How can Apple turn the iPhone into a long-term success?

How can Apple turn the iPhone into a long-term success?

Summary: Steve Jobs is no fool. He didn't lead Apple from the edge of bankruptcy a decade ago to where it is today by making rash moves. Betting against Jobs isn't a good bet. The chances are high that the iPhone will be a success initially, but what about long-term? This depends largely on what the early adopters have to say about it.

TOPICS: Apple, iPhone, Mobility

Steve Jobs is no fool.  He didn't lead Apple from the edge of bankruptcy a decade ago to where it is today by making rash moves.  Betting against Jobs isn't a good bet.  The chances are high that the iPhone will be a success initially, but what about long-term?  This depends largely on what the early adopters have to say about it.

Heck, I've even thrown dough at things that have become over a period of weeks nothing more than expensive paperweights, but when there's a 2-year contract attached to the deal, that's when I become waryThe iPhone is a first generation device and as such is flawed.  I make no apologies for saying that.  Lack of 3G support is a flaw.  Rolling it out on one network is a flaw.  Lack of cutting-edge features such as a GPS is a flaw.  The on-screen keyboard is a major gamble which could turn out to be a serious flaw.  The battery life, although improved, could be a flaw in the design.  Folks who go out on the 29th to buy an iPhone are buying a new device and locking themselves into an expensive contract based on nothing more than faith in Apple.  Now I'm not aversed to throwing money at a gadget that doesn't live up to all my expectations.  Heck, I've even thrown dough at things that have become over a period of weeks nothing more than expensive paperweights, but when there's a 2-year contract attached to the deal, that's when I become wary. 

For me a cellphone is a tool that has to work, not a toy, a piece of jewelry or a badge of honor.  If it doesn't work, I lose money.  Years ago I got burned by being an early adopter of a SmartPhone.  I hate to think how much that piece of junk cost me in downtime and hassle.  Sure, it was a nice toy, a cool conversation piece, but it was rubbish at doing what it was supposed to do.  That kind of experience makes you very wary of combining the phrases "early adopter" with "crucial piece of business kit".

But for a moment let's assume that the iPhone is pretty much perfect in every way.  Let's assume that it's the perfect fusion of cellphone and iPod.  The keyboard works, the battery life is fantastic, everything works as planned.  What next? 

Steve Jobs has predicted that Apple will be able to shift 10 million iPhones by the end of 2008.  To me, given the size of the market and the current penetration for market leading phones, this sounds ludicrous.  If the iPhone was $250 and came with no contract strings attached, I'd still say that 10 million was overly optimistic.  If, by the end of 2008 Apple has managed to shift around 3 million iPhones I'll be amazed.  The 10 million iPhones statistic could be one number that comes back to haunt Apple next year.

Apple could launch two branded tin cans and some string and initially the product would fly off the shelvesThere are other limiters to the success of the iPhone other than technical ones.  The main limiter is that the iPhone is a convergence device, and by and large, convergence devices haven't enjoyed anywhere near as much success as divergence devices.  Over the short them the iPhone is bound to be a success.  Apple could launch two branded tin cans and some string and initially the product would fly off the shelves.  But the success of the iPhone won't be judged over the first 90 days, it'll be how well it performs over the first couple of years.  The hype surrounding the iPhone has been extraordinary but this won't last at present for long once the device is out.  It then relies on real-world reviews and word of mouth from early adopters.  This will be where the rubber meets the road and after all the hype it will be really interesting to see what regular users make of Apple's new creation.


Topics: Apple, iPhone, Mobility

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  • Convergence devices

    I think you're going to be in for a surprise. If 10 million RAZRs can be sold for $500 and 2 year contract, the iPhone should be a piece of cake. It is (alleged flaws and all) a much more capable device.

    As far as the failures of convergence devices, there's a simple explanation for that. Pretty much all of them suck. There are too many compromises offered, you get the worst of each world. You end up with a mediocre version of everything, all with a poor interface that kinda sorta works but not elegantly.

    A successful convergence device will create a unique interface for each function, as Apple has done here with the touch screen that you keep whining about. You have to pick one side of the argument, either you want a hardwired interface that's specific to just one function, or you want a successful convergence device. You can't have both. Although I'm willing to bet someone will start selling a snap-on keyboard that hooks on to the dock connector in the very near future, which will hopefully cover those who want to type while driving.

