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iPhone Faces Uncertain Market 869

Posted by kdawson
from the second-and-third-thoughts dept.
48 hours have passed since Steve Jobs's MacWorld keynote and the reality distortion field is beginning to wear off. Lists of the drawbacks of the announced iPhone are sprouting all over the Net (and there is the occasional defense by true believers). Now narramissic writes, "The iPhone may be poised to take over the high-end cell phone market, but is it a market worth taking? Not if an InStat survey from July is any indication: Of 1,800 consumers surveyed, just 21 had spent more than $400 for a cell phone. Prices for the iPhone, admittedly more of a handheld computer than a cell phone, start at $499 for the 4G-byte version with a required two-year contract with Cingular. So, is Apple pricing it right? Analysts quoted in this article seem to think Apple's going to have a hard time getting the 1% of market share that Jobs called for."
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iPhone Faces Uncertain Market

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  • Is it possible... (Score:5, Insightful)

    by ack154 (591432) on Thursday January 11, 2007 @02:10PM (#17559294)
    That most people won't spend over $400 on a phone because there aren't any phones worth spending that much on? The high end market may be small... but there's no reasoning given for not spending so much... maybe it's just because nothing (until now, IMO) has been worth the extra $$?
    • by eln (21727) on Thursday January 11, 2007 @02:17PM (#17559444) Homepage
      Maybe, but I think it's that the average person is reluctant to spend 500 bucks on a gadget, no matter what it is. You limit yourself primarily to early adopters and gadget freaks. This may also be a big reason the PS3 is having difficulty gaining traction.

      If Apple can generate the buzz to make this into a fad item like the iPod, they could sell millions to young people and damn the cost. However, if it ends up being grouped in as just a superior Smart Phone, you aren't going to get anyone but the gadget freaks to buy one at that price.
      • by mjpaci (33725) * on Thursday January 11, 2007 @02:23PM (#17559592) Homepage Journal
        Once non-Slashdot people start seeing the likes of Paris Hilton and Shaq using the iPhone, it will gain traction. Isn't that how it always is? Remember, nobody was going to spend $300 on an MP3 player named the iPod...

        This is a new take on an old market. Give it time. I bet come October we'll all be singing a different tune...
        • by Hawthorne01 (575586) on Thursday January 11, 2007 @02:44PM (#17560010)
          I distinctly recall my disappointment at the pricing of the iPod mini when it came out. I thought it was at least $50 overpriced, maybe more.

          And it went on to be their bestseller until replaced by the Nano.

          Shows what I know. :-)

          I think the market may expand here. The high-end cellphone market is so small because most of the devices are so effin' hard to use for non-geeks. My wife's eyes glaze over when I try to explain to her how to use Google Maps on my 7100t. She may (note: MAY) find the interface on the iPhone easier.
        • by Yold (473518) on Thursday January 11, 2007 @02:59PM (#17560350)
          Yes, it is not news, this phone will be an "overpriced" fashion accessory. Call me a "rapid mac fanboy" or whatever, but I want one badly because it will look slick and others will stare at it when I bust it out. Yes, older phones have the same features, are cheaper, etc... but I doubt they will pull of an interface quite like the iPhone. It is damn slick looking too. I have $200 in the gadget fund, and I was looking for a PDA phone, but i am going to continue saving for the iPhone.

          My point? Lots of other college students with disposable income will be early adopters too. Techies or not. IT IS FASHIONABLE (like the ipod). Same things with high school kids wanting a slick phone, maybe some business professionals/middle income 20 to 30 somethings. Apple has turned pretty gadgets into an "overpriced" fashion statement before. Moto did it with the Razr, and apple will probably do it with the iPhone.
          • by rekoil (168689) on Thursday January 11, 2007 @03:03PM (#17560444)
            I think it will get there, but not in its current form. Remember, the iPod really didn't become a huge success until rev. 3...I think the first gen will sell well, but not to expectations, but once they're on version 3 or 4, the price/features mix will be much more compelling. And hopefully they'll have a removable battery by then...
            • Re: (Score:3, Insightful)

              by MBCook (132727)

              No, the iPod didn't become a big success until they released iTunes for Windows. It was popular, but limited to the Mac market. If you wanted to, there were 3rd party programs you could buy (at least 2 or 3 big ones) that would let you use a iPod with Windows.

              But it was when "Hell froze over" and the other 98% of the computer using public could actually use the device easily that it really exploded. It could have easily done quite good at revision one, and the second revision was extremely good as well.

              As

              • Re: (Score:3, Informative)

                by aztracker1 (702135)
                Honestly, my biggest concern with devices like this as a phone, is how well will it work in a leather case? ... I mean, my current phone has been dropped many, many times over the past 3 years, and still works fine, the edges are a bit scratched up, and one of the navigation buttons is starting to wear out, this is typical use. I wouldn't expect the iPhone to last 6 months of typical wear...

                Do I want one? oh hell yeah, I was planning on getting a new phone, and I may just hold out another 5-6 months to
            • by fupeg (653970) on Thursday January 11, 2007 @04:39PM (#17562680)

              Excellent point. It wasn't until 2004 that Apple's profits really took off as a result of the success of the iPod. It was really Christmas 2003 and the release of the Mini in January 2004 that started that meteoric rise, and that's a good two years after the iPod debuted.

              However, there are some fundamental differences between the iPod and the iPhone. Very few people had portable MP3 players in 2001. How many iPod owners have owned any other MP3 player besides an iPod? So to get them to buy an iPod, they just had to be convinced that the value it brought to them justified the price they paid for it. Between 2001-2003, Apple steadily improved the value (increasing capacity, reducing size, improving user interface, adding photos, etc.) while also bringing down the price (original iPod cost $400 for a 5GB version, by Christmas 2003 it was $300 for a 15 GB, and the Mini was only $250 in January 2004.)

