Off-Hook

Maybe it’s both. There’s no doubt that the iPhone is the most exciting new handset in the wireless industry since the Motorola RAZR, but is Job’s prediction of 10 million iPhones sold in 2008 at this year’s Macworld realistic?

Some of the reasons it will sell include built in wifi and bluetooth. These have been great selling features for other smartphones and are must-haves in pdas that aren’t phones. It’s also very attractive and has an extremely user-friendly interface. It’s major selling point is its iconic brand (many people will pay $500 for this phone simply because it’s Apple). What truly makes the iPhone unique in wireless, though, is its interesting new perspective in handset marketing.

Typically, handset manufacturers design and implement features according to the recommendations of the service provider, and rightfully so, since the service provider dictates the feature capabilities of the network and the target market, as well as contract obligations and billing of the end users. Apple, however, is opting to take charge of the relationship and dictate its own design features, as well as control the price point of the phone. The iPhone will sell for $500 to $700 under 2-year contract with AT&T (formerly Cingular), the exclusive provider. No discounts, no exceptions.

What’s strange about this is that AT&T is aggressively deploying UMTS thoughout its network, including HSDPA. This technology is currently capable of data download speeds up to 3.6 Mbps (up to 14.4 Mbps planned in the near future). Apple’s iPhone, however, is restricted to the more common GPRS EDGE data speeds. Downloads max out at around 236 kbps. The difference in these speeds is comparable to the difference between good DSL (1.5 Mbps) and basic DSL. Anyone who has downloaded a ringtone, game, email, accessed web graphics, or made reservations online with an EDGE phone knows how frustrating the speed can be sometimes. The typical user downloads very little though, so the speed can be acceptable (if a bit slow).

The point is this: One of the more anticipated features of the iPhone is delivery of multimedia content (like mp3s, mov files, etc.). One would think that Apple would obviously add HSDPA to its handset in order to marry the capabilities of the iPhone with the capabilities of its chosen network (a fair assumption for a multimedia-centric device) to deliver such content. Since that’s not going to happen, one might assume that the iPhone might at least allow access to iTunes on the PC via bluetooth. Instead, however, iTunes on the phone works exactly as it does with the iPod, and must be connected via USB to a desktop in order to download music to it’s moderately impressive 4-Gig or 8-Gig of storage (much more than any smartphone competitor). I say only “moderately impressive” because I would have expected to see even more storage, since the newest iPods up the storage to 30-Gig or even 80-Gig.

Another disadvantage is the lack of voice interactive features that are so common on smartphones today. There will also be NO 3rd-party applications and obviously no support for MS-based office formats such as Word docs, PowerPoint, or Outlook synchronization. Those 3rd-party applications are VERY important to my friend BKW, who uses his Nokia 770 daily.

In comparison, the Palm Treo 750, which costs $100 less than the suggested low end of the iPhone, offers the same WiFi and bluetooth capabilities as the iPhone, yet also offers compatibility with 3rd-party apps and Windows apps that allow you to open the most common form of email attachments (docs and spreadsheets), AND offers both UMTS and GPRS-EDGE data network compatibility on the same AT&T network. It also utilizes common flash memory (SD cards) that can be removed, replaced or upgraded. On the other hand, the Treo 750 doesn’t offer a built-in iPod.

So now that we know there is at least one popular competitor, the Palm Treo 750, that offers very similar features for considerably less, how does Apple intend to sell 10 million in 2008?

Many, MANY people will pay $500 for a phone with Apple’s iconic trademark on it. The name alone implies technology that is not intimidating and easy to learn which is in sharp contrast to many of today’s “smartphones,” and this would be an accurate statement. Plus, with the phenomenal success of the iPod, how could the iPhone be any less popular?

Besides the name, It offers the iPod in a phone with a stylish interface, good storage capacity and the 2 most popular smartphone alternatives to access wireless content. However, the price will not likely go down until Apple releases another version of the phone, and high-speed data access is much more limited than it has to be.

Overall, I’d say the iPhone shapes up to be a cool-looking new phone with some great features, including an easy introduction to the smartphone market for many users who were slightly intimidated by UT Starcom’s Personal PC and Palm’s Treo, but don’t expect it to offer all these new and exciting features that set it apart from the crowd. Considering Apple’s current product offering, I didn’t expect greater value, but I did expect more innovation.

At $500 on a 2-year contract, I simply expect more than this phone offers.