Handicapping the iPhone
January 9th, 2007

Tomi T. Ahonen wrote two posts today about the Apple iPhone, both which were full of insight and advice for Apple. In the first post which was an open letter to Apple, Ahonen defines SMS Text Messaging as the Killer Application for mobile devices – even though that’s not how they are sold.

“….Make sure your iPhone is at least on par with top text messaging phones out there today. You have six more months to accomplish that. But please, Apple do it.

If you don’t , I am afraid you will fail. Voice is NOT the killer app for current mobile phones. Neither is music; neither is the camera feature; neither is video. The killer app is messaging, specifically SMS text messaging (and very rapidly also mobile IM ie Instant Messaging, and other collaboration such as mobile blogging). Understand that those phones that are not good at messaging are going to be returned to the store by dissatisfied customers, and the mobile operators will be forced to substitute alternate phones. You don’t want phones returned because of poor texting, as Nokia learned with its unconventional keypad designs in 2003 – and rapidly corrected this colossal error.”

In the latest post – Handicapping the race: iPhone markets and rivals, Ahonen weighs in on the iPhone vs. it’s competitors and while he likes many aspects of the iPhone, he feels it can not reach the lofty sales goals set for it by Apple:

:…To reach its target, Apple would have to convince every Cingular smartphone user (probably many very loyal to their Motorolas, Nokias, SonyEricssons etc) to switch to the iPhone. This means all Blackberry users in its network with corporate e-mail clients therefore as well; and then capture AS MANY new customers by stealing them from the rival networks. Cannot be done. Is totally beyond all reason. If the GSM standard based smartphone market in America is about 4.3 million, Apple cannot capture all of that. Not in one year, not even with a miracle phone. And the iPhone is far from a miracle phone.”

While I read a lot of hype and excitement about the iPhone today, Tomi T Ahonen’s reviews were very realistic, down to earth, from someone who is an expert in 3G networks, including social networks. Ahonen does think Apple can succeed with selling the iPhone as a “music phone”, however.

“…But all is not lost for Apple in America. While the analysts talk about the smartphone market, I would rather look at the music phone market. That is much larger. It includes many cheaper music phones, but for many considering a mid-range music phone, when the iPhone becomes available, it will well be a worthwhile alternative, even if on the high end of what that customer would be willing to pay.

How big? Gartner tells us they sold 309 million music phones in 2006 (vs about 40-42 million iPods. Can you guess the theme of my upcoming iPod vs music phone review next week when Apple releases official numbers for the Christmas quarter of iPod sales?). Music phone sales rocketed in 2006, more than doubling. It is fair to assume, even at very conservative rates, that music phone sales will reach 400 million units in 2007. This of course includes most of the 120 million smart phones mentioned above.

Now we are talking about a valid market opportunity for Apple. 10 million means only 2.5%, and that is quite do-able.”

Ahonen thinks the real reason for the iPhone is the erosion of the iPod as the dominant music player in the portable device market.

“….I would say 10 million iPhones – with prices in the 499 and 599 dollar range, and with only a GSM model and launching with only Cingular in America first – this is a tall order, but it can be done. I would suggest history will find that this is a much bigger drain on Apple’s marketing and sales support resources than they can have imagined, but the writing is honestly on the wall. The reign of the iPod came to an end last year, and this is in reality a “defensive move” by Apple to remain relevant in the MP3 player market. They have to do it. In reality they should have done it a year ago.

With the launch and aim of 10 million sales comes a certain corporate-wide commitment by Apple to make it happen

I would say they will do it. But it will come at a serious cost to profitability. Note that this expands Apple’s portfolio and helps a PC maker move into the mobile Internet – the future, so this is also a clever move by Macintosh, to gain a foothold into the mobile computer market of the next decade.”

So, if I were an analyst, I’d go over both Ahonen articles on the iPhone with a fine tooth comb.