              Most people already own a cell phone. So people don't just have to be convinced that an iPhone is worth $X, but also that it is a better value vs. their current phone and a huge slew of competitor phones from Motorola, Nokia, Samsung, LG, etc. Jobs wants to claim that Apple is re-inventing cell phones because he does not want his iPhone compared to other phones. Sure it will have advantages over other phones in many areas, but it will also have disadvantages. And it's obviously a lot more expensive. These are much bigger obstacles than anything the iPod faced.

              One last thing... A big part of why the iPod succeeded is that from 2001-2003, nobody really stepped up to compete with Apple. It really wasn't until last year that somebody (Microsoft) came up with a product (Zune) with a similar user experience as the iPod. It's really pretty amazing. I was fortunate enough to get an iPod in 2001, and I kept guessing that at some point somebody would come out with an MP3 player that did everything the iPod did, but cost $100-$150 less than an iPod. It never happened. It still hasn't happened. Apple can't expect the same kind of lack of competition for the iPhone.

              • Re: (Score:3, Insightful)

                by jaseuk (217780)
                Provided this phone works well as a business smart-phone, they could take most of the market, particularly if the e-mail solution works well.

                Why? Business users don't typically pay for their phones, the business buys them. If it's a good usable phone, I don't see why there won't be take up. There of course will be a lot of upwards pressure for take up, as it gains the business user a FREE iPOD!

                The price is fine btw.. my windows smartphone not on a contract costs £600 (£1000), the Apple one se
        • Re: (Score:3, Funny)

          by dfghjk (711126)
          "Remember, nobody was going to spend $300 on an MP3 player named the iPod..."

          No, I don't remember that.

          "Once non-Slashdot people start seeing the likes of Paris Hilton and Shaq using the iPhone, it will gain traction."

          Paris is too dumb to use a phone without a real keypad. Where would she have her swarovski crystals glued on?

          The fact is that phones with entirely touchscreen-driven interfaces have failed in the market so far so the iPhone has history against it. There are plenty of phones in the iPhone pri
          • Re: (Score:3, Interesting)

            by WinDoze (52234)
            The fact is that phones with entirely touchscreen-driven interfaces have failed in the market so far

            Not to mention that they're completely unusable by blind people.
        • by Overly Critical Guy (663429) on Thursday January 11, 2007 @03:02PM (#17560422)
          Don't worry. The very fact Slashdot is posting iPhone FUD means it will be a smashing success, just like the iPod and iPod mini. Expect a ton of "My ugly old phone does everything the iPhone does! Sure, it actually doesn't have a full web browser, touchscreen, random access voicemail, virtual keyboard, iPod functionality with dock connector, etc. etc. etc. But it still does everything!"
          • Re: (Score:3, Informative)

            by danigiri (310827)
            Here you have a glowing preview of hands-on 10-minute usage:
            http://www.pcmag.com/article2/0,1895,2082444,00.a s p [pcmag.com]
            And no, I wouldn't consider PCMag to be a 'fanboi' site at all...
            Some excerpts:
            "For the most, it was an absolute revelation. Seeing the device in action is one thing--but actually using it is another. Each application is impressive in its own right, from photo-management software to the Safari Web browser, but it's the overall touch-screen interface that takes the breath away."

            "The rest of

      • by Gr8Apes (679165) on Thursday January 11, 2007 @02:30PM (#17559732)
        Yep, that would explain the large number of premium-when-released iPods, the Treo and Palm pilots, flat screen TVs, HDTVs, nVidia 8800 Gxx's (not even a complete gadget!!!) Macbook (Pro)s, Alienware anything, etc etc etc.

        The PS3 is having difficulty because, in a word, it sucks. It's more than a day late and a dollar short.

        I'll give you a different take on the "Smart Phone" limitations. I, for one, haven't bought one because of the size, power requirements, and sheer onconvience of using and carrying one. Along comes Apple, and appears to make this simple, easy to use, intuitive, and, to top it off, good looking. Oh, and need we mention that you can also run your familiar interfaces on it provided you like Macs to begin with? No special "browser" needed. No new learning how to browse the web. A PDA you can actually use. My current LG phone's calendering option is so convulted to setup that I don't use it. The contact list is "locked", or they think it is, so I cannot manage it easily nor sync it with my computer. The iPhone does away with all of that. It will appeal to a large group of people that are carrying both a cell phone and an iPod, if you add PDA and/or pocket PC to that, you'll just add to the attraction.
        • by gunnk (463227) <gunnk@@@mail...fpg...unc...edu> on Thursday January 11, 2007 @03:45PM (#17561402) Homepage
          I'm the person your talking about.

          I have a Dell Axim. I have a Motorola RAZR. I have an iPod. I don't have a pocket to put all that in and I refuse to go with the Batman utility belt look.

          Apple is offering one device that does all that for $500-$600. I can carry it in my pocket. It's flash-based, so I can run with it. It's a PDA with wifi and GSM which runs Cocoa apps. It's a cellphone. It's location aware and can tie Google Maps to my cell functions.

          Lets see: $299 for a Dell Axim (520MHz model), $249 for an 8GB iPod, and $80 (after rebate and with 2-yr contract) for a RAZR. That comes to $628. $599 for all that in one device sounds great.

          Now if only it included a Leatherman Supertool I'd be set.
      • by Rob Y. (110975) on Thursday January 11, 2007 @02:43PM (#17559982)
        I think Apple isn't all that interested in 'taking over' the high-end cellphone market as much as they're interested in defining a new category of communications device that's not thought of as a cellphone.

