The Four City Day and iPhone

  iPhone 
  Originally uploaded by Alexandre Lemieux.

Yesterday was killer. I started it in Phoenix at 6am after getting four hours sleep. I was in Phoenix to see Howard and watch the OSU/Florida game with my OSU friends. We had to go out afterwards to wash down that loss. OSU was just terrible. So I got back to my hotel late and had an early flight to catch.

Then to Vegas for CES and a bunch of meetings. I landed in Vegas to the iPhone news. More on that later in this post.

CES is nuts. I was overstimulated in five minutes. The highlight for me was seeing all the action in the HD Radio booth. There had to be forty to fifty different HD radios in all forms and price points; car radios, hybrids, table tops, tuners, a USB radio for your computer, etc, etc. HD is happening. It's real. I also enjoyed doing a meeting with Peter from Bug Labs behind the Girls Gone Wild truck. That was memorable. But it sure did feel like the big CE news of the day was happening at Macworld.

Then it was off to Denver where I camped out in the airport for a couple hours and talked to Jessica who pulled up Jobs' Macworld show on her computer. She started telling me facts about the iPhone, and then she stopped doing play by play and I just heard "wow, wow, wow". She told me she could feel her Apple stock (AAPL) going up just watching the speech. I told her to check her stock ticker. She told me Apple was up $7 on the day. That led to some more "wow, wow, wow". Yesterday was clearly a good day to be an Apple fan and/or stockholder like Howard.

Then I hopped on a quick flight to Aspen where I am attending a Jeffries and Company event. There are a bunch of media execs and private equity investors here. At dinner and afterwards we discussed CES and the iPhone. It's on everyone's minds.

My take on the iPhone? It's an awesome product. But I don't think its going to make a dent in Research In Motion's (RIMM) business. I don't see myself going away from a device with a keyboard. I think iPhone is going to be a big hit in the consumer smartphone market (with the caveat that the price point is an issue). But for mobile mail, there isn't a better device than the blackberry and I've tried them all.

I also think the exclusive deal with Cingular is nuts. Why force people who want an iPhone to switch carriers? Apple is an obnoxious company. They make wonderful products that blow me away. But I really dislike their approach to business. I won't use the iPhone unless you can get it unlocked and run it on any GSM network.

Comments

[CoryS]

Well, really, Apple has looked at the top player in X market (Google search, Yahoo mail, Cingular global network) and partnered up thinking penetration is best made by entering and partnering with the big kid on the block. It would be hard not to bank a cell phone start up with those three partners linked up along with the product.

Exclusivity is relative and temporary to a company that forged partnerships with IBM, Motorola, Intel, heck, even Microsoft a few times. Things are forever, until they end.

iPhone - great product, installed base of already interested consumers and I agree that the main stream typical business user isn't thinking Apple anytime soon.

[howard Lindzon]

still a lot of SHOW ME, but I am willing to be shown and pay to play and seeee

[Michael Sitarzewski]

"But for mobile mail, there isn't a better device than the blackberry and I've tried them all."

Except for the iPhone, right? ;-) If Yahoo's "push" IMAP service is all it's cracked up to be, then RIM may actually lose a competitive lock.

There are two things, and only two things that bother me about this phone. First is the inability to load my own apps on it. Apple's apps are great, but 3rd party apps (wifi scanners, etc.) would make this phone sing. Second is that I haven't seen the qwerty keyboard in landscape mode. The portrait mode keyboard does nothing at all for me... which is why I'm using the Cingular 8125/slide out keyboard.

Either way, I'll likely have a 4GB Nano and an 8125 for sale in June. ;-)

[fred]

a touch screen keyboard is a disaster for someone who does a lot of mobile mail. i've tried it and it doesn't work for me.

this is from today's David Pogue/NY Times story on iPhone:
------

* Typing is difficult. The letter keys are just pictures on the glass screen, so of course there’s no tactile feedback.

Software helps a lot. You can afford to make a lot of typos as you muddle through a word, because the software analyzes which keys you *might* have meant and figures out the word you wanted. Its best guess appears just under what you’ve typed; if it’s correct, you tap the Space bar to accept it and continue. I typed a couple of e-mail messages with lots of typos but eventually 100 percent accuracy, thanks to this auto-correct feature. (My testing didn’t involve proper names, however.)

Bottom line: Heavy BlackBerry addicts may not want to jump ship just yet.