    Has Apple succeeded where others have failed with convergence devices? We'll find out in about a week.
    tic swayback
    • There are a lot of "ifs"

      that have to fall perfectly into place in order for your scenario to work out. I'm not saying it can't happen, but there are a lot of known issues that already put the iPhone at a disadvantage versus the RAZR. The biggest known issues being the lack of choice of provider (even current AT&T customers will get no breaks, which shows you what monopoly power can do), the higher rates which will be necessary to enable all of the iPhone's capabilities (a RAZR works just as well on a $30/month plan as a $100/month plan), and the lack of a good fast network like 3G. Given those strikes already against the iPhone, one more strike against it could mean the difference between initial success (well we know it'll do well the first month, but how well it does after that is the true test) and an abysmal failure.

      I love the ideas behind the iPhone, but the question is whether it is too far ahead of its time (in other words, too expensive) to be a success.
      Michael Kelly
      • AT&T Cingular

        When the RAZR launched, it was a Cingular exclusive as well.

        But you are right, there are a lot of "if's" and success is not a given.
        tic swayback
        • re: AT&T Cingular


          "When the RAZR launched, it was a Cingular exclusive as well."

          But the RAZR wasn't a Cingular "exclusive" for five years, as opposed to reports regarding how long the iPhone will be an AT&T "exclusive".

          Big difference.
          M.R. Kennedy
          • True

            But the RAZR hit the 10 million mark while it was still an exclusive.
            tic swayback
  • Apple WILL ride the wave

    Apple WILL ride the wave, so long as technology web sites such as ZDNet continue to seem bent on making the iPhone the major news story of the day with multiple articles.

    I mean, look at ZDNet's slogan: "Where technology means business." Yet, its pretty much apparent that the iPhone isn't suitable for business environments. So why is ZDNet so committed to giving so much air-time to a consumer device?

    As long as ZDNet and others continue to rev up the hype for free for Apple, Apple will enjoy a verrrry long ride.
    • I don't agree with that

      I think this targets the Blackberry market just as much as it targets the home consumer market. In fact I think of this device as a next generation Blackberry more than I think of it as a cellphone/iPod combo, although it is that as well. Also some people who might find an Origami useful may find the iPhone useful (although the likelihood of that will increase if third party software is allowed).

      How well it will do will depend on how well it syncs with productivity apps like Outlook (I'm talking about direct syncs, if you need to sync with iTunes first then do a second sync with your productivity software then that will be unacceptable), and whether or not the iPhone itself works as well as it does in its commercials.
      Michael Kelly
      • No way is it an attempt to overtake Blackberry

        Blackberry and Treo have a distinct advantage in the corporate marketplace because there, IT can manage the device and control email. Apple is not offering any of these servers. There is no "iPhone server" nor will it be a compatible device with Intellisync or Blackberry servers.

        For corporate environments concerned with regulatory compliance, the Apple iPhone is a big no-no. There is no way to establish email archiving and retention with the existing email infrastructure.

        As for syncing it with outlook, whoopee doo. That doesn't even come close to email retention policies from a legal perspective. This was already proven in court cases, most notably the University of Texas case two years ago. When it comes to legal discovery, email trails must come from a discoverable and queryable email system.

        iPhone in no way, will be able to provide for the legal protections that companies need nowadays. How the iPhone can even remotely be considered a competitor to Blackberry with those specs is beyond me.

        There's a reason why IT departments are fretting over the introduction of iPhones in their network. iPhone is bad for their business.
        • Don't discount small to mid-sized businesses

          Most of those businesses have no capabilities, or even a desire, to micro-manage every employees' e-mail account. All it you would need is a desktop plug-in for Outlook (the same way most PDA's do) and it will have all the capabilities they'll need.
          Michael Kelly
    • Why...

      is the iPhone not suitable for the business environment?
      • Because it is a consumer product

        There appears to have been no effort to make the iPhone suitable for
        big business. ATT isn't even offering it to corporations - only
        individuals can buy the iPhone.

        When you take out the technical requirements of the corporate world
        AND the significant discounts corporations would demand you are left
        with a market that is open to the design that Apple wanted to do.
        Being able to define the market allowed Apple to make some
        important decisions early - such as using OS X as the iPhone's OS.

        Only having one carrier will be a problem for some, but the iPhone
        requires enhancements to a carrier's infrastructure for features like
        visual voicemail. There is no way any carrier would make that
        investment without an exclusive contract. It's not a flaw - it's just a
        reasonable demand by a carrier that would need to make some
        significant investments in their infrastructure.

