Friday, January 12, 2007

Apple's iPhone will be a flop

One of the gifts I received for my birthday was a 2nd-generation iPod shuffle. It's a triumph of minimalistic design, a near-perfect marriage of functionality and aesthetic. (I really like it.)

But the media are currently in an almost religious frenzy over a different Apple product: the iPhone. A lot of the coverage has seemed like it was lifted straight out of Apple's propaganda press releases. Hmmm ... where have we seen this before?

In reaction to this media love-in, I spent rather too much time today trying to convince anyone who would listen (including my long-suffering brother) that the iPhone will be a flop. I marshaled what I thought were some pretty good arguments. But a Google search of "iphone will flop" reveals that I was scooped! Back in December, CNET editor-at-large Michael Kanellos published an opinion piece titled "The Apple phone flop". He predicted that:
As with any Apple product release, it will be ushered into the world on a wave of obligatory gushing. "It's the greatest advance in communication since cave painting," some will proclaim. ... It's predictable. If Apple got into medical devices, people would come out of Steve Jobs' speech proclaiming "The iBag is the easiest, most user-friendly colostomy device I've ever encountered."
But won't the iPhone do for cell phones what the iPod did for MP3 players?
The entire strategy ... is based on what I call "iPod magic." Apple succeeded with the iPod, the theory goes. Therefore, they can break into other categories and turn them upside down.

But the iPod looks like it may turn out to be a non-repeatable experience. Look at the historical record. When the iPod emerged in late 2001, it solved some major problems with MP3 players.
(At that time, the MP3 players on the market had very little memory, small screens, and what Kanellos described as "cheesy navigation".) But what about cell phones?
Cell phones aren't clunky, inadequate devices. Instead, they are pretty good. Really good. Why do you think they call it a Crackberry? Because the lumpy design and confusing interface of the device is causing people to break into cars? No, it's because people are addicted to it.

Samsung has scoured the world's design schools and hired artists on three continents to keep its phones looking good. Motorola has revived its fortunes with design. KDDI, a Japanese carrier, has a design showcase in the teen shopping area of Tokyo just to be close to trends. And Sharp doesn't skimp when it comes to putting LCD TVs on its phones.

Apple, in other words, won't be competing against rather doltish, unstylish companies like the old Compaq. The handset companies move pretty quick and put out new models every few weeks.
In addition, Kanellos made some other arguments I hadn't thought of. Of course, he was writing this more than a month ago, so he only had rumours about the iPhone to go on. In particular, the name of the new phone hadn't been released: nobody imagined that Apple would pick a name that was already taken. And then there's the rather hefty price tag: the cheapest iPhone will set you back US$500. (I'm not alone in thinking this could be a deal-breaker.)

I have occasionally (ahem) been described as a techno-geek, and I'll admit that I can get pretty enthusiastic about new technology. I also own an iMac G5, which I quite like. But I think the time has come to upset the Apple cart.

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Anonymous Joe Dawson said...

Hi Nick:

I think you’re a bit off base (pardon the pun) on this one. Now don’t get me wrong I am not one of the people who will run out a buy an iPhone. It has many flaws that would stop me from getting one.

That being said I think quoting Kanellos comments from December before he knew what an iPhone would really be is not really a great way to make a balanced objective point. I look forward to his comments in a few weeks if he makes any about the iPhone now that it is out.

As someone who has used a Blackberry and a Palm Trio they are great devices that allow one to access your e-mail remotely away from your computer. That being said they both have some awful user interfaces and poor navigation.

I bought two new Motorola Razors before Christmas that can take pictures, send e-mail, scheduling, view web sites and even make phone calls. In my mind there is no question that the Blackberry and Palm Trio do much better job of send e-mail, scheduling and accessing web sites. But as I bought my cell phone to make phone calls, I found the Razor’s size was better for our requirements.

If I have a problem with the Razor is that it has to many functions that I don’t want. That is why I agree with you and think the 2nd generation shuffle is such a perfect MP3 player for people who just want to play MP3s.

So the iPhone really needs to compare itself with other Swiss army knife cell phones. And I think when you do that it will come out very well. It wouldn’t take much to be a much better web browser then the Trio of Blackberry. As I could see from the demo it was already doing many web sites that you just can’t view on any cell phone. The ability to run Google Maps on a cell phone is very impressive.