[Bosko]

I wouldn't label the touch-screen keyboard on the iPhone as "difficult to use" before trying it; the multi-touch screen is something that has yet to be done on any mobile phone and Apple claims its sensitivity and intelligence (e.g., detecting undesired touches) are fantastic. We'll see how it "feels" when it comes out.

As for the Cingular exclusivity thing; I agree it's not pro-consumer when there's an exclusivity agreement involved, in general. I would have preferred an open standard for "visual voice mail" (random access voice mail), that allowed any carrier, beyond just Cingular, to offer a vvmail service. What I'm hoping for is that:

1) There's a way to unlock the device;

2) The SDK is released and is as open as possible so that other carriers can develop their own vvmail-style apps, that work with their own service.

I'm sure we'll get (1) and (2) anyway, it's just a question of whether Apple will be along for the ride (i.e., whether they'll volunteer the information), or whether it'll have to be done underground.

-b

[Jay]

There is one reason Apple partnered with cingular- how else are you going to do intelligent voice mail?

Cingular had to change their voice mail system in order for Apple to do this.

So this was not apple being "obnoxious", this was apple focusing on the best quality for customers.

Eventually every carrier will want to get on the bandwagon-- like the record companies and TV networks now and film studios soon-- and will be happy ot make the changes necessary.

Or maybe Apple will go MVNO. But Apple knows half the reason the cellular experience sucks is that carriers suck.

IT was amazing to watch the Cingular CEO stumble thru his speaking-- he didn't really stumble, but he had cards out. Its clear he Does Not Get IT.

You can't win the war instantly, and so a partnership was critical to getting the product into the market.

A lot of the negative feedback I'm seeing reminds me of the iPod negativity-- "too expensive" "who wants something with this controller".

Its a new platform, and it has things that no other platform has. I don't see how blackberry can compete.

[Hank Williams]

First, I think that thinking of iPhone as a phone misses the mark.

The iPhone is a new computer that includes a phone. Think macintosh, windows 3.1, palm, iPhone.

This is really the first major league mobile operating system. I thought linux was going to get here first via palm Access. I dont think windows mobile or palm PC count. They just were never good enough for much of anything.

If steve is not lying, and this is really OSX in a handheld environment then this is really the OS for the next 10 years. Vista will never fit on a phone.

Comparing this device to RIM (despite the fact that the market has done so and trashed RIMS stock) I think is a bit off the mark, because RIM is not an operating system. Its a product. People dont really write apps for the Blackberry. Yeah, I know you can, but its really not a serious development platform like linux or OSX.

So the interesting thing here is really to look and to see how long it takes for apple to have, for example, a model that doesnt have a phone - just wifi and bluetooth. I think in the next 18 months there will be devices running this OS that cost between $200 and $600. There will be devices with keyboards, and without. The current ipod will begin to be phased out except at the very low end, and this is how the apples mobile line will look.

Regarding Cingular, I totally understand how Jobs got there. Jobs is a product perfectionist. Its not about arrogance (though he is). The only way to do certain things was to write to network specific APIs and he couldnt do that with all the networks. For now he has decided to work with Cingular. He couldnt do the work to support everyone, and it was to expensive to sell unlocked. He didnt want people talking about the $800 apple phone. Doesnt sound good. So he gave it to Cingular, and in return, cingular agrees to heavily market the product. When the price comes down and he can offer an unlocked version for $399 or so, he will.

So thats my $0.02.

[mark slater]

this harkens back to what you partner brad said to me last year when we were talking about a wireless company at your offices. He struggles to validate an investment thesis in wireless because of the carriers positioning in the value chain - here is further validation of that notion. Why on earth would a great product company like apple - place a bloody great speed bump in my buying decision by forcing me to change carrier - ITS NOT GOIN G TO HAPPEN. Why cant the carriers compete for the product?

And no - it wont beat the balckberry - i've tried em all too, and the pearl is a great piece of gear.

[Devin]

Verizon & Sprint have envy this morning, but shock as well -- their multi-$ investing into "walled" carrier desks and streaming video are about to be a thing of the past. And if I bought an Apple iTunes, hell sure I should be able to have it as my ringtone without buying it again. That's why the deal with Cingular is an exculsive -- its deck is not very good and this saves their customer service horror-show.

[galeal]

I also can't get past the Cingular deal. From my blog, "…Internet pervasiveness has brought us to an inflection point in just about every industry/product segment in which walled gardens keep more people out than they keep in.”
Walled garden still works in some situations, and Apple proved it with the iPod, but handsets and smartphones is a very saturated segment. Apple is giving others the opportunity to really disrupt voice - make an unlimited, open Internet appliance that does voice, not a voice appliance that does some Internet.