        This thing is just a first stab, and it's being aimed at the high-end cellphone market, if only because that's a market that exists, and to communicate, you've got to have people to communicate with. But perhaps Apple's betting that, though it may make phone calls, the gadget of the future won't be though of as a phone.
      • Re: (Score:3, Insightful)

        by daviddennis (10926)
        I think your PS3 example is an interesting one. Supply was badly constrained around the vital Christmas season. Now we have the news that the first million have been sold. That means they have probably received about as much revenue for it as Nintendo has for the Wii, despite the latter's far better publicity. This seems particularly impressive since the launch was severely bungled, and most reviewers have agreed that the games that presently exist for the PS3 are mediocre at best.

        So actually I think th
    • by the_humeister (922869) on Thursday January 11, 2007 @02:20PM (#17559514)
      Personally, I refuse to spend that much on something I know will somehow eventually end up in the washing machine and dryer, twice!
    • by siphonophore (158996) on Thursday January 11, 2007 @02:22PM (#17559566)
      You're right.

      Look at the iPod: Before that product, the market for $300 mp3 players was relatively non-existent.

      The iPhone will probably do the same thing: Create its own market and then dominate it.
    • Re: (Score:3, Insightful)

      Indeed, part of the justification in this cost is that it is your iPod too. I would definitely buy this if I was inclined to carry a flash based iPod.

      Factor in that convenience/expense and the cost is competitive. Of course if you don't use an iPod, you have the current argument that it's a damn expensive phone. Of course, if you outfit your smart phone with 8 gig of ram (ignoring for the moment that you *can't*!) it's actually a pretty good deal compared to many smart phones.

      The only reason I am hesitating
      • One more thing... (Score:5, Informative)

        by earnest murderer (888716) on Thursday January 11, 2007 @02:41PM (#17559970)
        If you've been considering upgrading to the new Treo 750, you're going to spend $500 with a two year contract. And it only comes with 64 MB of ram and a best case expansion of 2 gig which puts the price at $550 and is obviously inferior on paper.

        I'm just saying Apple isn't breaking ground on cell phone price points in this category.
    • by nine-times (778537) <nine.times@gmail.com> on Thursday January 11, 2007 @02:33PM (#17559790) Homepage
      That was my thought exactly. I, for one, have never owned a "smart phone". I can afford to spend $400-$600 on a phone, and in fact my company has offered to buy me a Motorola Q or Blackjack, but I don't want them. I sure would like to get a smart phone, but whenever a new model comes out, someone at my company gets one, and I usually get a chance to play with them. You know what? They stink. Really, they're terrible.

      The OS is unresponsive, the email clients have a hard time connecting, and the various applications crash too much. The interface stinks. There are too many buttons and jog wheels and doo-dads. They're all just toys, and pretty much everyone I know spends more time trying to get theirs to do something than they spend time using it.

      If someone would just make a cell phone with an e-mail client that wasn't completely frustrating, I might spend $500 on the phone and an extra $20 a month *just for that*. Yes, I've tried Blackberries, and I've even supported Blackberries. I can't stand them.

      Also, you have to consider that people have shown a willingness to spend $300 for just an iPod. Let's say Apple made an iPod with a screen as big as the screen on the iPhone. Would people be willing to spend $300 on it? Yes. If you made a smartphone as slick as the iPhone without the iPod components, would people spend $200 on it? Certainly. So why are people saying that no one will pay $500 for the iPhone?

  • iPod + Phone (Score:5, Insightful)

    by geoffrobinson (109879) on Thursday January 11, 2007 @02:11PM (#17559326) Homepage
    If you are looking for an iPod and a phone, or if the phone is a bonus, the price may be worth it to you.

    I'm not familiar with the specs of the iPhone, but it isn't as simple as "this is a really expensive phone."
  • by XxtraLarGe (551297) on Thursday January 11, 2007 @02:12PM (#17559336) Journal
    Just remember what everybody was saying about the iPod when it first came out. You may not like them, but I'd say Apple has been pretty on the mark over the last 5 years or so...
    • by richdun (672214) on Thursday January 11, 2007 @02:20PM (#17559528)
      Bingo. Even as a big fan of what Apple can do in general, I'm not calling this one until it comes out. Apple is bad about not wanting to get into short upgrade cycles, so if by June something strange happens and 3G is suddenly huge, they'll put it in there rather than waiting for v2 a year or so down the road. iPod, (apple)tv, the switch to Intel - everything Apple has done recently has been criticized, but then the stock flies through the roof and sales are at record levels. Too many people underestimate the willingness of the general public and even those in the know about technology to pay extra for something that hits enough of the tech high points and "just works," regardless of whether it has all the bells, whistles, and radios it needs to be completely state-of-the-art.
      • Re: (Score:3, Insightful)

        by gutnor (872759)
        The biggest difference with the iPod is that anybody could buy an iPod.
        With the iPhone, it is only Cingular customer, and even then only the customer planning to stay for another 2 years.

        Ok you may say that iPod was for Mac user only in the beginning but I don't think Apple has the same karma appeal with its own customer than with Cingular contract user. In this case Apple must rely on Cingular karma and it is less flawless ( sorry for the 2 Cingular fanboys )
    • by winkydink (650484) * <sv.dude@gmail.com> on Thursday January 11, 2007 @02:22PM (#17559564) Homepage Journal
      When the iPod first came out, the mp3 market was still very small and still is in comparison to the cell phone market. There are over 2 billion cell phones in use today, with the big players having huge market share; Nokia's is currently over 30%. It's a low-margin, commodity business... not an area where Apple has expertise (niche products, high margins).

      SO, I wouldn't base the past success of the iPod as an indicator of the future success of the iPhone.
      • by Overly Critical Guy (663429) on Thursday January 11, 2007 @02:46PM (#17560064)
        But I wouldn't count it out, either. Slashdot has been wrong about a lot of things in the past. There "wasn't a market" for the iPod, either. The fact is, there is no phone like this out there, and a lot of people will want it once they see what it can do. You guys are treating it as just a cell phone when it's really an iPod, cell phone, and miniature Mac in your pocket. It even has the iPod dock connector.