In my view the iPhone has a good chance to replace the Palm Trio but will not have a significant impact on corporate blackberry users. What many people may not know is that the corporate blackberry have a secret weapon that makes them powerful. Inside the corporation they install something called a BEZ server. This server then sends out all the corporate e-mails to the Blackberry devices through an encrypted link (not SMTP) and the BEZ server also allows access to corporate applications via a special VPN system. So until Apple has a version of that functionality the blackberry has little to worry about in the corporate world.

The problem for me is that I am not a big fan of Swiss army knives. They really are very poor screwdrivers and the knife is not as good as a single function hunting knife. The new trend of Swiss army knife cell phones is not something I like. I personally don’t like the idea of taking a poor phone, awful web browser, very low quality digital camera and a video and a poor mp3/video player.

You see as an iPod the iPhone is really not that great a device. For an iPod that plays videos you need more then 8 gigabytes. The existing iPod that plays video has ten times that storage for a lower price. If you just want to play music this is a huge MP3 player.

If you really want to take pictures, then get a digital camera as the best cell phone ones are just awful quality.

But if you subscribe to the Swiss army knife approach to cell phones then the iPhone may be on your wish list. And with one billion cell phones sold every year even may people do subscribe to the Swiss army knife approach. Even a small 1% market share could make a very successful product in the eyes of Apple share holders.

That said I should point out some significant road blocks that Mr. Kanellos didn’t know in December that will likely prevent the iPhone from having an 80% market share in cell phone market the way the iPod has today in the MP3 player market.

Problems with iPhone that Mr. Kanellos didn’t know in December:
1. You have to be on the Cingular network in the USA to have one.
2. Current versions don’t do CDMA so in Canada it will only work on the Rodgers Network.
3. You can’t remove the battery. So in a few years when the battery is not working, what do you do?
4. The touch screen is a great concept but as a phone that you will have touching your face it will have oils from your ear and face all over the screen. That is an existing problem on Razors today and it is quite ugly!
5. It is not a flip phone so the screen will get scratched if you put it in your pocket with your keys and coins.
6. Battery Life… I hate to say they all lie, but they do… Most of this portable technology will not last as long on battery as they say. You can’t have a device with that big a screen running sound and video for 5 hours. The existing iPod Video only can do 2 hours so I think someone is not 100% truthful here.

Finally let’s give Apple a break here… They have a very nice cell phone for Version 1.0.
We need to remember that the 1.0 iPod in October 2001 was no great shakes. It was only FireWire and didn’t run on a PC until the third generation iPod in April 2003. So it took them two years after entering the MP3 player space to really start to hit full speed. Let’s see what the third generation iPhone looks like in two years.

11:48 AM, January 13, 2007  
Anonymous Trivial Pursuit Champion said...

The part about Samsung scouring design schools stirred up an old memory.

I remember attending an event in Toronto thrown by a PR company on behalf of SONY. (Must have been in 2002 or 2003.)

They brought in some cellphone designers from Japan to discuss SONY's strategy for maintaining its cellphone market share.

One designer made the point that at SONY, the aim was to create phones that "would not just look good in the shop window."

The idea was to sell someone a phone that, every time they looked at it, they would feel they'd purchase something extraordinary -- for years after.

Not sure how high the burnout rate among the designers was... :-)

9:54 PM, January 14, 2007  
Blogger Nick Barrowman said...

Joe: I know what you mean about quoting what Kanellos wrote about the iPhone before he'd even seen one. Still, I was struck by how similar his reasoning was to mine. Plus I was amused by his writing.

I guess it's possible that if the iPhone had been different, my prediction might be more optimistic. Sure the iPhone has lots of goodies, but for US$500, what do you expect? Apple has invested an enormous amount of resources into this, and sure they'll sell a few, but will it take off? No. What's the "revolutionary" new feature? A touch screen. Touch screens can be useful, but a cell phone with no physical buttons?? I don't think so.

10:57 PM, January 14, 2007  
Anonymous Anonymous said...

but really, what do you think of the person who GAVE you your iPod shuffle?

7:16 PM, January 30, 2007  
Blogger Nick Barrowman said...


11:58 PM, January 31, 2007  

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