        EDGE is going to be interesting as I believe a lot of users will rely on
        the ability to connect to the internet at various hot spots. (Might be
        worth investing in Starbucks instead of ATT now that I think about it.)

        We'll have to wait to see if Apple can hit the 10 million mark in 18
        months, but I wouldn't bet against them. I expect that there will be
        other models and that ATT will eventually deliver a more attractive
        package to bump sales when things slow down. No way would I bet
        against Steve Jobs on this one.
  • one word... RAZR... shows everything you mention is utterly irrelevant...

    iPhone is NOT targeted to business users... IMHO you should not buy an iPhone.. it's not designed for you. the issues you mention are valid for YOU, but are not issues for broad consumer cellphone market (i.e. non-business users)... you are stuck thinking about the iPhone as a traditional smartphone for the niche business users but the iPhone brings smartphone feature and makes them palatable for the much larger and lucrative broad consumer market.. your ideas about numbers and what features may or may not be essential are off base because you are not the target audience for this phone and you seem unable or unwilling to think outside of your own wants and needs to the needs of the target audience for this phone of which you are not.. the broad consumer smartphone market doesn't exist yet... Apple is about to create it.
    • Just for consumers?

      Well if they are only targeting "consumer joe" then they've overpriced it. $500 as a business expense is one thing, but $500 to impress your co-workers at Starbucks is quite another :( Sure there were people who bought a RAZR for $500 when it first came out, but generally cell phones drop sharply in price after a while. I got my RAZR for $50 with a plan. Can you imagine a day when Apple sells these phones for that little?
    • You're half right.

      It's definitely a consumer item, but the price has to come down significantly to sell 10 million.

      I disagree with adrian that it can't kill at 250.00. At 250, people get a Nano AND a phone. The nano alone is $200.00 to 250.

      However, he's right about the AT&T exclusive. I wouldn't take an iPhone if they were free, because I will not switch to AT&T/Cingular.

      Until the product is in stores and reviews are written, we won't know jack.
    • This phone is too EXPENSIVE

      Other than a few very well off gadget freaks, I can't see the "average" non business user shelling out what they are asking for this phone. At this price point, it should be directed at business users who have the needed deep pockets.
    • yeah & early RAZR adopters got screwed...

      As one of the early RAZR adopters, I definitely got screwed for almost all the reasons the article mentions...most specifically the 2 year contract. How else do you describe buying a $499 flawed phone that sells for a tenth of that a little more than a year later... and a better version w/ the kinks worked out.

      My RAZR battery-life sucked...had so-so call quality & had several software issues causing it to crash more often than a simple device should... all for $499 + 2 years of fun w/ Cingular.
  • Pricing Is What Will Kill Them

    $499-$599 for a phone...then you have to pay out the rear for your monthly service agreement (don't forget that mandatory data transfer fee you have no choice in whether you get or not)...

    Once again, a device that only the "elite" will have and flaunt it like they always do, then it will fade into obscurity because no one will be able to afford it.

    I'll stick to my Treo for now, I've said the Iphone is great, which it is, but at the price they are offering it I can take my savings with my existing phone and put it towards something better like a bigger Ipod.
    • No, it's $299-$399 for a phone

      It comes with the equivalent of a $199 ipod, (arguably, worth more since the screen is bigger than the $199 ipod), so if you want/need an iPod, killing two birds with one stone is somewhat attractive.

      It isn't just a phone, the integrated iPod is always overlooked and never accounted for.


      P.S. Note that I own no I-anything, won't be buying one (maybe if it comes down to commodity $79 price eventually) and can be programmed to play ogg (lol, so NEVER).
      • integrated hardware is bad.

        Your video goes after warranty, then what? Go w/o a phone for a few weeks/months, or consider it a downgrade to phone and ipod music player only?
        Actually, nobody has forgotten it's an ipod, but why have a screen and not enough memory to do much iPod related video?
        In the end your phone needs to be able to take and receive calls, the extra is just unneeded integration, which in the case of the web browser, doesn't even belong on a device that small. Unless you don't mind view pages at one per hour.
        • I agree completely

          Give me separate MP3 player, standalone phone and a laptop (hey that's what I have) minimizing the failure impact. For the iPod part, it is, as you say, only applicable really for music, like the Shuffle. You can probably get an hour or two of video. I was simply echoing what I think will be much justification for the high cost of getting one.