[Rik]

As with all new things, that touch screen will just take some getting used to. The first time you used a blackberry it was also not the same as your trusted PC keyboard. But on the Cingular deal I have to agree, that's a silly move. Yes they have great distribution, yes you can have the intelligent voicemail, but still I reckon people will want to be able to choose their own operator. Think about all those tied to a business account at another carrier and will not be able to get it.

Still, 'I'm gone buy me one' :-P

[NICCAI]

Thank you, Fred! You are absolutely right. I'm a huge Apple fan and user, but I'm also a RIM owner. The reactionary sell off yesterday was amazing - I should have bought more. At any rate, as a UI person, I will add that I think this phone is fantastic, and I applaud Apple for being innovative. However, I think the lack of tactile feedback is big - or big enough that there is no way that this could be a Berry killer. Addicts (and even simple phone users) can feel their way around a keyboard without the need to look, and I think this is a big drawback for heavy users. Also, what about oily fingers? Do I want to type continuously on the screen I view movies and websites through?

As for Cingular, I think that is also a huge mistake. I know I would consider this phone, but I very well may not want to switch providers. So why did they do it? Simple, to keep the cost of the phone down for users. I'm sure the real cost is closer to $1500, but Cingular will help eat this by locking in subscribers.

Another thing I find interesting that hasn't been questioned is the full webpage browsing on a mobile device? Don't we want trimmed down pages when going mobile? Can I browse with Safari in mobile mode?

Anyway, it's a great product from an innovative company - but it should have been a flip phone.

[Jason Chervokas]

Typical Apple: Their business model is all about proprietary devices and now, closed networks. They continue to make good CE products differentiated mainly by great software and fabulous marketing.

I think the consumer smartphone market has the potential to be SUPER ENORMOUS and I wouldn't be against Apple designing the right product! But the cost barrier relates not only to the cost of equipment. In fact, I suspect it's not principally the cost of equipment. The bottleneck is the cost of consumer data service contracts--$80 a month at Verizon! Yeah that number is competitve with what many pay for premium cable TV. But between that, plus another $35-50 a month for at home broadband, consumers are tapped out in terms of their willingness to add more monthlies to the mix. A consumer wireless data business explosion awaits service pricing consumers can afford.

[Jim Griffin]

None of the previous comments bit on your HD promo, but mine will. HD is truly the mass medium that missed the masses.

HD is an embarrassment, as is the unflinching broadcast and investment support for what is truly a mistake.

HD should (and will) go away, replaced by a global standard (DAB, webcasts, podcasts, whatever). It was born of defense of spectrum, defense of incumbent advantage, defense of the wrong business model (taxing chip sales) at the wrong time (satellite came along and subsidizes chip sales), and it is offensive to most everyone who cares about radio and community.

This year Ford is shipping the F150 with an Internet Radio option, and every car made has satellite options (some are standard), but HD has little if any support in Detroit.

You need more money than sense to embrace these HD units. Squandering hundreds of dollars on an HD radio when there are such compelling alternative digital expenditures is for the elite few, not the masses. Less than a hundred thousand sold, less units than the broadcast industry has employees.

Fred, I have great respect for you, but as they say in Hollywood, your problem with HD is that you are invested.

Relevant link to KCRW's Martini Shot episode entitled "Don't Invest":

http://www.kcrw.com/etc/programs/ma/ma061213dont_invest

Jim

P.S. What was your timeline for this investment? How far astray has it gone?

[Rick]

I wish apple would take a cue from their apple stores and reinvent wireless customer service.

[fred]

jim

i generally don't respond to comments left here, particularly ones that take shots at my investments.

but you are so wrong in your assertions that i feel compelled to respond.

BMW announced this week that they are making HD factory installed on ALL models going forward.

there were any number of cars outfitted with HD radios at the CES show. most of the asian and european auto companies are now looking at HD as a must have.

HD was everywhere I looked at CES

Clear Channel and Microsoft have teamed up to use the HD data channel to deliver an array of interesting data services into cars.

sure there are plenty of alternatives; satellite, ipod, wifi, wimax, etc, etc

but HD programming is free, over the air, brought to you by brands like 1010 Wins that you know and trust.

it is far from an embarrassment and a mistake.

the only one who is mistaken is you

[NICCAI]

I agree with Jason - data package pricing is simply insane for most users - especially the consumer market. In Canada, these costs are even worse than he quoted at Verizon. If the carriers and Apple really want adoption and margin on these additional services, they need to think about how they've stung first time users - or casual users. I'm a heavy user of all broadband services, and I avoid mobile surfing like the plague - terrible experience and terrible pricing.

