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Why the iPhone is a success

Not for the reasons you think

The smart choice: opportunity from uncertainty

There's another problem. This phone has to work for the networks, and the networks need a phone that people will keep switched on. Rigorous studies show there's a direct relationship between how many bars you have on your battery indicator and how many calls you'll make. When the battery indicates less than half full, people start to turn the thing off to save power.

That's a disaster for the networks. Not only are people no longer making calls but, even worse, they can't receive them. "Termination charges" are where the networks make more than half their money - they get a payment for every call their customers answer. Phone switched off? No termination charge.

The new iPhone user interface is the real trick. It's a typical Apple invention, making control of a cyberdevice easier, more intuitive, and it works well. But, because it's called an iPhone, everybody knows it's an iPod. The phone is what you focus on, and never notice that what's really happening is that the old iPod is no longer in the magician's hands, and the new one has been smuggled onto the stage. A wave of the hands and <pouf!/> - cries of "oooh!" and "aaaah!" and "It's an iPhone!"

Now that we know it works, Apple can refine it. It can sort out the network (AT&T problems are a great test bed) and it can upgrade the wireless (GPRS or EDGE is hopeless for a web phone), and can make sure it gets the battery life right.

And when all that's done, you release the 3G phone.

I dare say several European networks would sell the current iPhone, even though it needs EDGE wireless to be even slightly acceptable, and there's very little EDGE in Europe - they would just like to be able to put it on their advert pages! But for serious numbers, that won't work. I don't know a single European carrier with spare data capacity on their 2.5 G data networks; and the iPhone is a potentially huge data pump.

But most European carriers have far more 3G data than they can find a use for. Probably (say analysts), the problem will catch up with them in two years. As soon as the market find a killer application for mobile data, the spare capacity will become a shortage. There are plans (see femtocells) which may be able to deal with that in a couple of years. Right now, they don't have to worry about 3G capacity, but they do need a successful 3G phone that will generate revenue there. It may not be profitable revenue, but in a fire sale, any price is better than giving it away free.

By the time the shortage of handsets eases in North America (looks like a few months from now) the 3G phone will be ready; there's no need to launch the current model anywhere except on AT&T and Cingular.

I hope Apple does sort out the digital rights management issue. There are problems with some of the music studios, true, but overall iTunes FairPlay has been a winner, and there's no credible competition. Let's hope that the restrictive DRM on the iPhone is a "proof of concept" for people who think they need it, rather than a pointer to where Apple is taking downloads - otherwise, recorded music could hit the buffers (Maybe, it will, anyway?).

But at this point, it really does look like the innovation of putting a GSM wireless into the box as an excuse for updating the spinwheel, has worked. The faithful have loved it, and the phone users seem to understand it.

And even if demand does go soft in North America in September, and Apple has to ship 100,000 odd units into other markets, it won't change anything. At about 10,000 units per country, it won't spoil the market for the Real Thing, which will be around in January. And long before then, we'll know which European networks are carrying the iTunes traffic. ®

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