iPhone 3GS? Apple's real story is elsewhere

So Apple launched a new iPhone, with a faster processor, better camera, video, compass, et cetera. The old 3G iPhone is clearing out of stock at $99.
Written by Rupert Goodwins, Contributor

So Apple launched a new iPhone, with a faster processor, better camera, video, compass, et cetera. The old 3G iPhone is clearing out of stock at $99. That’s what Moore’s Law does for you. It’s not as if anyone’s come close to the consumer experience of the last couple of iPhones – Android is great, but still a gawky adolescent – yet Apple’s always been comfortable competing with itself.

Everyone will be talking about the iPhone 3GS. So let’s have a look at what else is going on – and why it might matter a bit more than that video camera.

Snow Leopard, the long-awaited upgrade to Leopard, is finally on the runway. It’s got lots of new features, including what looks on the surface like decent Exchange support, 64 bit support, Grand Central multicore magic, many sweet interface tweaks. It looks at least as different to Leopard as Windows 7 does to Vista.

But Apple will be charging $29 – around twenty quid – for Snow Leopard, which plays remarkably well against a competitor which, let’s say, wants to compete on price and has just spent millions on television adverts saying so, but habitually charges up to $320 - £200- for a new OS. And has to, because it doesn’t have any hardware sales.

Be nice if Apple cut the price of its hardware too. Oh, it’s done that too - with margin left for later. If there’s anyone who hasn’t yet seen Apple as a real threat to Microsoft, it’s probably time to return to your planet.

Yet even that’s not the most important part of Apple's latest news. Deep in the traditionally dull third party partner part of the WWDC keynote, the real story lurks. There were medical and ebook applications wheeled out, and Apple is “very excited” about education and health. (Not that there’s a recession on.)

Traditionally, health and education are gristly meat compared to the tasty burger of consumer bling. But these two aspects demonstrate both the breadth of the iPhone’s market and its ability to sink into niches - and they make huge sense with the new hardware accessory support and excellent new developer aspects of iPhone OS 3.0. Those make the iPhone a very tempting remote control/viewing device for all sorts of industrial, quasi-industrial and consumer gadgets (fancy an iPhone interface for your set-top box? That works anywhere in the world?). And the iPhone is already a very acceptable e-book reader, which makes it the perfect platform to attract further development. To say nothing of the 50,000 applications already available - or billion plus downloads already delivered by the App Store.

The iPhone, in other words, has become the default ultra-portable application machine. It's become the PC of the pocket. It’s got there because of the app store, because of the SDK, and because it was cool enough to sell in large numbers and so create the market.

You may have noticed what the PC became in the twenty years after its launch.

There are two small differences. Unlike the IBM PC, where the clones made the market take off, nobody but Apple can make the iPhone. And nobody but Apple can put applications on the thing. Those two limitations would have sunk the original PC, had IBM been able to pull them off.

But then the iPhone is around twenty times cheaper than the PC, is very capable, doesn’t have the same need for expansion and enhancement, and Apple isn't being a complete donkey about app distribution.

So Apple will get all the advantages of a universal market and none of the displeasures of losing its income stream or control over the hardware. Given the difficulties, technical and legal, of producing an iClone, Apple’s monopoly looks assured.

And we know what happens when that happens.

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