Will Apple’s iPhone Push The Mobile Market?

by Tanner Godarzi Jun 22, 2007

People were skeptical when Apple announced the iPod way back in 2001 and even predicted just how the company would fall due to an overpriced MP3 player. But many people missed the fact that it was more than a MP3 player, it was style and it was a revolution. However, many knocked it, claiming it lacked sufficient storage capacity and other features. “The iPod will never take off and will kill Apple!” they yelled, but it was only a matter of time before the MP3 player market would be turned onto its head, spun around a little, then slapped in the face.

Fast forward to today and we have the iPhone, and what is the reaction? The exact opposite of what it was 6 years ago, but the reason being: the iPod is a trusted name. Anything associated with the iPod can launch an Apple-made device to a higher level of sales and generate massive hype. This is nothing short of what has happened to the iPhone even though it has yet to be released. The noise generated has caused some companies to belittle the device, a sign that they are taking note of it and view it as a potential competitor. The most prominent comes from Microsoft’s Steve Ballmer, knocking the platform and saying outright it would flop.

But the main question is about the iPhone’s influence in the mobile market, can it do to cell phones what the iPod did to music? My guess is yes but the effects won’t be as profound for a couple of reasons.

The Limitations Of Wireless Carriers

The Ball And Chain
Multi-year contracts are a favorite of Wireless Carriers but it’s a tradeoff for a heavily subsidized phone. You could say it’s a trap but most of the conditions are laid out in front of you and in some cases it’s a great deal. The only real downside is realizing how expensive phones are once you’re under contract and the hassle of not being able to buy the phone you want because it’s on a different network or in a different country. This restrictive practice has gone unchecked but we’ve become accustomed to it because of paying our cellular bills monthly. There are usually 12-24 months in a contract which means 12-24 payments and most people do not switch phones often enough to consider the contract a restriction, but instead a calendar for paying cellular bills.

Cellular Software
Software on every cheap phone made is an atrocity, even on some “higher end phones.” The first thought that comes to mind is the RAZR; its interface was slow and buggy. Of the 3 our family has used we’ve had little positive experience with the device but this went for almost every Motorola and Nokia phone that’s entered our house. The thing is, though, cell phones have long since evolved. They no longer just make calls; it would be horrible to market a phone that just made calls, and for sure Jerry in marketing would get fired. To make it appeal to consumers, oodles and oodles of useless extras must be piled on, such as a very low quality camera, tons of overpriced content, and of course a half baked web browser. Who in their right mind would browse the Internet on a thumb-sized screen, not even I look forward to browsing the “full” Internet on an iPhone’s 3.5 inch display because switching back and forth from a 17-inch display would take some getting used to. Nonetheless cell phone manufacturers make horrible and slow interfaces with no easy way of changing them or even options to do so.

It’s All About The Network
The most popular complaint about any network anywhere is dropped calls, bad coverage, and horrible call quality. It boils down to the placement of wireless towers and each region differs from carrier to carrier. No matter how much you complain, no matter how many times you call tech support, and no matter how many times you change your phone this problem will still exist and your only option is to pay a termination fee to switch carriers. If you do change carriers this problem might crop up elsewhere, forcing you to repeat the process once more.

iPhone you phone we all phone!

The Bolt Cutter
Since Apple commands over 3/4 of the music player market, the major accessories you’ll find are “Made for iPod” products, and its huge success has given the company unprecedented influence over portable gadgets. Could the same be said for the iPhone? Not necessarily, as other cell phone manufacturers will try to keep up, but the real challenge is warming up to wireless providers.

As of now Apple will only sell the iPhone with AT&T for 5 years, after which other carriers may pick up the iPhone, but Verizon had turned down an original deal with Apple. Could Apple break the iron grip these companies have? Not likely, but it could be reduced somewhat. Retail outlets like to sell phones heavily subsidized but charge more on plans, as of now Apple is not subsidizing the price of the iPhone and it will be the same whether you buy a contract or not. This could cause wireless providers to recoup some of the costs and charge less on plans, but not a lot.

It’s an Animal Inside
The reason many phones have such limited and less capable software is due to what hardware they run. Evidently you aren’t going to Windows Mobile on a 10 dollar flip phone. But the deal with Smart Phones, they are designed as portable computers and Apple realizes this. The key is to create a capable Operating System that will take full advantage of the Hardware, no more no less. If Apple can set an example of creating phones with an impressive Operating System and Hardware specs to match then others will follow the same route. However they could be stifled by the rules each carrier has in place.

Essentially if Apple innovated to the point where its iPhone could cure world hunger, kill cancer, and promote global peace they could still be blocked from doing so by wireless providers. However, it will cause cell phone manufacturers to compete, and if competing providers despise AT&T they can choose not to carry the iPhone and instead carry multiple iPhone killers.


  • Is this place iPhonematters?

    Can we talk about something else? I know it’s been a bit of a slow news week since WWDC is over…

    vb_baysider had this to say on Jun 22, 2007 Posts: 243
  • @vb_baysider, sorry I have a case of iPhone fever wink But you’ll have to permit me to make one more post next week regarding the iPhone on Apple Matters and of course a review next week too.