        I hereby predict the FUDsters (initiated by cell phone manufacturers frightened of what Apple unveiled on Tuesday) are wrong and that Apple will be highly successful with the iPhone.
      • by nine-times (778537) <nine.times@gmail.com> on Thursday January 11, 2007 @02:52PM (#17560176) Homepage

        It's true that it isn't quite the same situation as MP3 players, but there is a similarity in the relative suckiness of the product being sold. Before Apple entered the MP3 market, the players available were all terrible. The technology was ok, more or less, but the user experience of the devices was ridiculously awful. Likewise with the current cell-phone market. The technology is pretty well established and good enough, and everyone I know has a cell phone. But everyone I know *hates* their cell phone. The experience of using them is just terrible.

        You say Apple has no expertise in the commodity business, but where they seem to excel is in entering a commodity market, selling high-end products that offer an excellent user experience, and making a killing from being the prestige brand in that otherwise commodity market.

        • by Thraxen (455388) on Thursday January 11, 2007 @03:06PM (#17560554)
          Yes, but most people hate cell phones because of price, contracts, and service areas. The iPhone is more expensive than most phones, has a mandatory contract attached, and is only as good as the Cingular service. The iPhone does absolutely nothing to fix most of the major problems people have with cell phones. Then it adds a couple of problems other cell phones don't have... like having a battery that is not user replaceable. In return all you really get is a slick touch screen interface. Sure, it may make playing music and browsing the web a litter easier, but many people really don't give shit about that stuff on a phone. In the end I think it will sell well thanks to the rabid Apple fanbase and people's desire to own status symbols, but it won't actually be a good value or that much better than what is already out there.
      • Re: (Score:3, Informative)

        by sobiloff (29859)
        Huh? Apple owns the "low-margin, commodity business" of flash-based MP3 players, as well as disk-based MP3 players. And, they seem to be doing quite well selling those "low-margin, commodity business" Intel-based PCs at competitive prices with good margins (c.f. record profits for Apple).

        The original iPod was also quite expensive compared to everything else out in the market when it was introduced, but it offered a superior way to listen to music. It broke open the market and now eight year-olds are runni
    • by lucabrasi999 (585141) on Thursday January 11, 2007 @02:24PM (#17559610) Journal
      You may not like them, but I'd say Apple has been pretty on the mark over the last 5 years or so...

      Of course, the 10 years prior to that, they saw their desktop computer market share shrink to almost nothing. Not trying to be a troll, but "Past performance should not be used as an indicator of Future performance".

  • by Professional Heckler (928160) on Thursday January 11, 2007 @02:12PM (#17559344) Journal
    This report fails to take into account the added capabilities of this phone. People will be much more willing to spend 300+ dollars on a phone from a company that has a impressive history in the mp3 player department. This is not just a phone. Remember that. Prof
  • by TrippTDF (513419) <hiland@NOsPAm.gmail.com> on Thursday January 11, 2007 @02:13PM (#17559352)
    If you look at Cingular's current plans for blackberrys, their voice and data packages start at about $80 per month. You can bet they will charge at least that for the iPhone service, if not more. even if it is just $80 a month, you are going to wind up paying $2520 over two years (including $600 for the phone), and that's before fees and taxes.

    So that $600 price tag is really closer to $3000.

    If Apple is really smart, they've already locked Cingular to a reasonable cell plan. They might be able to capture the high-end market with the iPhone, but without cheaper plans, they will never get the majority of people.
    • by garcia (6573) on Thursday January 11, 2007 @02:24PM (#17559602) Homepage
      If Apple is really smart, they've already locked Cingular to a reasonable cell plan. They might be able to capture the high-end market with the iPhone, but without cheaper plans, they will never get the majority of people.

      If Apple had been smart, they would have went to T-mobile (or Cingular) and worked with them to get a rate plan similar to the T-mobile branded Sidekick. $20.00/month for unlimited data and SMS with a phone plan or $29.99 without. You can't use the device as a modem though...

      I refuse to pay the astronomical data plan rates that other providers offer. I especially won't go to Cingular after how I was treated during their switch from AT&T.
      • by sokoban (142301) on Thursday January 11, 2007 @04:00PM (#17561756) Homepage

        $20.00/month for unlimited data and SMS with a phone plan or $29.99 without.
        You mean a plan like Cingular's "SmartPhone Connect Unlimited w/Xpress Mail" plan? A plan which is intended for smartphones such as the iPhone, includes unlimited data transfer, and costs $19.95 per month. Oh yeah, it includes 1500 text messages, and can be added on to any plan including the family share plans(though I'm pretty sure you have to do it for each phone).

        I've heard stories of Cingular's bad service, but I go to a store in person and don't take any shit from them. I even had them unlock my old AT&T phone to work with a new cingular contract, though it did take a call to some sort of supervisor person.
    • Re: (Score:3, Interesting)

      by u19925 (613350)
      Seriously! If Cingular is the culprit, then iPhone will die after Cingular dies and that ain't gonna happen soon. Besides, your point of $2500 for service proves that iPhone is even more worth it. What is $500 extra on top of $2500 (which you would anyway pay with Cingular)? Just 20% extra, and you get wifi, 4 G ipod.
  • by suv4x4 (956391) on Thursday January 11, 2007 @02:13PM (#17559366)
    I'm having deja vu reading this article and comparing it to very similar articles on Slashdot (for iPod) few years back.
  • by greenguy (162630) <estebandido&gmail,com> on Thursday January 11, 2007 @02:13PM (#17559368) Homepage Journal
    ...and the iPhone is exactly what I want. But I'm not buying it. It's cool, but it's not $500 cool.

