Has the iPhone Killed the Video iPod?
The iPhone guranteees there’ll be no video iPod for a long time. If you don’t need to buy an iPhone to get a video iPod, why else would you buy one? Certainly not just because it’s a phone. That’s one hell of an expensive phone! And it’s not quite smart enough as a smartphone.
Well, I’m back from the beach. I had a nice relaxing holiday, but one thing kept niggling away in the back of my head while I fried the front of it lying on the beach under a scorching Australian sun: who the heck is the iPhone for?
Before answering that question though, we first need to establish what it is and is not.
1) It’s a phone.
2) It’s a video iPod.
3) It’s not a PDA.
Okay, now that wasn’t too hard, but therein lies the issue. Because, it doesn’t matter how you look at it, it’s one expensive phone. Thus it’s not just a phone, it couldn’t be. See, Apple had this dilemma. Steve wanted a mobile phone for the 21st Century, one that even James T. Kirk might consider swapping for his communicator; however, such a device would be prohibitively expensive as a phone.
If all the iPhone did was be a phone, would anyone buy it? Considering the technology inside of it would be still pretty much the same, it would still cost the same. So, not a chance.
One other little thing the iPhone is: it is a handheld computer. This is significant. That little bugger really is a computer—albeit, one wearing a shorty-pants version of OS X.
So, to fulfill Steve’s dream, Apple had to build a device with the power of a handheld computer just to make this iPhone thingy with its whiz-bang, multi-touch interface. And, to make it viable, it would need some other features tacked on. Coincidentally, many folks think they want a video iPod, while others are clamoring for an Apple PDA. So the engineers at Apple, being the creative bods they are, found a way to kill two and a half birds with one stone. The half-bird is the PDA. (If this were MS, the stone would have missed the birds and hit the customer. Of course, the customer would have been thrilled when told this was an undocumented feature.)
But anyway. We’re starting to distill some things about the phone, so let’s hop in and see who it might be for.
Mobile phone warriors
These folks’ lives revolve around their mobile phones. Many of them wish they could get their bluetooth headsets implanted in their ears. They buy expensive phones and might even accept the price of the iPhone, especially given it’s PIM features, albeit somewhat neutered.
And these folks are master keypad jockeys. You see them belting out SMSes, scrolling their address books, leaping through their voice mails, and all with their non-preferred hand while eating a three course meal.
How many people out there in reader land hold their mobile in one hand, and press its button with a finger from the other hand? None? Less than none? I thought so.
The iPhone—from the videos and information so far—looks like it will often need to be used that way. That is, one hand to hold it, and one to point and touch with. Maybe it’s a safety feature to stop people from texting while they drive.
Mobile phone warriors only have one finger that counts: their thumb. Multi-touch? Can you really see them using a phone that requires two hands?
Smartphone users
The iPhone does fall into the category of smartphone; however, is it smart enough? After all, it is not a full PDA and has no way for third-party applications to be added. Smartphone users I’ve spoken to so far are not interested unless it is a full PDA.
For so many years we’d waited for Apple to get back into the PDA market, and now we thought we were getting more than we could have hoped for—a handheld Mac. What a PDA that would be! Steve said it ran OS X. It had to be a Mac.
Until we started getting the feedback.
The first murmur of concern was that it wouldn’t run third-party apps. Yep, said Steve (according to the NY Times a few weeks back), we don’t want it ending up like a PC and crashing or hanging up just when you need to make a call.
What? OS X behave like a PC? Crash? Hang up?
And so the iPhone’s PDA capabilities have been neutered.
The iPhone may be a smartphone, but it ain’t the brightest light in the street. Without having full PDA capabilities, can it really compete in the smartphone market? I’m not convinced.
Video iPod fantasizers
Bing, bing, bing! Flashing lights! Scores!
This is the market Apple is really after with the iPhone. Apple could have released a video iPod only with all the look, feel, OS and GUI of the iPhone. And it would have been bought in record numbers despite a high price tag. When you consider that the original iPod cost $399, $499 is not too bad for a video iPod.
Except, Apple was drooling over the mobile phone market. 1 billion units a year! Who wouldn’t want a piece of that? And so Steve or someone else got smart and suggested including a phone in it as well. Yep, the iPhone is actually a video iPod with bonus phone.
Apple could have released a more traditional and affordable handset but really, that would have gotten lost among the millions of other such phones.
So how to get into the higher-end phone market and guarantee success? Make it the video iPod. There is a ready made market for the video iPod; folks have been clamoring for one for years. I don’t know just how big that market is, but for many of the first buyers, it will be the reason that clinches the deal (besides Apple-aholics who buy anything with the logo on it).
