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O Lord, won’t you buy me, an Apple iPhone 19 January, 2007

Posted by paulgordon in I want one, mobile, telecoms.
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I confess. Mine is one of the animated voices debating the future of Apple in the mobile phone industry. But I’m the heretic denying that we’re witnessing the birth of the Mobile Messiah. I have much love for Apple (even if sit typing this on a Sony Vaio). They have a knack of disrupting markets through intelligent and beautiful design. And the desirability of their brand is second to none. So they should be well placed to thrive in the mobile phone business. Right?

At the risk of being burned at the stake, I believe not. There is nothing in the iPhone launch announcement to suggest it will create market disruption. Sure, the iPhone looks beautiful. The user experience looks promising (unless you like texting one handed). And yes, it can do clever things. But nothing disruptive. Nothing to unsettle the status quo in the way iTunes unsettled the music industry. Nothing so different that you can’t wait for the end of your contract before binning your existing handset. And nothing to warrant the enormous pricing burden the iPhone will have to carry.

Apple are facing stiff competition this time. Nokia, Motorola, Samsung and Sony Ericsson may not all have the cache of Apple, but they are much beefier brands than the rag bag of competitors Apple whitewashed in the MP3 market. However, my heretic view is not founded on the relevant strengths of phone brands (even though we do work for Nokia). It is based on the dynamics of the industry. Among Nokia’s many reasons for success are their relationships with network operators around the world, their supreme global logistics operation, and their sheer economy of scale. Apple have none of these. Someone put me right here, but Apple are not exactly renowned for their partnership skills either? I can only imagine the scene when they realise the network operators have a compulsion for instructing manufacturers which features must go into their next product.

Of course, many of the faithful will queue overnight to satisfy their addiction to own all things shiny and Apple. At the launch, Mr Jobs proudly reminded devotees that there are 100 million iPods in the world. He omitted to mention the two billion Nokia mobile devices in the world, with the Finns adding to them at a rate of 350 million in 2006 alone.

So if you guys in Cupertino aren’t realistically expecting to take on Helsinki, what are you expecting to do? Is this a defensive manoeuvre against MP3 players in phones? If it is, you are one tardy bunch of Californians. Or is it the realisation that much of your future business will be wrapped up in mobile computing…of which voice communication is a critical component? Or are you hiding an industry disruption up your sleeve which will yet turn the entire market upside down?

I guess whatever your answer, it will be a reflection of your faith.
 

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Comments»

1. O Lord, won’t you buy me, an Apple iPhone | iBIT - 21 January, 2007

[…] paulgordon Filed under Blog […]

2. Nick Fletcher - 30 January, 2007

First up, great blog – smart thinking and really well written.

I just wanted to throw another thought into the mix. That of the software. Going beyond the eye candy and Jobs continual “boom” outbursts the fact that it was running some form of OSX was the most significant announcement for me.

Whether the iPhone as a device is a success or not runs a second to what they can do and will do with this version of OSX. The mind races.

Paul, your thought about taking on Helsinki is well made, but I am sure that they are not taking on Helsinki. They have already said they only want to ship 10M in the first year or so. Even the most evangelistic macinista would have to admit that would hardly be a gnat bite on a small fleshy part of Nokia. What we don’t know is what success looks like for Apple. To judge them against the success and size of the established device manufacturers is, I think, wrong. They are going for a different market. In the same way that Apple nay-sayers compare a Mac Book pro to a Dell- it just misses the point. Apple is a high end manufacturer that controls the hardware and the software; and yes even the Ipod falls into that thinking. You can still buy cheaper MP3 players, is just that few people do. If Apple does disrupt the market it will be because it has raised the bar, just as it did with their computers, and their MP3 players. That is what may cause worry in Helsinki or Waterloo, not that Apple is eating their market share, but that there is something better out there.

As for partnerships, again I take your point, but they didn’t do a bad job with the music industry, arguably they shifted the balance of power from the industry to the distributer. And they did that without prostituting themselves in the same way the Zune. Lets not forget they just got the biggest US wireless provider to a) keep the project secret and b) reconfigure their network to allow for visual voice mail and c) doing all that for a product that didn’t even exist. Maybe they will change the balance in the mobile device industry. We don’t know who will be the UK/Europe provider yet (any inside knowledge?), but I bet most would love to be the exclusive provider of the iPhone, and I bet they will also reconfigure their networks. I suspect that the reason they want the iPhone is not because they are going to sell millions and millions of the things, but because it is from Apple. Such is the brand power of the brand, and thinking different.

Nick


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