    I'll probably buy a cheap-o model and wait. Someone let me know when there's an unlocked model for $250.
    • by Midnight Thunder (17205) on Thursday January 11, 2007 @02:41PM (#17559954) Homepage Journal
      ...and the iPhone is exactly what I want. But I'm not buying it. It's cool, but it's not $500 cool.

      Well I am not going to make any analysis based on what people on /. say they won't pay, since in many cases the readership seems to want stuff for cheap or free (I know I am generalising, so don't take this personally). The market is not about the sort of people who say they love a Mac, but wouldn't even fork out for a Dell because it costs too much. The market is about people who are willing to a price for a well designed product, that works well, looks good and is easy to use.
  • by HappySqurriel (1010623) on Thursday January 11, 2007 @02:14PM (#17559380)
    Personally, I think the iPhone sounds cool but I will never buy one (or at least in the near future) ... There are two reasons why I dislike "do everything" or "convergence" hardware, usually the hardware is average or bad at every task and very expensive, forgetting (or losing) a phone/MP3 Player/PDA is bad but forgetting (or losing) your phone and MP3 Player and PDA is awful.

    Something as small as having a touch screen to dial your phone, and display everything, means that you're either going to have to carry around a stylus (which you will probably lose) which will scratch your screen, or your screen will have fingerprints; either way it means images/videos/text will be hard to read.
    • Re: (Score:3, Insightful)

      by b0s0z0ku (752509)
      Something as small as having a touch screen to dial your phone, and display everything, means that you're either going to have to carry around a stylus (which you will probably lose) which will scratch your screen, or your screen will have fingerprints; either way it means images/videos/text will be hard to read.

      Apple is going for the stylus-free touch screen approach. The other problem with this is that unless touch screen tech has changed drastically in the last 6 mo., this will be unusable while weari

  • by ivan256 (17499) on Thursday January 11, 2007 @02:15PM (#17559388)
    Quite honestly, we don't know enough about the device yet to make any informed commentary. We're going to have to deal with six months of analysts talking out of their ass about it, and Apple fanboys/haters blathering on about how wonderful/awful it is without more than a basic overview of its functionality and no hands on UI experience. The 'specs' from Apple are a joke, and don't reveal the most basic of needed information. The details of the restrictions that will be placed on the device by Cingular are completely unknown. Until those things are known, it could go in any direction.

    Anybody who talks about what is going to happen with the iPhone in certain terms at this point is an idiot.
  • by zmotula (663798) on Thursday January 11, 2007 @02:16PM (#17559426) Homepage
    > Of 1,800 consumers surveyed, just 21 had spent more than $400 for a cell phone.

    This could simply mean that there were no phones good enough to justify the higher price tag. I mean, is there a phone with a few GB of memory, big touch screen and really good software? What kind of phone can you buy for $500 right now?
  • by pieterh (196118) on Thursday January 11, 2007 @02:17PM (#17559442) Homepage
    Apple tend to launch a product and then fork it into a product family that covers a nice price range. This format could expand to include a hard drive and become a real portable hand-held, the new Newton. It could also shrink to become a simpler phone. Expect the actual release model in June to have much more memory, and better battery life.

    The biggest problem with all smartphones today is that UI design is generally terrible. If Apple can get this right, and make a family of phones that react quickly and are fun to use, they will sell a lot of them.

    Further, it seems to me, phone or not, that this is what the iPod will look like in 2 years time. The wheel is no longer needed, and this format makes video a pleasant reality.

    So it's quite possible that the "phone" part of this product is less significant than the large-screen, no-button, Apple-inside format.
    • Re: (Score:3, Interesting)

      by Ryandav (5475)
      Since you mention it, do notice that one part of the keynote was about the intellectual property and the patents that Apple Inc had on the iphone. They are staking out a claim and view this as an exclusive window of opportunity to market their vision of this type of interface. And they know people are going to keep thinking of the iPod while they do it.
  • by Frag-A-Muffin (5490) on Thursday January 11, 2007 @02:18PM (#17559480) Homepage
    Think about it. Most people who buy phones just want a phone that works. That's not the market Apple's going for. They're going for the guys that keep upgrading their expensive iPods with more expensive and newer iPods. Now, they'll get the latest "iPod" but it'll have a phone built-in too. If you look at the sales of the most expensive iPods, you'll see that there's more than enough people there to get Jobs' 1% market share that he wants out of the gates. Don't underestimate the loyalty that the Apple brand garners. It's much like Nintendo's. They'll buy whatever is the latest and greatest.

  • Cingular (Score:3, Interesting)

    by b0s0z0ku (752509) on Thursday January 11, 2007 @02:21PM (#17559554)
    For $500-600, it better not be locked to Cingular. That would suck if you wanted to travel abroad and use a non-Cingular SIM rather than paying Cingular's extortionate international roaming rates. I'd rather wait a few months for the unlocked or grey-market models to show up on EBay. If I have to pay $150 more for one, that's fine too. But, honestly, even $500 is too much for me to pay for a phone. If Cingular were smart, they'd offer it for $250 and add $15/mo for "Apple phone service" to the regular voice/data plan. Basically a stealth payment plan over two years.

    -b.

  • by 8127972 (73495) on Thursday January 11, 2007 @02:26PM (#17559638)
    1. Apple releases iPhone 1.0 (ApplePhone after Cisco gets through with them?) in 4GB and 8GB sizes
    2. Apple Fanboys will buy this version because "17 50 7074||y ru|35 4nd w1|| pwn 7h3 m4rk37 dud3!"
    3. Apple will release version 2.0 with way more storage (1.8" hard disk or SSD) for half the price. This will happen in about 18 months, But not actually ship for another 4 - 6 months after it is announced. (so as not to piss off Cingular)
    4. Joe Sixpack will buy that version in droves. Fanboys who have version 1.0 rush to upgrade because "17 50 7074||y ru|35 4nd w1|| pwn 7h3 m4rk37 dud3!"
    5. Profit!
  • by duffbeer703 (177751) * on Thursday January 11, 2007 @02:26PM (#17559654)
    Businesses do.

