Enter the iPhone: Apple finally releases long-rumoured iPod cameraphone

Well it took long enough. Just a few minutes ago Apple's Steve Jobs announced at Appleworld that there will be a cellular phone from Apple, which combines iPod music functionality with other top-of-the-line smartphone features, a bright big screen for video and a 2 Megapixel camera.

First, this obviously validates our view from 18 months ago, that the future of the MP3 player is on mobile phones. Stand-alone players like the excellent Apple iPod, were only a stop-gap solution. The future belongs to mobile phones.

Secondly, this is very welcome innovation fusion to the handset industry. We've seen a lot of consolidation in the top-end of the market, with Sony and Ericsson joining; Siemens merging with BenQ; and many of the "second tier" handset makers totally pull out, such as what was once the world's largest consumer electronics company - Philips.

Thirdly apparently the iPhone will be sold by Cingular in America. I wonder how well Apple has managed its network operator reseller channel. Cingular is on GSM, so at least Apple has an excellent chance to sell globally and access about 75% of the world's mobile phone customers. Will there be a CDMA variant, I wonder. The American market would certainly warrant that. Will this Apple superphone be 3G (WCDMA) - if not, then Japan and Korea may be out of its reach. I do hope it is a 3G phone.

Welcome to the carnage, Apple. This is not the "easy" PC market or the dormant musicplayer market where Apple's innovation had an edge. The existing major manufacturers, Nokia, Motorola, Samsung, SonyEricsson and LG - have massive scale - remember the smallest of the big five, LG, sells twice as many cellphones as the total output of Apple's iPods and Mac computers combined. These big five have very deep consumer insights specializing on trends, fashions and preferences. They've beaten a wide range of global challengers who have exited or become only local or niche players. Consider this list of world-class consumer electronics excellence: Sony (yes, when Sony was the sixth largest manufacturer four years ago, they said they cannot sustain their handset business as a profitable venture), Ericsson (which set up its joint venture with Sony, and obviously was also unable to continue alone), NEC, Panasonic, Philips, Alcatel, Sharp, and so forth. Motorola was making massive losses with its handset business a while ago, and Samsung has been complaining last year. Only Nokia has managed to be profitable in this game. It will be tough.

One word of warning. It seems from the short clip on CNBC a moment ago, that this Apple phone does not have a keypad? I am not sure if I saw correctly. If the iPhone does not have a keypad, it may be successful in America, but it will definitely fail in the rest of the world. You cannot send text messages effectively - fast, and secretly - if you have to point at a screen to type. But please, I have not yet seen actual specs on the phone, so this is mere speculation. I do hope that Apple knows the ONLY addictive service on mobile is SMS text messaging. Music is not addictive. If the iPhone is poor at texting, it will fail.

Still, I am very happy to see this development. We need innovation and fresh challenges in the handset business. As I've reported here many times before, the mobile phone is the world's most widely held electronic gadget. We really can use the insights and creativity of Apple. I honestly wish and hope, that the new iPhone will bring as much a leap forward as the Mac did for personal computers and the iPod for portable music players.

Welcome Apple. I only wish you'd been here 18 months ago...

UPDATE - I've written a "definitive" analysis of the iPhone's market chances including regional numbers and quarterly projections a week before iPhone launches June 28, at this blog: Crunching the Numbers for iPhone

Comments

[David Cushman]

Thanks for posting Tomi - how have you contained yourself? Can't wait to see what you have to say about what this means for your favourite device; the I-pod :D
Another victory for convergent devices.
http://fasterfuture.blogspot.com/2007/01/apple-i-phone-follows-convergence-pack.html

[Stephen]

Fascinating to see how the partnership with Cingular plays out, and whether that can really deliver the integrated end-to-end experiences (e.g. visual voicemail) that have been so needed in this space.
Full specs here: http://www.apple.com/iphone/technology/specs.html

[Tomi T Ahonen]

Hi David and Stephen

David - yes the convergistas seem to take the day with the iPhone. Its such an obvious strategy for Apple, they really - REALLY - should have done it a year ago. My guess is they decided about 18 months ago, and were frustated along the way with some false starts, not understanding how complex and difficult the equation is to fit the features, processing power, form factor, battery life etc into a reasonable cost and remain competitive... And ha-ha, I couldn't contain myself :-) I wrote two more blogs on the topic ha-ha..

Stephen - Yes, lets see the integration. With Apple there is honestly a fresh outlook to it, and with Apple also there is an unheard-of level of commitment to making the user experience right. If you ever thought a Nokia phone was doing the thinking for you, being "intuitive" - we will now surely see a whole next generation in user-friendliness of the device. Totally similar to the revolution in the computers with the Lisa and Macintosh, and the Newton PDA, and the iPod...

In that way, Cingular is the big winner here (and similarly, I really think Apple is the loser. They could have been stronger in America if they had not limited initial offer to Cingular. But that is the power of the operators. Wait until Apple fights with the sibling rivalries in all the countries in Europe and Asia. There will be many ulcers yet ha-ha)

PS on visual voicemail, yeah, stop-gap obsolescent service that will only work in America, among the old fogies who are digital immigrants. The digital natives (under 25s) will be all abandoning their voicemails - if they bother to use them - like their European and Asian sisters and brothers - in favour of SMS text messaging. Like the Finnish Prime Minister says in his voicemail greeting, don't leave me voice mail, send me a text message instead... But yes, many similar innovations are waiting to be discovered and deployed, around communities, video, collaboration and music of course

Thanks for writing

Tomi :-)

[alex]

Hi Tomi,

couple of points.

Jobs said that they started on the iPhone 2.5 years ago. So they must have gone already through several fail-and-learn cycles before launch.

Apple plans to go to Asia only 2008, so time to add 3G. GSM-EDGE is just fine for US and Europe.

Indeed the iPhone has only a touchscreen UI, and I also see it as most critical for success how well it really works. Not only secretely sending SMS, but also one-hand operation (Jobs always used both hands), and what about sticky, wet, gloved, sweaty fingers?
Not possible to judge this from a demo.

You might like the UI of the SMS application: it looks like iChat, i.e. showing conversations rather than the Inbox/sent model.

[Ajit Jaokar]

great posts Tomi.

As I said, in my blog
The iPhone is extraordinary not because of it’s UI but because it’s the tail wagging the dog .. But the real question is: How many dogs can it wag?

So .. What I am saying is
The iPhone is cool, sexy etc because it works closely with the one Operator where its launched(namely Cingular in the US). In that deployment, Apple seems to be the dominant partner rather than Cingular if you consider features like Visual voicemail (which is unlike the norm i.e. Usually, the Carrier is the more dominant partner in such relationships). The caveat is, as more Operators deploy the iPhone, either it becomes too complex or it becomes least common denominator. Thus, the jury is out still IMHO.

see http://opengardensblog.futuretext.com/archives/2007/01/the_iphone_is_e.html
kind rgds Ajit

[Tomi T Ahonen]

Hi Alex and Ajit

Thanks for comments, yes I agree with both of you. And great post Ajit on Tail Wagging the Dog, but how many dogs can it wag. I'd blog about it, except that we have so many blogs about the iPhone already - and I will have to do my iPod review blog as promised when Apple release iPod final sales for the Christmas quarter next week - that I don't want to do yet another iPhone posting for now. But it is an excellent posting, I urge all to go read Ajit's posting at www.opengardensblog.futuretext.com

Thanks Alex and Ajit for writing

Tomi :-)