iPhone Reaction: Slick but Unwanted?

Apple Computer Incorporated revealed the iPhone, an unoriginal name for a very original product, just minutes ago at Macworld ‘07. The reaction of the crowd was enthusiastic after all the entire auditorium was bathed in the invisible but nearly palpable Steve Jobs Reality Distortion Field.

The iPhone not only exudes the slickness that Apple is so well known for, but surpasses any previous iteration of any Apple device. What appears to be a solitary button mated to a screen is in really a very large button (the screen) and a home key. The most immediately useful thing about the button that is also a screen is the near infinite configurability for the future. This is a product that takes a long-term view and does not limit the ability of the product to grow with time. An interesting departure for a company who many feel actively discourage upgrades to ensure sales of a never ending stream of new Macs.

Unbelievably cool design aside the iPhone is at its heart a smart phone, replicating the functions of the current crop of smart phones (an ever-changing-never-satisfying lineup). In the past phones have balanced bulk and usability against a desire for svelte size and easy portability and the result was a constant battle of tradeoff. Reading emails was easier on the bulkier models, talking more convenient on smaller models. They were trade offs users had to accept if they wanted to play in the smart phone game.

The iPhone is still a thing of compromises, but these are beautiful compromises. Seeing the iPhone and comparing it to a current smart phone is like comparing the first amphibian that crawled from the primordial muck to Aphrodite. The interesting thing is that it took evolution hundreds of millions of years to go from barely land capable creature to the Greek ideal of beauty while Apple pulled it off in just 2 and a half years.

That said the iPhone has some non-trivial problems, not with the software, not with the GUI (Steve calls one way of manipulating images “pinching.” Not as bad as “squirt” but not great) but with the concept. Apple wants the iPhone to go huge, Steve argued that cell phones sold almost a billion units last year which dwarfs the market for iPods or even computers. Thing is that the iPhone won’t, at a $499 price point, be competing in the cell phone market. The iPhone will be competing in the smart phone market, a much smaller market indeed.

The numbers that quick Google search turns up are a market at about 1.3 million units. Apple is hoping for 10 million iPhones out the door in 2008 which means the company is counting on grabbing over 5% of the smart phone market (assuming projections are correct and the smartphone market continues to increase). Not impossible, in fact likely, but one is forced to wonder if the iPhone, unless changed, will forever to be tied to smart phone market.

And it is a problem if the iPhone is always a smart phone. To get an iPhone you’ll be forced to make a two-year commitment to Cingular (which is how long Cingular’s CEO seemed to talk without ever saying anything). That means iPod fiends that want a better movie watching experience are left out in the cold, if you desire to show your pictures in a larger format it is back to the TV for you and finally if you want the functions without the connectivity, no way brother.

A problem, but not a big as the biggest problem: the iPhone does a whole bunch of stuff no one wants to do. If one lament surfaces time and time gain about the cell phone it is that people want just a frickin cell phone. They don’t want to do anything but make calls. The iPhone is an elegant solution for calling but the battery sapping baggage that comes with it might chill the appeal for people who aren’t already on the smart phone bandwagon.

All that said, the only viable outcome for the phone is to at least rule the smart phone market with more than likely bleed over to the cell phone market. As the price drops and the phone is bundled with service contracts for an ever decreasing amount of cash, iPod sales will start being impacted but they will take the sales of the Zune popular .mp3 players along for the ride. In short, Apple seems to have pulled off iPod 2.0. All hail the new gadget masters!