The iPhone is indeed targeted at the folks who want a video iPod or a 6th Gen iPod. And the cost is not a problem, even if it was just a video iPod. These guys are willing to pay.
Even if the iPhone doesn’t sell as many units as expected, it will always have a solid base market because of its video iPod capabilities, which Apple will then be able to leverage off as proof of success, leading to it becoming a “must have” device.
No video iPod
But what does this mean for the future of a full video iPod?
There’s been a lot of talk about the need for a bajillion terabyte video iPod to store a reasonable amount of videos (okay, I exaggerate, maybe 100GB). However, I’ve downloaded a couple of short videos from iTMS and they average less than 5MB per minute. Even a long movie of 130 minutes would therefore only be 650MB. So, even on the 4GB model, that’s 13 hours of video.
Apple won’t release a video-only version of the iPod anytime soon as it would cannibalize both the iPhone’s market and the existing video-enabled iPod market.
So, don’t hold your breath. The iPhone is for the folks who want a full video iPod.
In the ‘80s, The Buggles sang “Video killed the radio star.” In the 21st century, they might sing “iPhone killed the video iPod.”
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On the iPhone: It took Apple 30 years to make something I’ve got absolutely NO INTEREST in buying.
If Apple doesn’t make a true video ipod soon, someone in China will. The factories are obviously ready to go.
And that device will REALLY “cannibalize both the iPhone’s market and the existing video-enabled iPod market.”
Business Survival Rule #37:
Go ahead and cannibalize your own products because somebody else will do it for you if you don’t.
What would Apple prefer? Sell 10 million widescreen iPods and 10 million iPhones, or sell 0 widescreen iPods and 15 million iPhones?
In fact rather than killing the Video iPod, iPhone means said iPod is just around the corner. My son has been holding off a whole year on buying an iPod because he’s been waiting for the widescreen version. Steve Jobs has no choice but to release the Video iPod soon because the top end of the iPod lineup is getting boring and has nowhere else to go.
I think this analysis is spot on. Another analysis came to the same end result, i.e. that the iPhone is for people who are willing to paz for an entertainment device with phone.
http://mobileopportunity.blogspot.com/2007/01/shape-of-smartphone-and-mobile-data.html
Most long movies from iTS average around 1.XX GB at least in my experience
I disagree. Apple would be stupid to invent such a groundbreaking technology (patent pending, no less) and only use it in one product. Besides, the iPhone only has a few GB of memory - taking out the phone/WiFi stuff would allow a hard drive to be put in there without making it too fat. And now that you can get full movies through the iTS, they are gonna make sure that you can put lots on your iPod, not just a few. The number of people with >8GB stuff in their iTunes is definitely sizeable. Just look at the number of people who bought the hard disk iPod. People want to put everything they have in the palm of their hand, not just selected things. For a start, it is a pain when you let your iPod choose your music (I have a shuffle), then go “Wait, I want to listen to that track, it’s awesome but I haven’t heard it in ages” and it isn’t there.
Finally, people see the iPhone as a phone (it’s got phone in the name…). They need to sign up to an expensive monthly contract to get it, as well as paying the huge base price. This will exclude a large number of people, for example who are on pay as you go. If they fall into the ‘wanting an ipod, not really a phone or a pda’ category, they won’t be too pleased to pay monthly for the privilege of not using all the iPhone’s features. These people (me included) would lap up an iPod in no time. Apple *will* release a video iPod. I’d be prepared to wager £20 on it.
Apple will need all its energy to get a hold in the cellphone market, i.e. create various iPhone variants for the global market needs (the announced iPhone model will hardly sell anywhere else than North America), keep up with the fast model replacement cycle of the phone industry (since phones are much more personal and fashionable than computers or music players), go to lower price points (“iPhone nano”) etc.
That’s much higher risk but also more potential revenue than video iPods. At the same time they also try a new market with AppleTV and cannot afford to neglect the Mac (still half of their business).
So I’d say the video iPod is wishful thinking.
RE DrMac:
You forget that the iPod business is their biggest profit-making business at the moment. Yet another reason why killing the iPod would be suicide. There’s plenty of room for both.
First of all, we have a video iPod. It’s the video iPod. And while the iPhone interface is sleeker and adds touch controls, it isn’t functionally all that different from a regular iPod. They both play video, music, and photos - although the iPhone has substantially less storage.
So I wouldn’t regard the video iPod as a whole new product that will or won’t be created just because of the iPhone. If the iPhone won’t cannibalize video iPod sales, then I don’t see how the reverse would be true.
Instead, I’d count on seeing improvements to the iPod that are similar to the iPhone, like the sideways screen, possibly a touch interface, and even more storage capacity than 80GB. If both products existed, and I could afford it, I’d have both and not feel like one had redundant functionality over the other.
