Sunday, January 21, 2007

iPhone: The mediocre phone that will change the world

A bad phone -- but just what is it, anyway?

David Haskin

More than a week after Steve Jobs' blockbuster iPhone announcement, longtime industry observers and analysts are still furiously debating iPhone's impact.

And the first issue the analysts are wrestling with is: Just what the heck is an iPhone, anyway? Before commenting on its potential success, four analysts I spoke with first struggled to define exactly what an iPhone is.

"If you take the telephone out of the equation, the effect of iPhone will be profound," noted David Chamberlain, principal analyst for wireless issues at market research firm In-Stat. That is to say, Chamberlain said, the iPhone isn't much of a phone but it is an awesome ... something else.

In an industry accustomed to slotting products into narrow categories and measuring success within those categories, the unclassifiable (so far) nature of the iPhone has created a Jobsian, Alice in Wonderland-like atmosphere where t's are being dotted and i's are being crossed.

Herewith, with the help of some highly regarded industry analysts, we'll try to throw a lasso around this galloping pony and understand just what the iPhone is and what its prospects are.

What is the iPhone, anyway?
Trying to figure out what the iPhone is can be a matter of addition by subtraction. One thing the analysts agree about is that it won't be much of a cell phone, let alone a smart phone.

"It does seem under-horsepowered as a phone," said Neil Strother, research director for wireless devices at NPD. "It doesn't have [3G], which I don't get. How can they expect people to spend that much money [$500 for the 4GB version] and it doesn't even have 3G?"

Among the reasons the iPhone isn't a smart phone like the Motorola Q or the Treo line is that it doesn't support corporate e-mail or viewing attachments in Word or other formats commonly used in the enterprise. Nor can it use third-party applications like smart phones, many plain-old, not-so-smart phones and even old-fashioned PDAs. Nor is it a plain iPod since media players don't have even mediocre voice capabilities.

"It's been billed as less a smart phone than a super-smart iPod with phone functionality," noted Miro Kazakoff, a senior associate for wireless technology at market research firm Compete Inc. "It comes from a place of being more of an entertainment device with phone functionality added on."
Added Ken Dulaney at Gartner, "It's either a weak phone or a hot device in the network media category."

Another thing that the iPhone isn't is just another mobile device. "The interface is absolutely breathtaking," In-Stat's Chamberlain said.
Got it. The iPhone is a lousy phone but a breathtaking media device that acts like a phone but isn't.

What does it compete against?
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