Mene, mene, tekel, iPhone: What the finger hath wrought

Keen news readers would have heard about the strong earthquake that rocked south-western Greece on Sunday. Fewer may have realised that the quake was not so much an act of God, as an act of Jobs.
Written by David Braue, Contributor on

Keen news readers would have heard about the strong earthquake that rocked south-western Greece on Sunday. Fewer may have realised that the quake was not so much an act of God, as an act of Jobs — the result of displacement of the Earth's crust from the weight of hoardes of Apple faithful congregated outside their local Apple Stores to hear news of the long-awaited iPhone 3G.

For a product so widely anticipated that the share market actually dumped Apple stocks when it was found Jobs had nothing else to announce, the iPhone 3G is still pretty cool. It now offers most of the features we expected when it was launched over a year ago, and the fact that it's going to be legally available in Australia means everyone can stop getting ripped off by corner mobile phone vendors selling jailbroken models for just shy of AU$1000.

The new model is particularly interesting in the things it doesn't include. Apple has a history of convincing us to forget things we don't need anymore, by just dropping them from its products: the floppy disk, PowerPC processor, FM radio (still not in its iPods) and even the whole idea of a separate computer for running Windows have all been made obsolete by Apple's technical decisions.

This track record does not bode well for features like video conferencing, A2DP, camera flash, and MMS, which have apparently been excluded from the iPhone 3G, but it says heaps for the future of GPS, which has finally made an appearance. The most interesting thing about the iPhone, however, is not the iPhone at all; smart phones have been out for years and many already do far more than the iPhone 3G. What is most important about the new iPhone is not the number '3', as in 3G, but the number 199 — its price.

The US$199 price will be converted to Australian dollars — around AU$205, the way things have been going — and increased to somewhere around AU$269 to cover GST and carriers' other various costs. Still, this is Not Very Much for a mobile phone. Given retailers' normal practices, the 3G iPhone could very well be selling in your local Optus or Vodafone shops next month at $0 upfront.

This is extraordinary, given that smartphones have traditionally been positioned at the upper echelon of the market — and with a four-digit price tag to match. Such pricing has limited the popularity of the devices since they are, for most people, just phones. But by slashing the price of the 3G iPhone, Apple has just done the unthinkable: commoditised the smartphone.

Even as a raft of competitors hits the market in coming months (did anybody even notice that Samsung launched the Omnia, its iPhone killer, hours before Jobs' keynote?) they are going to struggle to reach the height to which Apple has raised the bar.

The iPhone 3G represents a new frontier for cachet-obsessed phone buyers. And while $0 giveaway deals have usually been targeted at lower-end and mid-tier phones and their purchasers' relatively unsophisticated expectations, giving away the iPhone is tantamount to offering free tickets to a U2 concert.

If I'm Joe Consumer and am weighing up whether to get a basic Nokia handset on a $0 deal, or the iPhone, guess which I'm going to pick.

If you didn't already figure it out, the title of this column comes from the writing that the prophet Daniel deciphered for King Belshazzar, who it seems had taken far too many things for granted after inheriting power, wealth and respect from his father Nebuchadnezzar, who was in God's good books.

Belshazzar and his people had turned away from God, and were worshipping "gods of silver and gold, of bronze, iron, wood and stone, which cannot see or hear or understand". (There's no mention of things with shiny piano-black finish, but one can't help but wonder).

Tired of this foolish behaviour, said deity used a large human hand, finger extended, to write words on the wall of Belshazzar's palace to convey that the king had been weighed, measured, and found wanting — and that his kingdom was to be split and given away.

Just as God gave the finger to Belshazzar, Steve Jobs has done with the entire mobile phone industry. Even if the iPhone 3G flopped, and it will not, its low price point will convince consumers that good phones don't have to be expensive — and retailers trying to tell them otherwise will get the cold shoulder.

Their kingdoms, long built on high-priced smartphones and expensive data plans, are crumbling - and Jobs is picking the new wallpaper for their castles.

Call the iPhone hype or call it a revelation, but it will single-handedly reshape the market like nothing else before it. I reckon its pending release is a major reason Optus invested AU$315 million to build out its 3G network, which will benefit the entire market. Expect a significant compression in the mobile phone market as mid-range phones become entry-level models, smartphones become mid-range phones, and the most basic phones simply abandoned for supermarket checkout aisles. Samsung, O2, HTC, Nokia and other smartphone aspirants will have to follow suit.

Ironically, Telstra and 3 may find themselves competing on price since, having passed on the iPhone 3G, they'll have to work doubly hard to win — and keep — smartphone consumers by convincing them not to jump ship for a $0 iPhone.

There will, of course, be those who tire of wiping fingerprints off their iPhones, and those who just want some buttons to press. But by challenging the conventional understanding of the mobile phone, and pricing the resulting device within everyone's reach, the second coming of the iPhone will shake up the mobile industry like nothing before. The writing truly is on the wall — but this time, the finger is yours.

Has the world gone mad for the iPhone 3G? Have you already staked out your site outside your local Apple store? Or have you bought something else?

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