily subsidized quickly, were tied to operators’ walled gardens for content, and suffer for it. Speculation is that consumers may pay up to $80 a month for an iPhone data plan, but why? Most critics are missing the boat. You only need a cellular connection for making calls, email, and browsing, not for content acquisition – the iPhone accesses iTunes content via the iPod connector or a WiFi connection. Outside the U.S. consumers are used to paying more for phones as they are less subsidized, if at all. So I was surprised that Apple did not line up any non-US operators at launch, particularly in Europe and Asia where phones are getting bigger thanks to video and TV, and more expensive.The noise around the iPhone’s high price points and comparisons to
Handset vendors have been upset with U.S. operators because they will not subsidize and carry their high-end smartphones. Vendors like Nokia are starting to go direct to retail with unlocked GSM phones to counter this. Looking at what’s available on eBay alone shows you the trend as U.S. consumers are fed up with their lack of choice, and with the control exhibited by operators. Apple is the bull in the China shop here and Cingular is playing along. Also, note to Nokia: your legendary battle with operators over the UI has been side lined based on what was released on Tuesday.
What many industry players such as Motorola and Nokia but especially the operators don’t have, is Apple’s rabid user base. The iPhone is not a normal play. Consumers are getting increasingly fed up with the normal play. iPod was not the first to market music player. First to market does not matter. Operators may be unlikely to give Apple special treatment but what matters is that it’s consumers who are going to drive adoption of devices like these, not operators. And it’s high time for everyone to realize that.