    Except for gadget geeks, probably 80% of the Blackberrys, Treos, etc are purchased by companies for employees or by business owners.

    Apple is hoping to extend that market by taking a typical consumer/parent who is about to buy a $300 iPod anyway and convincing them spend another $200 for a phone that has unique internet capability. The reasoning behind this is that a person who is ready to by a $300 device is far more likely to spring for a $500 device.

    The typical phone buyer considers the phone to be almost disposable. If you come into a store to buy a $50 RAZR after rebate, you're not going to get them to spring for $499. So Apple is taking advantage of the iPod buzz to upsell iPod consumers (the average iPod buyer has already owned 3) into iPhones.

    This is sales 101. That's why half the people who show up to buy a Toyota Corolla drive away with a Prius. ("Hmm... $5000 more and I have a hybrid AND get bluetooth and that neato screen")

    On the flip side, they'll get businesses to buy some too. Enterprises will stick with Blackberries because they use Exchange and like the security aspects of the device, but there are plenty of mid-level managers with purchase authority to spend $500-600.
    • by nine-times (778537) <nine.times@gmail.com> on Thursday January 11, 2007 @03:05PM (#17560522) Homepage

      On the flip side, they'll get businesses to buy some too. Enterprises will stick with Blackberries because they use Exchange and like the security aspects of the device, but there are plenty of mid-level managers with purchase authority to spend $500-600.

      Well, and lots of people are saying this will flop because it doesn't have Exchange support, but the fact is that Exchange supports IMAP and POP3. It's not as though users won't be able to get their business e-mail on this phone. Even when it comes to contacts and calendars, Apple could set the syncing in iTunes to grab that stuff from outlook.

      If anything, I could see this influence going in the opposite direction-- instead of the lack of Exchange support hurting the iPhone, I think you might see the lack of iPhone support being counted against Exchange/Windows. I've worked in a few businesses of different sizes and all, and ultimately what gets supported is largely dependent on what technology the executives are infatuated with. A lot of the support for Blackberries within IT isn't because we love the devices, but because we had to support them or the president of the company would flip out. All his friends had Blackberries, and so he wanted one too. And then, once they're using Blackberries, we're locked further into using Windows on the desktop and Exchange in the datacenter, because that's what RIM supports.

      Now if the iPhone becomes the hot new phone, and all the executives start demanding them, that's what IT will support. If you get better calendar/contact/e-mail syncing with a Mac on the desktop and an Xserve in the datacenter, this could be yet another boon for Apple.

  • by Azathfeld (725855) on Thursday January 11, 2007 @02:26PM (#17559658)
    If anyone knows how to achieve a 1% market share, it's Apple.
  • 1% of the market (Score:5, Insightful)

    by mfender9 (725994) on Thursday January 11, 2007 @02:29PM (#17559702)
    Of 1,800 consumers surveyed, just 21 had spent more than $400 for a cell phone

    Well, that's more than 1%...

    • Re: (Score:3, Insightful)

      by bogjobber (880402)
      Gimme a break. 21 is 1.167% of 1800. Which is approximately 1% when taking into account error margins in the survey. I don't know the methodology of that survey so it may be even more or less but whatever. Therefore, for Apple to capture 1% of the entire cell phone market, they will either need to capture the entire market (extremely unlikely) or grow the market considerably while capturing a large market share. Either way, it's a tall order for Apple.
  • by Dzimas (547818) on Thursday January 11, 2007 @02:31PM (#17559758)
    Here's a bold prediction: The iPhone that Apple Inc. introduced yesterday won't be a runaway success. It will never sell tens of millions of units, nor is it intended to. In reality, it's a flagship product intended to define the high-end of Apple's new ultraportable media computer lineup. Let's face it, the classic iPod has reached the end of its natural life. Even the most recent fifth generation iPods are showing their age. The screen is small, the OS extremely limited. To make things worse, Apple's competition has been nipping at their heels with rapidly improving devices such as SanDisk's tiny Sansa [sandisk.com] flash players and the Creative Zen Vision:M [creative.com].

    The iPod line needed a reboot, and the iPhone was splashiest way to do it. In fact, this device is the logical evolution of the Newton MessagePad [retrothing.com]. Think about it. Apple realized that boring contact lists, calendars and handwriting recognition won't encourage the Unwashed Masses to adopt portable computers. People are far more media-centric than that.

    The rejuvenated iPod lineup will tempt you with music, movies and games, while offering an addictive combination of go-anywhere Wi-Fi browsing and email. And you can bet that Apple is planning to open up third-party development as quickly as possible.

    As for the iPhone device, the bleak reality is that it is slightly larger than a 5G iPod. Too big to slip into the pocket of my jeans, which means it's too large to use as my everyday phone. My hard drive-equipped iPod usually lives in a messenger bag on my shoulder or in a jacket pocket, simply because it's too bulky to function as an "everywhere" communications accessory. I wouldn't be willing to carry something as large or expensive as the iPhone with me everywhere I go. I'd look like a dork with my calculator on a belt clip. Besides, mobile phones are expensive enough to begin with and many people (especially students) will balk at the idea of committing to a 2 year $1000+ mobile voice/data/voicemail contract after shelling out $599 for the iPhone itself.

    No, the real magic will happen when Apple releases a $299 version of this device - the next generation iPod - that retains everything but the GSM + EDGE phone technology. At that point, the iPod will be perfectly positioned to become everyone's favorite teeny-tiny ultraportable computer.

