#9: Biggest Stories of 2006: The iPhone

As the year draws to a close, rumors once again abound of Apple bringing an iPhone to market. The latest guesstimates are that the phone will be launched in the first half of 2007.

For a device that’s been rumored for years, and that, at best, is still months away, the iPhone sure makes for “big news.” Typing “iPhone” into Google News results in 894 matches, and that’s just in the last month! Of course, Apple is super secretive about product launches, so there’s no indication out of Cupertino of any real plans.

The iPhone clearly qualifies as a “big news” story for 2006, and since it’s still just rumor, it also qualifies as “no news” for 2006. The question is, will this be “real news” in 2007?

Even if Apple introduces the iPhone (and that’s a big “if”), this isn’t an easy question to answer. Apple worked with Motorola to introduce the ROKR phone way back in 2005 (and even then it was 13 months between announcement and availability). I’m sure that both Motorola and Cingular (the first carrier to offer the phone) had high hopes for the device. I’m not sure Apple really even cared.

In the end, the product was a flop. Why? I think there are three main reasons.

  • First, the phone synchronized with iTunes, but only over a tethered connection. In other words, the product didn’t gain any value as would be predicted by the Law of Mobility.
  • Second, the phone had limited storage (only holding about 100 songs) and, compared to the iPod, limited battery life. So, the product was actually less valuable than any of the “real” iPod products.
  • Finally, the phone was a Motorola product, not an Apple product.

What do I mean by that third bullet? Well, basically the ROKR was designed by a phone company and was about as usable as any feature-rich handset (in other words, not very).

This key point will determine how valuable any iPhone may be. If Apple can successfully bring the value of their usability leadership into the handset space, they will create new, untapped value in a new industry. Good for Apple and good for cellphone customers. But, if Apple can do that AND fully leverage the Law of Mobility to amplify the value of the iPod, then we’ll be looking at a revolutionary product that is helping push forward the mobility revolution.

That’s a lot of “if”s – starting with the biggest one of all – “if” Apple brings an iPhone to market.

And all those “if”s may be closely related. Apple has an incredibly valuable franchise in the iPod. The company has little motivation to either devalue the product line (through carrier subsidization models) or burden the iPod with the heavy technology and performance costs associated with building in a wireless phone. Even more critically, the huge impact of the iPod has come from it’s usability. Apple is highly unlikely to compromise that usability to accomodate the overwhelming plethora of features required by the industry for mobile devices. Finally, and perhaps most tellingly, Apple still defines itself around the personal computer. The iPod is a strategically appropriate product for Apple because it fits into Apple’s vision of the personal computer as the central hub for how people live and play. Essential to that fit is the tight integration between iTunes and the iPod, which of course, further contributes to the iPod’s usability.

Apple is not driven by the Mobility Revolution. The success of the iPod and iTunes is only marginally associated to the Internet Revolution (the iTunes store isn’t a bad revenue source…). The iPod is really all about the PC Revolution that Apple launched more than a quarter of a century ago and which still defines the company.

Is Apple willing to commoditize their economic engine? I don’t think so. Will the company compromise usability to integrate cellphone features into the iPod? I can’t imagine them doing so. Even if they overcome those two barriers and bring an iPhone to market, will they really rally around the real value of mobility by breaking the tether between mobile device and PC? Call me a party pooper if you like, but that hasn’t happened in 27 years, I can’t see 2007 being any different.

Check back a year from now as I run-down the top 10 stories of 2007 and find out whether I was right or wrong!

One Response to “#9: Biggest Stories of 2006: The iPhone”

  1. […] Almost a month ago, I wrote a piece identifying the iPhone as one of the top stories of 2006. […]

Leave a Reply