Original URL: http://www.theregister.co.uk/2007/01/10/iphone_where_is_the_market/

Why I want the iPhone to succeed

This bling deserves better

By Andrew Orlowski

Posted in Mobile, 10th January 2007 15:26 GMT

Opinion I'm glad the iPhone's is here - and I have very selfish reasons for wanting it to succeed. That's because even without the cellular telephony, it looks like something I've been wanting to buy. But it's also because after years of writing about smartphones, I've seen the established players become lazy and complacent, go down blind alleys, or standardize on horrible designs and feature sets. So the iPhone should focus minds wonderfully - it should raise the bar for everyone.

(Read how bad smartphone UIs have become here, and how the leader of the pack blew it, here)

I'm also hoping a crushing wave of shame will overcome anyone who has a Blackberry, or one of its hideous clones from HP, Motorola, Nokia or Palm. Owning one of these is like volunteering for a lobotomy - then boasting about it afterwards.

But common sense suggests it's going to be a bumpy road for Apple, and it knows it. This isn't a new experience: both the original Macintosh computer and the iPod received rave reviews on their debut but both were, a year of later, perceived to be failures. Both eventually recovered. Will Apple's new PDA?

That morning-after feeling

So Apple has set the relatively modest sales target for the iPhone of 10m by the end of 2008. This is rather less than cheerleader analysts predict - PiperJaffray last year suggested sales of between 8m and 12m Podphones in the first 12 months, based on one third of iPod owners upgrading.

That's a figure so modest it suggests Apple is (publicly and in the short-term) happy to see iPhone take its place at the top of the iPod range - with existing owners upgrading, and perhaps attracting a few new buyers. It's sensible to take a conservative line, because for all its bling, it's going to be a bumpy ride.

Unusually on the Apple boards, the iPhone is already chalking up more negatives than positives - and the reason isn't hard to find - Cingular.

And ominously, Steve Jobs is already beginning to make the same justifications he made after the launch of the Apple G4 Cube, a beautiful Apple product close to my heart. (I was an original Cube buyer, and today have two. There aren't many of us around). But great design can't save something when the price is too high.

Here's how John Markoff described the Cube-style justification in the New York Times today -

Jobs' new designs win over a sceptical Swedish boardroom

Mr. Jobs defended the higher price of the new phone in a market where prices of so-called smartphones — those combining voice calling with Internet functions — are rapidly plunging to $200 and below. He contrasted the iPhone, which has only one mechanical button on its surface, with the BlackBerry and smartphones from Motorola and Palm.

And the Cube, you'll remember had no buttons at all - just a light sensor.

Elsewhere in the Times, David Pogue struggles with the iPhone's cramped onscreen virtual keyboard. Well, I'm with Steve Jobs on this one, for aesthetic reasons. But I have a horrible feeling that a device that appears to type better and costs one third as much will still find a market.

Neither of these problems - availability or cost - is insoluble. The limited availability will be fixed when the Cingular deal expires, leaving Apple to strike deals with multiple operators and/or release an unlocked iPhone. And Moore's Law, and a low-cost "iPhone mini" will help dissipate the Cube effect.

People forget the iPod was a flop until 2003 - until iTunes on Windows and then the iPod Mini ushered in the mass market. Meanwhile Apple's feature set suggests that it's in it for the long run - but how can it get from here to there?

Here's how the iPhone could weather the inevitable disappointment in the coming year - and how Apple could find a lasting market for its new, connected PDA.

What is your iPhone for?

It's been some time since the PDA disappeared off the shelves of retail stores. IDC saw PDA shipments fall by 60 per cent last year.

But amazingly, they still sell tidy numbers, earning the manufacturers money. Even without refreshing its product line for a year, and without serious competition for almost three, Palm's PDA products netted it hundreds of millions of dollars last year. (In the most recent quarter, PDAs earned Palm $109m - the lowest for some time).

While it's hard to find a Palm owner these days, they seem supremely content with their combination of Bluetooth phone and PDA. I can see why. The Palm T|X does music pretty well, photos and documents passibly well, and it still does PIM superbly, but with one or two exceptions the software library is dusty and aging.

The iPhone is really entering the premium portion of a space that Palm should own today, if it hadn't been so badly let down by its operating system supplier. PalmSource's failure to produce a next-generation OS that anyone wanted, Cobalt (and the reasons for this are hotly contested) ensured Palm missed the SatNav boom, and its aging browser is severely limited compared to Nokia's Web and Apple's mobile Safari. It's also an area that Sony should own, too, both with its PSP and through its Sony Ericsson investment. But the phone division has been let down by the UIQ 3.0 fiasco, which turned a successful product into a mult-pronged disaster, and Sony's own reluctance to open up its PSP as a platform.

But despite all its severe limitations, reading the web on a Palm is still less noxious than reading it on a phone, and everything else is a bonus. I'm primarily in the market for a web reader, which is what I use a Palm for now - if only because the screen is larger than the competition. If the price is right, the iPhone looks like a natural replacement. On the other hand, the screen is considerably poorer than Nokia's new Linux tablet, which promises to be considerably cheaper.

Equally, the iPhone could find a niche as an ersatz SatNav. Apple seemed to think so, inviting Google and Yahoo! to show off the iPhones map and directories. With Apple's gesture UI, it made for a great demo. If one or more of these functions takes off, the iPhone will have a new lease of life.

It'll need this, because as a phone, the iPhone will face an uphill battle in Europe, where 3G communicators are supplied for free. From this perspective, the iPhone looks like an expensive iPod that locks you into a utility contract you might not want. This year's phones will run at 3.5G-speeds, (HSDPA) and several, like Nokia's N95, will feature GPS mapping built in. Stuck on 2.75G, the iPhone begins to look like a rich man's toy.

(We don't know the level of Cingular's subsidy, but it could be disguising a $1000 boondoggle).

The question then becomes, is the price right?

When it first appeared the Mac received a very similar reception to the iPhone. It was two years before the Mac found itself a market, desktop publishing, one that it helped create (thanks to the Mac UI, Postscript and the Laser Printer). Apple will be hoping the iPhone can similarly find some unexpected niche.

It deserves to be far more than a US-only phenomenon. ®

Update

And a few observations we missed. Two howlers were highlighted by Gary Wood -

Actually it's not 2.75G they are battling Nokia et al with, it's 2.5G as there is very little EDGE here (so they'll be stuck with GPRS). The battle is 3.5meg vs 56k a second ... imagine using home dial-up again after your fat ADSL pipe.

Also, is the battery removable .. a fixed battery is one thing in a music player but not in something people will want to rely upon when the last train is cancelled or late ...?

We missed that. The lack of removable battery almost killed the Treo 600, we recall - but Palm swiftly made amends.

"Does look like a nice toy though," concludes Gary. We'd agree with that. A product in search of a market, then.