iPhone questions
The iPhone announcement may have put an end to years of speculations, however I feel that it still raises lots of questions. Many of these questions have already been discused, but surprisingly I haven’t seen any of the following questions asked on the web:
1. What does the iPhone mean for the future of the iPod?
If you were to believe Steve Jobs, the iPhone is an iPod, the wide screen iPod everyone has been clamoring for. The truth is that what people were really asking for was a US$249 80GB true video iPod. The announcement of the iPhone, while exciting, has not eliminated the need for such a product. Apple is expecting to sell 10 millions of iPhones this year, which is great but from my point of view, a true video iPod could easily beat that target. The reason is price, storage and global availability. The low end iPhone will retail at US$499 which is significantly more expensive than the current iPod with video. Add to that the price of the monthly Cingular fee and you can see that this is not a product most teenagers will be able to afford. Storage space is a problem too. I do not have tons of music, photos and videos, yet my 30GB of storage are almost filled up. Finally, there are large regions of the world where the iPod is currently an immense success but, at least initially, there are indications that the iPhone will not be available. Latin America is one of those regions. Most customers there buy the iPods in the US and then smuggle them back to their countries. That will not happen with a product that these customers cannot use at home. So, the question is, will Apple release such a product. That seems unlikely for two reasons. First, it could cannibalize sales of the iPhone which is dangerous since Apple needs a blockbuster launch for its phone if it wants to be a credible player in the cellular maker industry. Second, the true price of the iPhone seems to be close to US$1000, if you take into account the Cingular subsidy. By removing the cell phone features, it is unlikely that you can bring the price down to US$350.
2. Will some of the iPhone innovations eventually make it to the Mac?
Apple claims that the iPhone underlying OS is indeed Mac OS X and it implies that the iPhone inherits most of its power from the Mac. This is probably an overstatement. The truth is that Apple is probably using a deeply modified version of Darwin with a graphics layer that uses some Cocoa APIs but includes many new private APIs not available on the Mac today. That means that there are technologies that have been developed for the iPhone that could be useful for the Mac. Could some of these technologies be the “secret” features Steve Jobs was talking about when he unveiled Leopard at WWDC 2006? We will know pretty soon, when the new OS is released next spring.
3. How long before competitors catch-up with the iPhone?
Apple claims that the iPhone has a five years leap over the competition and that over 200 patents will prevent competitors from releasing a similar product. This is probably an exaggeration. Let’s examine for example the browser included in the iPhone. Apple is just using the WebKit open source project which had already been adopted by Nokia for future phones and therefore, while any contributions made by that company have been available to Apple, it also means that Nokia will be able to soon release a similar browser on their own phones. Sure, the finger based user interface may be unique, but differentiation will diminish over time.
4. Will January 2007 will be remembered as the beginning of the end for the PC?
When Apple first released the original bondi blue iMac, one of its main innovations was the lack of a floppy disk drive. Everyone knew that the device wasn’t really needed but PC manufacturers did not dare to eliminate it. Today we are in a similar situation, this time the endangered species is the PC. Except for some computer intensive multimedia applications such as Final Cut Pro, most of us really use the PC to connect to the internet. By removing the word Computers from the company name, Apple inc. is recognizing not only that it manufactures consumer electronic products but also that the PC age is coming to an end. This doesn’t mean that Apple will stop manufacturing fine computers for the foreseeable future, it simply means that when analysts start to see a downward trend in computer sales to consumers Apple will be somewhat shielded from a negative valuation as they will be participating in other growing markets.
What do you think? Please share your thoughts.