    Tanner Godarzi had this to say on Jun 22, 2007 Posts: 70
  • well… for the next few weeks at least, the iPhone is Apple’s biggest story.

    Greg Alexander had this to say on Jun 22, 2007 Posts: 228
  • Tanner, I hate to say this but this is a sloppy article. It’s pretty poorly written, doesn’t tell me anything new, and seems to be just a collection of iPhone facts.

    Try to be like the company you so admire, and create beauty through what is not present. That should probably include this article.

    I’m sorry if I’m being particularily hard on you, maybe I’m just in a bad mood, but for some reason this article irkes me.

    simo66 had this to say on Jun 22, 2007 Posts: 78
  • No, it’s not iPhone Matters, VB, and it’s not iPod Matters or Mac Matters either. It’s Apple Matters.

    iPhone is the centre of Apple news at the moment so rightly deserves comment.

    It’s kinda like when the Olympics are on - all sports writers only talk about it. It does get frustrating though if you want to hear about other things.

    At the moment we’re all in “pre-Olympics” mode, prognosticating on what we think, based on limited hard evidence.

    Next week, I suspect that any article not about the iPhone will hardly get noticed.

    Unless I can write 500 words about the iPhone video, you’ll be pleased to know I won’t be among them. (I actually want to write about Adobe Creative Suite but just have to establish a link to Apple)

    Chris Howard had this to say on Jun 22, 2007 Posts: 1209
  • Interesting on the iPhone video the presenter calls the stocks and weather features applications. They looked like Dashboard widgets to me. Does this verify that third party apps will be limited to widgets?

    Chris Howard had this to say on Jun 22, 2007 Posts: 1209
  • @Chris, that is interesting but Dashboard Widgets are mainly HTML and CSS. Perhaps Apple would go a step further and create a Dashboard interface for the iPhone?

    Tanner Godarzi had this to say on Jun 23, 2007 Posts: 70
  • The iPhone is less than a week away and Apple has a new video on their website that demonstrates the features of the iPhone.  This device looks like it might actually work as a convergent device.  It is clearly a FAR better stab into this market, perhaps it is an entirely new market.

    iPhone detractors have wailed and whined about the “obvious” failures of the device.  I suspect that this is just FUD because these “failures” seem to instead be conscious design decisions made by Apple.

    The camera sucks!  (as if 2 megapixels isn’t enough for snapshots and the lens couldn’t be good enough to support the sharp focus that even 2 megapixels needs).

    There is only ONE camera and it can’t used for videoconferences!  Can you imagine how annoying it would be for someone to be talking on their phone in public AND doing a video conference.  He would have to hold the phone in front of his face and speak loudly enough to complete tick off everybody nearby.  No video conference = good plan.

    There isn’t enough memory!  Maybe for heavy duty music and video users, but its a phone!  If one wants a portable entertainment device that will hold a whole video library, then buy a device intended for that niche job.

    No 3G!  3G takes more power to run, 2.5G is good enough for light duty work and 3G isn’t implemented over nearly enough of the coverage area.

    No GPS! Again, takes power and not needed.  Cell tower triangulation works well enough for E911 and finding a the user’s location well enough to make Google Maps work.

    Battery life sucks!  Apple just announced a moderate increase in battery life AND all the other stuff that is “missing” would all consume power.  You can’t have it all.

    No user replacable battery!  Could be a problem but it would add to the size and weight of the device.  Also, the iPods don’t have “replaceable” batteries and that hasn’t killed them.  It would be nice, however, to have a hot spare battery though.  Apple really ought to think hard about this one.

    However, the iPhone is still a convergent device and carries with it the woes that come with being a convergent device.

    It is expensive to buy
    It is horribly expensive to use (probably about $1000/year)
    It has good standby time, but as soon as the other neat stuff lis being used, the thing STILL may not last a whole workday, especially after the battery degrades over the life of the phone
    It will be expensive to replace if damaged and hand held devices often turn into hand dropped devices.
    If one function or feature becomes obsolete, the whole device needs to be upgraded.  For example, Flash RAM storage would be hard to upgrade.  If a future version has GPS and you decide that you MUST HAVE GPS, then it’s new device time.  If you just can’t stand AT&T for any reason, then you are simply stuck.

    An iPhone won’t be following me home, but I am certain that it will attract many others who really want what it offers now.  I hope that it is wildly successful but primarily because it will give the rest of the cell phone industry a swift kick in the backside and force innovation.  I also like it because MicroSoft has the most to loose with eventual failure of their Windows for Mobil plans as if they haven’t failed already.  If the iPhone is successful, it will also prod Apple into making more types of embedded devices and eventually one of them will be something that I could use.

    gwschreyer had this to say on Jun 23, 2007 Posts: 23
  • BTW… the comment was somewhat tongue-in-cheek. I know it’s a big story.  I should have added the wink

    vb_baysider had this to say on Jun 25, 2007 Posts: 243
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