For a while now, I've wanted to design a device that will connect to skype using wifi, actively poll for a stronger open signal, and then manage the transfer of an open call from one connection to the next. Transparent signal hopping is all that is needed. I kind of figured Apple would do it, but I guess I was wrong.

[gregg]

"Apple is an obnoxious company. They make wonderful products that blow me away."

Couldn't have said it better. I've bought 3 iMacs and maybe 6 ipods for me and my family in the last couple of years - the support sucks and I have yet to run accross anyone at the company either retail or phone based that even pretends to care. While I like the products's design and reliability of the iMacs seem to be quite a bit better than what are now essentially disposable PCs but there are problems if you're a business user. And ... I'm liking the the idea of being so tied to itunes less and less.

Reminds me of Sony in the 90's great products horrible company.

[Joseph Ravitsky]

I love my blackberry and don't see many business people switching to the IPhone. I also think these are the main people that could plunk down $600 and pay a penalty for leaving their carrier.

It seems like Apple is shooting themselves in the foot by partnering with Cingular. I believe they should have given Cingular some exclusivity for a year but not more.

[Gerald Buckley]

Apple **WILL** ship an unlocked version of the phone. FCC will require it.

Even if they don't the GSM sims from TMobile will 'work' in the phone. It's just a question of what's not going to work in characteristic integrated fashion? First guess is the proprietary voice mail deal (ala Cingular). UNLESS the voicemail is stored locally (possibility).

AND... June is a LONG way away. Apple's insanely great and retooling and reengineering for close in ship dates. You might not be receiving the same product you just saw in other words.

[jeremy]

im actually in the market for a new car, and yes, hd radio is a requirement. sooooo much better than satellite (i mean, come on, i can't get reception when im stuck in the ted williams tunnel).

[carl rahn griffith]

i find it utterly baffling that this product announcement - a phone with some nice features; for ultimately that is all it is - is global headline news. there is a ridiculous lack of perspective here - i suspect that because the mac is still the darling device of the media clique they are all too easily tempted to over-indulge on the coverage of anything apple launches.

[Jim Griffin]

Fred, that was a weak reply, and I am not at all mistaken. Indeed, your reply makes my point: The only auto manufacturer to include HD is BMW, and they are neither Detroit nor the masses (they are the elite, as I pointed out).

1010WINS the poster app for HD? AM cannot broadcast HD after sundown or before sunrise, and 1010WINS is available on the net without an overpriced HD radio or struggling to tune the weakened HD transmission that has trouble penetrating building walls at work.

If Apple is proprietarily obnoxious (and I concur), then HD is worse because it conscripts public airwaves (if the FCC ever issues final approval -- iBiquity withdrew its filing when last the FCC was poised to consider it) to perpetrate its lock-in as a matter of public policy. Were this a market decision, it would already be dead at the hands of globally ubiquitous inexpensive DAB radios (with rewind, record and fast forward functionality).

Indeed, why not a single HD radio with rewind or record buttons? Surely you advocate intelligent buffering for radio, right, just as you use for video.

It's a good thing you went to a trade show, because that's the only place you'll find much HD in evidence. Good discussion, for which I am appreciative, but you are blinded on this one.

Back to my question: When do you now predict HD will crack even a million users (less than a tenth of satellite's crowd)? How many years will you wait? If you'd been told that come 2007 you'd have less than a hundred radios manufactured per transmitter, would you have invested?

[Ken]

A little clarification from a former President of a wireless company. Mobile companies and handset providers ALWAYS, ALWAYS, ALWAYS have exclusive contracts for a roll out of a new product. The Motorola Razor, the Samsung Blackjack, you name it. All were exclusive deals with providers before the handsets became available on a wider basis. There are a variety of reasons for this, but basically the carrier is in the drivers seat, not the manufacturer, so let's not go pointing our fingers at "evil" Apple forcing people to switch. That is Cingular using its leverage. You want to be on their network? They get X months before anyone else. Eventually other carriers will be carrying the product. Now you can buy the Razor for every network, right?

[Alan Kelley]

Love this video of the iPhone

http://www.youtube.com/watch?v=YgW7or1TuFk&eurl=