That little bugger really is a computer—albeit, one wearing a shorty-pants version of OS X. -CH
I think of it more as a teenie, two-piece bikini on a godly hot-looking babe at some isolated NSW or Victoria beach! Been there, CH.
The iPhone does fall into the category of smartphone; however, is it smart enough? After all, it is not a full PDA and has no way for third-party applications to be added. -CH
Now, Chris, I hope you are not falling into that FUD trap that has devoured a many faithful have you? Of course the iPhone is the new embodiment of the newly elevated smartphone.
What exactly defines a Smartphone, anyhow? I have a Kyocera Palm smartphone and I don’t consider it even in the iPhone’s league.
So it doesn’t support 3rd party apps (yet) but it will through Apple software validation testing then via iTunes as downloads (a la iPod games).
So it does not have a tacky keyboard like the Treos and Crackberrys. Big deal! iPhone’s virtual keyboard and the Multitouch screen’s proximity sensors gives a superb imitation, if not better.
You know, the most prevalent problems with phones or smartphones are keypads and keyboards. I know because I used to post-analyze customer returns at Qualcomm’s old phone division for design improvements. The iPhone having no physical keypad/keyboard should be a great solution to that problem.
So, the iPhone being not so “smart” because “you can’t add third party apps” FUDs are hereby debunked.
Next…
What exactly counts as a Personal Digital Assistant? Does the lack of an open third party software platform preclude the iPon from being called a “smart phone”? In fact, I think that the phrase “smart phone” is a dubious description. But if it has to be used, I think it must be separated from the PDA moniker. It’s just not useful. What might be useful in your analysis is describing what makes a good Personal Digital Assistant, or a “smart phone”.
I feel the iPhone is best described as neither. No PDA has ever had the kind of usability the iPhone has out of the box. Second, many of the so-called “smart phones” are lacking in useful, smart, well executed features.
However, you may be unto something with your iPhone-being-widescreen iPod conclusion. I just don’t think it has anything to do with the whole PDA/“smart phone” conundrum. But you need a more convincing argument, as Apple are only aiming for 10m iPhones in the first yr. They at a rate of about 50m iPods a yr already. Think about that.
Another thing. Why do people insist on making conclusions based on unfounded assumptions? Take a previous comment that iPhone will come attached to an expensive Cingular 2yr contract. How do they know this? In fact, we can reasonably assume, given the special circumstances of this deal, that Cingular (AT&T) have arranged iPhone-specific tariffs, which may be different to what we’re accustomed to.
- MSOG
The 6G iPod will resemble the iPhone form factor - widescreen, virtual keyboard, and virtual click-wheel, and those nice proximity sensors and accelerometers.
To not impede upon the iPhone’s potential customers, Apple would have to differentiate the video iPod from the iPhone enough that there are no feature overlaps.
Obviously, the 6G iPod can scuttle the phone-specific features of the iPhone. I’m not so sure if porting OSX into the iPod vice the current OS is a good move, either. But I wouldn’t complain if Apple does. If they embed OSX into the iPod, its just to make development effort bw the Mac-iPod-iPhone-AppleTV all the more cohesive and cost productive.
I agree. Apple has established a design platform for launching new commercial devices, from less expensive iPhone models down the road to less expensive video-enabled iPods by this summer, all with larger touch-screen displays and gesture recognition.
Also, I don’t see that it would be impossible to still use the iPhone with one hand, and your thumb to press the interactive touch-screen.
I am concerned about the lack of third-party applications for the iPhone—but I don’t think this situation will last long. This is a platform in infancy, waiting to be exploited in the next decade.
Tony Bove
(Author, “iPod and iTunes for Dummies”)
(See my blog at: http://www.tonybove.com/blog/)
Take a previous comment that iPhone will come attached to an expensive Cingular 2yr contract. How do they know this?
Because Steve said so in his keynote and Cingular has confirmed.
Beeblerox, I don’t recall Steve Jobs saying it was “expensive”. You should read my comments again in full. In fact here’s what I said: “Why do people insist on making conclusions based on unfounded assumptions? Take a previous comment that iPhone will come attached to an expensive Cingular 2yr contract. How do they know this? In fact, we can reasonably assume, given the special circumstances of this deal, that Cingular (AT&T) have arranged iPhone-specific tariffs, which may be different to what we’re accustomed to.”
We don’t yet know if these contracts (their may be more than one 2yr option) will be compelling or not.
- MSOG
As per my previous comment, substitute contract for tarrif(s) where ever it occurs. It’s a lot clearer that way.
- MSOG