The Apple iPhone: Is it really a revolution?

Yesterday, Apple (a company I love and hate, but that’s another topic) announced the release of its newest, and long anticipated “iPhone”. To Apple enthusiasts, there was unmitigated glee. To “Apple is just another gadget company” folks, there was a collective… ‘Really?’.

I just (literally, just 2 days ago) purchased the Applie iPod 80GB, Apple’s current flagship consumer electronics device. It’s small footprint, large storage capacity and excellent (so I’ve read) battery life, pushed me over the edge to abandon my iRiver 20GB, which was good, until battery problems made me look to a better supported platform (with many more available accessories, I might add). Now, Apple has announced the device I truly wanted (more on that in a moment), albeit with less capacity than I would need.

I travel a lot; a whole lot. My travel budget last year was 6-digits, and I’m cheap when I travel. I crossed the Atlantic nearly 50 times. So, I’ve learned about the need to reduce my “lugged luggage” in spades. I’ve ditched my Palm Pilot, my cell phone, my pager, my notebooks, and all the power cords that I can, and now am down to one iGO universal charger, my CrackBerry (PDA, Pager,Cell Phone, etc), and my MP3 player (now to be switched with the iPod). Yet how I would long to drop yet another device and have it all in one.

Apple made a few mistakes however.

Firstly, they made an exclusive deal with only one carrier. Bad! Bad! Bad! They just cut their market immensely, and income potential, no matter what crazy revenue sharing scheme that Cingular made with them. Apple could have made much more money by offering (via their typical proprietary content distribution model) iPod video, songs, ringtones and Network based iPod games than they will potentially make from cell-phone minute usage income. With this, also, comes the lack of ability (albiet, I’m not yet certain, since I haven’t popped one of these iPhones open yet) is whether I can just buy one, yank out the SIM and put in whichever one I need …for whatever network I need.

Secondly, yet I’m sure this will get fixed in the future, is more capacity. You see, my iPod is a portable hard drive for me. I take tons of pictures, and use an 8GB CFII card. Apple has a handy USB2 sync adapter by which I can directly download my days worth of shots to my iPod, without the need to clog up my 80GB Laptop HD, which is quite burdened already. This was the clincher why I bought the iPod in the first place. Independent of the network issue, this would likely be a stickler for me.

Thirdly, they didn’t announce email on the phone. Now I know Monsieur Jobs is aiming at the consumer market, but at $500 and $600 price points for the 2 offerings (4 and 8GB respectively), he’s now priced himself into the “pro-sumer” realm where BlackBerry has thrived in their high-priced, high-value phone and service. He has my attention, but not what I need.

The fundamental question is this, does Apple understand the realm they have entered?

It’s not that they don’t know that this is a much desired product. Yet, do they know that they’ve moved into the highest-end user base target market, and hence highest revenue potential. This is not just because of their price (but it is a factor, they have effectively priced themselves out of the average cell-phone user space, even with subsidies on the phone price), but because of the opportunity of having a real computing / storage platform that also has phone and IP service.

The interface is absolutely beautiful. It’s crisp, without any strange keyboard shifting, and with a full-sized (full faced) screen that has excellent display resolution and quality. It is better looking PDA than anything else on the market. The fact that its got all the music/video capabilities of the 5th Gen iPods is also compelling.

What is not yet known (not enough information is available on the new product capabilities) is whether the high-end user can leverage the IP service in order to link up email and calendaring with the corporate groupware (email, calendar, to-do, etc). This, BlackBerry does incredibly well, and notionally, WinCE does alright at. This lacking capability has kept Palm in the hinterland of the phone market for quite some time, since it’s email/calendar linkages are quite poor when judged with enterprise requirements (and I say this having bought over 1500$ worth of Palm based phones). This missing link is the key to the long-term high end revenue opportunity of this product line.

Fundamentally, the iPhone is something to long for… but, without the choice of an enterprise mail and calendaring capability, it will pine away in the growing discount cycle of the consumer marketplace. With enterprise features as an option in their next iteration…. the revolution truly will have begun. Until then, it’s pre-skirmishes, and almost all real revolutions have had them.

iPhone… good for now, but can Apple truly do it? It’s only a matter of them wanting to.

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