Steve Jobs has more selling to do on iPhone

Plugged In

January 18, 2007|By Mike Himowitz | Mike Himowitz,Sun Columnist

When we returned from vacation Sunday night and I looked back over 10 days' worth of technology headlines, the one item that struck me was the announcement of a new, $500 gadget called the "iPhone."

Didn't I review that thing a while back? I thought.

A few clicks on the controls of the Internet Time Machine proved I wasn't dreaming. I did review a gadget called iPhone - a decade ago.

But lack of originality isn't the only reason that Apple's long-awaited entry into the cell phone business might not be the colossal, lifestyle-changing hit the company created with the iPod.

Yes, the iPhone will sell like hotcakes inside the Apple Cult, but is the heathen public really willing to pay that kind of money for a toy that duplicates what they already own?

The iPhone is a slick and very expensive digital music/video player and hand-held wireless Web browser that also happens to make phone calls. It won't be available until June, but faithful Macolytes are already lining up to buy it.

The iPhone I tried in January 1997 had nothing to do with Apple and was an entirely different animal - a $500 desktop computer-phone with a 7 1/2 - inch touch screen and elfin keyboard. Running software from a company called InfoGear, it was designed to exchange e-mail over a dialup connection and perform basic Web browsing chores without the bulk or expense of a full PC.

The iPhone worked reasonably well, but ultimately, it was a solution in search of a problem. People who wanted Internet access bought real computers instead, and the iPhone disappeared - unmourned.

Eventually, Cisco Systems Inc., the giant networking equipment manufacturer, landed the rights to the iPhone brand when it acquired InfoGear in 2000.

On Jan. 10, the day after Apple introduced its version, Cisco sued Apple for trademark infringement.

Cisco argued that Apple's use of "iPhone" conflicted with phones marketed by Cisco's Linksys subsidiary - in packages with "iPhone" stickers plastered over the photo of an existing Linksys model.

But Apple's real problem may be that the new iPhone, like its namesake, is a solution in search of a problem.

Yes, the iPhone is an elegant combination of hardware and software, a delight to the eye and ear. And it will sell a million units the day it's available because the Cult of Apple requires followers to buy whatever chairman-for-life Steve Jobs decides to hawk this month. If Jobs tied a couple of tin cans together with a string and called it a telephone, a million Macolytes would call him a "visionary minimalist" and shell out $500 for it.

But what about the rest of the world?

First, consider that most of Apple's target audience already owns a perfectly good iPod (or some other music player) and a perfectly good cell phone. Both may be better than their counterparts in the new combo gadget.

For example, the basic, $500 iPhone can store 2 gigabytes of music, while the $600 premium version stores 4 gigs. They use flash memory, like the lightweight iPod Nano line.

But "real" iPods, the models with hard drives, store 30 to 60 gigabytes of music. So music fans who like to travel with their whole collection will have to give up most of their music to use an iPhone - or carry two gadgets, one of which duplicates the other. Macolytes will have no problem with this, but the heathen will probably think twice.

Another issue - Apple is selling the iPhone exclusively through Cingular. That alone should make knowledgeable phone customers suspicious. In Consumer Reports' most recent satisfaction survey of more than 50,000 cell phone customers nationwide, Cingular's service ranked last or next-to-last in every metropolitan area. And for now, at least, the iPhone won't work on Cingular's third-generation, high-speed wireless network, but on an older, slower system.

For users who depend on a cell phones for their livelihood, switching to a less dependable carrier could be a big price to pay for a little extra cool.

And how about total cost of ownership? Neither Apple nor Cingular has announced monthly pricing, but to access the Web outside free Wi-Fi hotspots, send e-mail or text messages, download ring tones or use all those other cool online services that Apple is pushing, customers will have to sign up for a data plan that could cost as much as or more than their voice plan.

Despite the millions that wireless carriers have spent marketing these services elsewhere, customers just haven't been buying. According to a report in the Los Angeles Times, data accounted for less than 11 percent of the industry's total service revenue in the first half of 2005.

The irony is that competing wireless carriers may actually wish Cingular and the iPhone well, hoping they'll invigorate a market for services that existing customers have so far ignored in droves.

Finally, there's the conundrum that confronts all potential buyers of multipurpose devices. The more gadgets you cram into one package, the more things there are to go wrong - and the more likely it is that something will.

When something does go wrong - and given my family's history with broken iPods, that's a near certainty - you'll lose the use of your phone and your music player and your portable Web access while it's being fixed, if indeed it can be fixed. Do you really want your business communications dependent on the health of your music player?

Of course, none of these issues will dampen enthusiasm for the iPhone inside the Cult. And the iPhone might actually gain a few converts.

The gotta-have-it threshold of consumers - particularly the 20- and 30-somethings who buy these gadgets - has been increasing with their disposable income. Sony's PS3 and Microsoft's Xbox 360 game consoles are flying off the shelves at $500 to $600. For many of their buyers, the iPhone could be another toy to add to their collections.

mike.himowitz@baltsun.com

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