  • My ideal device (Score:3, Interesting)

    by DG (989) on Thursday January 11, 2007 @02:40PM (#17559946) Homepage Journal
    My wife bought me a Palm LifeDrive for our tenth wedding av, and it is *very* close to a perfect handheld device.

    There are a few quirks (what device doesn't have those?) but it is most of the way down the road.

    The screen size and general form factor is about perfect; any bigger and it'd be too clunky, any smaller and it'd be too small to read - this is my biggest complaint with smartphones like the Treo family.

    I've mated it to a Garmin GPS 10 BlueTooth GPS Reciever, and it makes a great driving GPS.

    Here's what I think makes for a killer handheld device:

    1) Same form factor as the LifeDrive; the LD screen is awesome.

    2) Lots of storage, like ~80Gb, plus the SD slot;

    3) BlueTooth connectivity, especially for headsets/headphones, but the device should act as a BlueTooth hub and be able to talk to anything;

    4) Wireless G;

    5) A multi-band GSM phone;

    6) GPS;

    7) A good MP3/Media player (should be able to play all reasonable media formats)

    8) Enough processor power so it can play movies without skipping, redraw GPS maps seamlessly, and remain responsive to use input at all time.

    The LifeDrive is ever so close, lacking primarily the phone, the storage space, and the processor power. The iPhone *almost* gets it right too.

    Eventually, somebody will build one of these, and convergence will be complete.

    DG
  • by Spyky (58290) on Thursday January 11, 2007 @02:45PM (#17560050)
    In order to meet their 1% goal they need to sell 10M phones in 2008 (the first full year they are available). That is directly paraphrased from Steve Jobs during the keynote. It may be hard to sell a $500 to $600 phone in those quantities. But Steve Jobs himself said they are going to continue developing iPhones (3G...). Does anyone really think that this is the only phone Apple will be selling for all of 2008?

    I think Apple will sell a lot more than 10 million iPhones in 2008 when they add the iPhone nano to their lineup a year from now. I predict the iPhone nano will be physically smalelr and drop some of the pricey "smart phone" features of it's big brother. But it will still have the great interface and importantly, style, of it's big brother. Probably will come in colors too. $200-$300. That will fly off the shelves.

    You heard it here first.

    Spyky
  • by mschuyler (197441) on Thursday January 11, 2007 @02:48PM (#17560104) Homepage Journal
    I've been a Treo fan because I get phone and PDA in one package. I paid $499 for the 600 when I upgraded from a 170. My company did not pay for it; I did. Frankly, I couldn't care less about iPod capability, but I can see how it would add considerable value to the package for those whose lives revolve around music. What does it for me is cool phone with new features plus what I would call "near-robust" internet connectivity that goes way beyond Blackberry's push email technology. They've got three cool things in there, and I figure if they can get you to want two out of three, you can justify it financially and they've got a sale. They do not need to get you on all three. In terms of competing with Treo and Blackberry, they are way ahead on that point alone. They will own high end, end of story.

    I hope they can get away from Cingular exclusivity as soon as possible, though I have had good luck with Cingular with a good plan, good price, and effectively unlimited minutes with rollover. It will be easy to remove the chip from my Treo and plug it into a iPhone. Given the infrastructure build on Cingular's part I understand why they did it, but I hope other carriers will make the changes necessary and find a way into this. To me it does not make marketing sense to go exclusive forever.

    Given what they have done with Google Maps I think the iPhone is ripe for GPS. That would put it over the top for me. I don't use it very much, but when I do it is extremely handy. Plus it will knock the GPS-only systems out, or at least force them to reduce their sky-high prices. Navigation in a vehicle is $2K plus and the stand-alones push $1K easy.

    In terms of "Apple arrogance," get over it. Around here that is the pot calling the kettle black. :-)
  • by SilentJ_PDX (559136) on Thursday January 11, 2007 @02:49PM (#17560116) Homepage
    As The Register [theregister.co.uk] points out, we should all be cheering for the iPhone because it'll kickstart competition. Finally, someone is showing RIM, Palm, Sony-Ericsson and Nokia that nobody buys smartphones because their smartphones *SUCK*.

    If this brings some innovation into a pretty stale market, that's great for everyone.
  • by cemcnulty (225472) on Thursday January 11, 2007 @02:49PM (#17560128)
    And before the iPod the most a person had paid for a portable music player for many years was around $50, and usually way less. Which probably explains why the iPod was such a monumental failure. The point is that using devices that have little in common with the iPhone for the purposes of setting the price is pretty useless.
  • First Release (Score:4, Insightful)

    by lazarus (2879) on Thursday January 11, 2007 @02:50PM (#17560150) Journal
    It's brainless to think that Apple will not come out with a simpler, cheaper model in six months. Everybody knows they've been working on two different phones. The surprise with this annoucement was that they brought out the smartphone first.

    This makes sense (IMHO). You launch your product in a small, dedicated, technical market first and then bring out your average joe consumer market product when you've got the wrinkles ironed out.

    As for that dedicated market, people like me have been waiting for a phone like this for a long LONG time. I've spent well over $1300 on smart phones in the last 9 months and have been disappointed with them all. I couldn't give a damn what it costs - I just want it to work really well.
  • by Ancient_Hacker (751168) on Thursday January 11, 2007 @03:14PM (#17560732)
    Like the light bulb marketing survey:
    • No consumer has ever bought a light bulb before, and none even hinted at any impulse to buy a "light Bulb".
    • Every consumer was happy with the light given off by candles, finding it sufficient for the typical nightime activities of plucking chickens, trembling with typhoid fever, and beating servants and children.
    • We suggest Mr. Edison focus on what consumers did ask for: whale oil lamps that can be hung on buggy whips.
  • 1% in *2008* (Score:3, Insightful)

    by Llywelyn (531070) on Thursday January 11, 2007 @03:22PM (#17560916) Homepage
    I seem to recall that Jobs said it was "1% by 2008"

    By 2008 several things will have happened. First, I'd anticipate that the price will have dropped by then. Second, anyone want to take a bet that the "multiyear exclusive deal" with Cingular is 2 years? Third, it will have undergone at least one revision (possibly with an "iPhone Mini" or somesuch in the middle). Finally, a lot of people will be buying new cell phones and possibly changing providers.

