iPhone Backlash: Apple Is Deliberately Limiting the Size of the iPhone Market
- 2007.07.20
Bong! . . . :-) . . . Welcome to Macintosh!
In the weeks since my article on
the iPhone was posted on Low End Mac, I've had quite the
response from readers. I thought I would share some of the
responses on this Welcome to Macintosh.
This one comes from Paul Allen (no not the Paul Allen).
He writes:
Your absolutely right. The iPhone in not for
everyone. Especially not at it's initial release as a new product
on the rapidly changing electronics market. Every new product that
is released is usually priced on the high side. Look at CD players,
DVD players, even the Motorola Razor cell phone. All were very
pricey, and few could afford them when initially released. The
Razor was priced at $500 and had few of the features that the
iPhone has, but now it's given away with some contract plans. And
the other devices mentioned are all very inexpensive now, though
initially out of reach for the common consumer.
Given that the iPhone replaces several pocket
devices, does the price really surprise you? No need to carry an
iPod, digital camera, cell phone or a PDA, just get an iPhone
. . . at a price cheaper than it would cost to replace
each of those devices individually. Contracts? Well, that's
AT&T, not Apple's fault. But if you wait a year, they'll
probably be giving them away with a nice year or two contract, like
they now do with the Razor. And by that time, they'll probably be
available with other service carriers and the price tag will have
significantly dropped, as well.
But you always pay more when you want to be on the
bleeding edge. Maybe you should let time 'blunt' that edge a bit
before you think about acquiring one. You'll find it stings less
than seeing the price drop significantly a month after you buy the
'latest and greatest' Oh yes, you loose some of the envy factor,
the bragging rights to having the newest 'toy'. But that's what a
'low end' existence is all about.
Paul Allen (not "the" Paul Allen)
Next up is an email from Ian Campbell. He writes:
I read your article regarding the iPhone today. As
for your predictions of it being a flop - I would have to disagree.
Now, I'm not advocating the iPhone - I'm planning to wait for the
second or third revision before buying (I did the same thing with
the iPod - bought in at third generation). But I noticed some major
flaws with your argument.
I'll start with your arguments:
- Price - The Motorola RAZR retailed for $400 (subsidized with
two year contract) at launch in 2004. Without the subsidies, the
actual cost of the phone was close to $700. Also, people are
presently paying $400-$600 (subsidized) for Treo's, Blackberries,
and the like, so people are willing to spend this kind of money on
a phone.
- Limited to one carrier - Often cell phones are limited to one
carrier at launch, sometimes for their entire existence in the
marketplace. I'll use the Motorola RAZR as another example: It was
tied to Cingular only at launch in 2004. Within 12-18 months, when
the sheen wore off, it began to be offered by other vendors.
- No prepaid option - The demographic that is being targeted by
the iPhone truly doesn't care about this. Typically folks using
prepaid service are using extremely low-end phones or models that
have been out for a long time.
Your argument about the price and rate plans being
expensive - again, if you are using a Treo or Blackberry type
device, those rate plans are the norm. The iPhone is not just a
phone, but a mobile Internet device. Frankly, only offering an
unlimited data plan for $20 is pretty fair, considering that the
alternatives are pricier in the big picture.
Another thing you may want to keep in mind is that
Apple is more than happy to offer products for the rest of us -
provided that we are willing to pay for them. The market determines
the price and desire for a product. With the hype machine Apple has
going, I believe that the iPhone will be a success.
One more thing to remember - and this a big one
that I neglected to pay attention to for a long time. Apple is a
business whose purpose is to make money for it's shareholders and
employees. Making products customers want at a price they are
willing to pay is a big step in that.
Within two years, every cell phone vendor out
there will either have made good knockoffs of the iPhone, or Apple
will start working with other vendors to improve the cell phone
market.
I don't see a $49.99 or even a $199 iPhone being
offered as a prepaid phone anytime in the not too distant
future.
- Ian R. Campbell
The last email comes from Chris, who is the lone one to agree
with me out of all feedback received, but he also shares this
important tidbit:
Hello Tommy,
I was reading your article on the iPhone and
noticed on the three issues with the iPhone (all of which are
valid, in my opinion), you say that there isn't any prepaid
option.
At the same time, though, I was reading TUAW.com
and found this little gem: iPhone:
Prepay the Right Way
It might be of help to those who are seeking to
use an iPhone with prepaid. Because the contract is just
astronomical in price. Though I'm not sure any LEM readers own an
iPhone yet. (We all still use our 4th generation iPods.)
Just thought I'd point that one little tidbit out
to you. But even still, great article. I agree with it.
-Chris
I'd like to take the time to thank everyone who read my initial
thoughts on the iPhone, especially those who took the time to email
me. I enjoy receiving feedback from readers, even when they have a
different viewpoint than I do. Healthy dissent is a wonderful thing
- it encourages debate, thus strengthening viewpoints and making
them clearer. Without readers sharing their feedback, I wouldn't be
here doing what I love doing, which is writing. I say kudos to you
all! :-D
As for what I think now in regards to the iPhone: For the most
part, I'm sticking to my initial predictions, while realizing that
things can change. Just look what happened to the iPod, as an
example.
Was I too hasty? Perhaps. Perhaps not. Time will tell. But if
I'm wrong, I will gladly admit it and eat a big helping of humble
pie. I hope I am wrong, because the iPhone is truly a marvel of
simplicity and has a chance to revolutionize the cell phone
industry, as well as pave the way for the next generation of
Internet in your pocket.
Let me be clear: I have no qualms about the iPhone in terms of
the device itself. I have not yet had the privilege of using one,
but from what I've seen and heard from others, it truly blows my
mind.
Am I stupid enough to believe this hasn't been done before? No,
but in a sense, it hasn't been done before - at least not this way.
With the iPhone, cell phones (or at least smartphones) have been
reborn. With the iPhone, gone is the expectation of traditional,
kludgy user interfaces that are hell to navigate; gone are the tiny
physical buttons which the iPhone in one fell swoop has deemed
unnecessary; but most of all, gone is the expectation that "this is
the way cell phones are."
In short, Apple hasn't done anything new from a features
standpoint. Many of the features have been in different smartphones
over the years. What they have done is take the complexity out of
cell phones and bring them down to a simple, easy-to-use plateau.
They've brought us not only a phone; they've brought us a glimpse
of what the future could hold for computing going smaller scale.
One only has to look back on a part of Apple's past that brought us
to this point with the iPhone - the Newton. It was revolutionary
for lots of reasons but failed to grab the masses. The iPhone may
be the redemption of the failed Newton.
The touch screen interface will undoubtedly find it's way to the
iPod, and looking down the road, perhaps to Macs as well. Just
imagine the possibilities....
Perhaps I will look back on my initial predictions of the iPhone
and laugh. The only thing I take issue with is the way Apple has
the rules set right now. I hope this will change in the near future
so the iPhone can pave the way for a revolution that will rival -
and perhaps even surpass p the introduction of the Macintosh in
1984. 