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1 - David Mantripp

Ahonen is a smart guy, but he refuses to accept that his analysis of the “erosion of the iPod’s dominance” is just plain nuts. His argument is based on the statistics of sales of music-capable mobile phones. He takes as granted that 100% of these are bought to, and used to, play music. This is so clearly wrong, that the only explanation for him sticking to it is to hype himself as a consultant to mobile phone industry players – which, it seems, he’s good at.

2 - Boris

I think they’ve sorely misjudged the importance of SMS. Touchscreens strike me to be supremely poor for one-handed touch-typing (without looking. you’d be amazed how many people can do this, mostly teenagers ;)… there’s no tactile feedback! People who really use their mobile device want to be able to use it with one hand. This has been learned over and over by the likes of Nokia et al. Or so I’ve heard…

This phone seems to have been designed by a small group of people locked in a studio in Cupertino with no regard for the reams of research and valuable anthropological user information already available in the space.

Man cannot create in a vacuum, and for all intents an purposes, Jobs’ ain’t a god. ;)

Other things to consider:

- is it carrier locked to Cingular? More than likely. Especially since it’s feature locked (hello non-industry standard, read: closed/proprietary) “visual voicemail”. Can you say outragous roaming fees?

- is it a closed platform? it may be OS X in there but can we get at it? Can we install our own apps? More importantly, can we write our own and run them on the device? with full access to the address book and camera and file system, etc? if yes, then oh my look out! but I doubt it. Apple would hate to confuse it’s user with too much functionality! (a standard Apple position, meant to say “you paid for this device but we will continue to control your experince of it for ever”)

iPhone *will* push a few innovations forward, but it is not the “revolutionairy device” they make it out to be. Anyone who expects it to be so is deeply “reality distorted”. ;)

3 - Aten Imago

Sure text messaging is very high on the list of most valuable technologies but is it the ‘Killer Mobile App’ ? I think not.
It’s not even about one capability , medium or channel versus another- but rather it’s about the integration, convergence and interoperability of several media and channels that makes the iPhone a good bet. Anyone that is bogged down in text messaging as the last frontier isn’t very visionary.
As we progress towards ubiquitous location and reciprocal object/place/ person awareness, that convergence will take on a whole new meaning as we move forward in the next phase of the electronically connected community. I believe that Apple grasps this and isn’t getting bogged down with just beating the best of the text messaging devices.
I mean, as much as I love text as a medium, I’ll freely admit that I find drafting, sending and archiving voice messages, videos and still pics less prone to cognitive effort- even though they are harder to search in databases and warehouses.
No! The next killer apps are still on the horizon- 3G+ enabled interactive/ immersive media, plugged into ubiquitous and mutual awareness, identification and authentication will make text messaging seem hobbled by comparison.
And though I sympathize with supporters of the Solid User Interface – as in direct control QWERTY keyboards- there’s a lot to be said for touch-screens as they make keyboard controls accessible to vast populations that can’t use currently use keyboards with slippery buttons that are 1/8 of an inch in diameter and hard to see without magnification.

4 - Sid

Vast populations that can’t use solid keyboards? You mean the oldies? Even they like using solid keyboard, at least my parents do.

The idea of a solid keyboard is so that you don’t need to see it, but just feel it with your fingers. We/I type fast this way. If you need to see every single button on the keyboard, any type of keyboard aint gonna help much.

I really think apple will sell over the 10 million mobile devices within the year that they expect this

mobile phone has everything.

6 - Toolate

Have you ever used a mid-range or high end Symbian phone? Don’t speak unless you have any idea what you’re talking about.


Thank you so much for providing this.
I am sure that it will be very helpful for many peoples.

8 - jackson123r

megapixel cam, 4GB or 8 GB of storage, Bluetooth 2.0 with EDR and A2DP, WiFi that automatically engages when in range, and quad-band GSM radio with EDGE.


9 - madisonuui

It’s beautiful, it’s simple and it’s an eye candy. And obviously, it’s expensive.


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