    1% sounds extremely high to me as well, but it has to be kept in mind that they aren't talking immediately and this thing does a lot more than most smartphones.

  • by sammy baby (14909) on Thursday January 11, 2007 @03:36PM (#17561184) Journal
    CmdrTaco on the release of the original iPod: "Lame."

    Result: Arguably, Apple's most successful product ever.

    CmdrTaco on the new iPhone: "They're going to print money with this thing."

    Predicted result: Sell AAPL. Now.
  • by Andy Dodd (701) <atd7@co[ ]ll.edu ['rne' in gap]> on Thursday January 11, 2007 @04:15PM (#17562110) Homepage
    This wasn't in the blog itself (http://paul.kedrosky.com/archives/2007/01/10/the_ five_bigges.html), but in one of the replies to them:

    "I have zero interest in this cell phone. But I would love some version of this phone on my business desktop. Current business phones are atrocious. How to do conference calling, holding, transferring is just impossible to remember. Voicemail is a disaster. If they built something to work with PBX and the ability input contacts from Exchange then a $600 business desktop phone is probably cheap. I could see them making a lot more money in that space."

    All of the disadvantages of using the iPhone as a cell phone disappear if it is targeted instead as a desk phone. Like the poster in that blog comment, while I have zero interest in the iPhone as a mobile phone (too fragile, too many cases where I need to "blind dial"), I would KILL to have that interface on my desk phone.
  • by MrPerfekt (414248) on Thursday January 11, 2007 @04:17PM (#17562160) Homepage Journal
    First I'll admit, I pretty much am a zealot. But many people's dismissal of the product before they see or use it in person is very typical of the telephone game we call the Internet. I saw over here somebody saying this so I'll take it as fact. The truth is we still don't know very much about the product. So let's stop assuming things and think they're set in stone.

    My number 1 gripe with people's assumptions is that the iPhone will be a 100% closed-product. This is bunk. Firstly, nobody official has said anything close to that. Just that development kits are not available at this time. Why is that? Let's think about it.

    MacWorld is very much Apple's own personal CES. Takes place at the same time for more or less the same purpose: to introduce new products. This show is not so much about the developer because Apple already puts on a giant show just for them, WWDC.

    As is widely known, Apple went to great lengths to keep the product a secret. So duh, no development kits were given to even the most tightly NDA'd partners. This thing was even kept secret to most of Apple's OWN employees. So it stands to reason they didn't want to mass-produce developments kits to have available at announcement. Beyond that, third-party software will undoubted bring up alot of flaws in the iPhone-specific parts of the OS and API. I'm sure they don't want somebody else's software mucking with the device at launch that could make it unstable or worse. That isn't to say they don't want third-party software running on it -ever-. Just not at first.

    And I'm perfectly okay with that. This is a first-generation device. An Apple first generation device! These tend to be flakey. It does take time to work out the kinks and I'm okay with that too. I'm fairly sure that a dev kit will be available at or shortly after WWDC (hey, that's in June too... hmmmm). They just want time for people to use the device as they intended it.

    Concerns about battery life are irrelevant at this point. We don't know how long it will really last. Could be better or worse than everybody is touting. But you know what I couldn't care less either way because I don't spend more than 5 hours per day mucking with or talking on my cell phone. I'm lucky if I can get an hour on even the most smartest of smartphones (and believe me, I've gone through alot of them). I'm willing to be most people won't either.

    As for price, puh-lease. Go buy a Cingular 8525 (the super-duper 3G pda-phone that runs Windows Mobile). Aside from WM5 being the most sluggish piece of software on the planet, you'll find that it costs $585 (granted without 2yr contract). That's the same ball park. Same with the Blackjack which is $350 (again, without 2yr contract) but both phones come with negligable internal storage so add on another $100 for 2GB Micro-SD and you're still not close on storage. Some people like removable storage because you can swap cards. I have -never- owned more than 1 memory card for a format, so again, I couldn't care less. Especially considering 8GB is fairly substantial.

    So I think most people's fears are overblown. The concern that could be given weight is the QWERTY touch keyboard. But that is a philosophical thing that has to be one way or another. Either you have dedicated tiny buttons or you go virtual and have a large screen. My side on this one is the large screen & virtual keyboard. That's just my preference. I have no need for tiny, fingernail splitting buttons so small that I accidentally press the wrong ones so I much prefer a keyboard on a large pretty screen that I accidentally press buttons on. Even if I wasn't such an Apple whore, I'd side with Steve on this one. Dedicated, ugly micro-keyboards suck (I'm looking at you, Blackjack). The 8525 was, for the most part, comfortable and quick to type on though.

    Anyway, I'm sure the next few months will be filled with iPhone bashing as people speculate till their heart's content. I know I'll get one (I've gone through 4 different phones in the past month looking for one that doesn't suck) but the iPhone could very well disappoint me in use, but I won't know that until it comes out in June.
  • Deja Vu (Score:3, Insightful)

    by Macgrrl (762836) on Thursday January 11, 2007 @06:36PM (#17564844)

    I remember everyone saying how the original iPod was too expensive, feature poor, no way it was going to compete in a market that already had the Rio, etc...

    The iPod redefined the market for MP3 players.

    As a long time Mac user, I've been listening to people predict the demise of Apple, the failure of it's products for decades.

    The iPhone may be a disaster, or it may be as disruptive a technology as the iPod. Only time will tell.

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