Great Expectations

On the day that Apple announced the iPhone, my eleven-year-old son decided that he wanted one. Since then he’s done chores above-and-beyond the call of duty in order to earn $500 to buy one. Fast forward to last week when this news appeared in the business press:

NEW YORK (MarketWatch) — Morgan Stanley analyst Kathryn Huberty reiterated her buy rating on Apple Inc. shares (AAPL :87.06, +2.45, +2.9% ), saying she believed the market is underestimating the likely success of the iPhone. She raised her 2007 iPhone sales forecast by 33% to 8 million units from 6 million, following a survey of 2,500 U.S. consumers. Huberty also believes Apple’s ability to leverage strong iPhone demand is being underestimated. “While we see positive leverage drivers across Apple’s product segment, the iPhone alone increases scale (better pricing from suppliers), strengthens retail store leverage (increased velocity on fixed-cost base) and takes advantage of lower NAND [memory] pricing in the market,” Huberty said in a research note.

(She is forecasting eight million units in six months. As a data point, Motorola shipped fifty million RAZRs in the first twenty-four months. You can currently buy a RAZR for $30 after rebate with a two-year contract.)

Of all people, I support unabashed exuberance for Apple products, and our family will evidently buy at least one iPhone, but I don’t understand this kind of coverage three months before the product ships. Clearly it’s a cool phone, and as with many Apple products, you have to ask, “Why didn’t any other company do something like this before?” Still, just off the top of my head, I have a few questions about the iPhone:

1. What’s battery life with Bluetooth, Wi-Fi, and iTunes running on a big color screen? The battery life of my Motorola Q sucks, and I don’t have Bluetooth, Wi-Fi, or music running. Based on Apple’s record when it comes to battery life of laptops, this is at the very least an “open issue.”

2. Will people tolerate Cingular’s Edge network? I switched from Cingular to Verizon to get EVDO. Edge is supposed to be three to fours times slower than EVDO. The knock on EVDO is that it has much less coverage, but I’ve seldom had coverage problems. Maybe only people like me who have used EVDO will ever realize that Edge is so much slower...

3. Will a phone without a hardware keypad work in the real world? I mean a world where you’re driving while trying to dial numbers as well as access and delete voicemail (unless you’re a SpinVox user). Can a person dial an eleven-digit number without looking at the touchscreen at sixty mph?

4. Is there voice navigation? This will help the keypad issue, but I haven’t seen anything that says that there will be. If you can do this on a Windows Mobile smartphone, I’d be astounded if you can’t on an iPhone. But I’ve been astounded before.

5. What’s Trixie and Tiffany going to do when they send 1,500 text messages a month without a keypad? Which is to say, will forefingers be the new thumbs? Or, will teenagers sprout much longer thumbnails?

6. Will people pay $500-600 for the convergence of phone, Internet device, and music player? And this doesn’t even count the $100 or so contract-termination fee since carriers treat current customers worse than new ones. Perhaps we should look at the iPhone as an Internet tablet or a PSP for old people—if you didn’t have to buy a service contract. (Will an iPhone run without a SIM card in it?) Maybe Apple could remove the phone from iPhone and make it a high-end iPod.

7. How will the sealed battery work? With most phones, you can replace a battery if it goes bad. What happens when this happens with the iPhone? (With my Motorola Q, I was able to buy a larger battery so that battery life went from horrible to merely dismal.) iPods have sealed batteries too, but it’s one thing to be unable to listen to music; it’s quite another to be unable to make or take an important call.

8. What’s the impact of a closed system where developers cannot create software for a phone? Imagine, for example, if you could only use iLife and iWork on your Macintosh. Is that what using the iPhone will be like? What about VPN? What about synching with an Exchange server? This is a consumer phone, but consumers do have corporate jobs.

There may be great answers for all of these questions. (Meanwhile, my son has amassed $400 of the $500 that he needs.) If not answers, there will be great reality distortion. If not great reality distortion, Apple will fix shortcomings in future iterations. However, it’s a tad bit early to declare this the greatest phone in the history of mankind—though many of us are hoping it is. We should at least wait until the phone reaches huberty.

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Comments

[David Ollech]

"Can a person dial an eleven-digit number without looking at the touchscreen at sixty mph?"

I think the question is: should a person dial an eleven-digit number at sixty mph? I would hope you wouldn't, not on any phone, especially with your eleven-year-old son in the car.

[Manish]

Hi. Does anyone know if we will be able to order the Iphone without the cingular service. I was hoping to buy it in the US and use it in Asia. 2008 asia release is too long a wait.

[John Nguyen]

Great post, I like the devil's avocate approach. But it was certainly unexpected!

I certainly don't think the Iphone is the end all of cellphones like the blue ray dvd is the final portable mass storage circular disc. But the iphone is certainly a step forward.

As far as the sealed battery, I think it was apple's way of saying, "hey, no one is going to cut into our profits by making a crappy oem -style- replacement." I think there's potential to shave additional funds off the market by enclosing a batter into a tight space and not allowing poor competitors with inadequate research/development to create replacement batteries and sell at a fraction of the cost on ebay.

I agree the closed software is iffy. As a much as I love gadgets, if I can't upgrade software or import software, its not my cup of tea. But then again, from a maximizing profits perspective, I'm guessing its a good way to say, "Hey, you're going to buy my software whether you like the price or not because its the only thing available." Its almost like this phone is a monopoly in itself and a great monopoly it should be.

The timing of this phone is impeccible. Kids are complaining about not having wireless headphones for the ipod, logitec made some. The combo is too good to pass up and the price tag only makes it more desirable in the teenage population even though texting might be difficult for the younger kids.

[cb]

Apple is often one generation ahead of where they're promising to be.

This product is better understood as the ipod video + beta phone and PDA. You can bet that the video features and delivery system (apple tv announced at the same time - odd? no market? really? hmmm...) will be perfected by the time it launches.

Phone companies and handset makers have nothing to worry about (yet). However, broadcasters and film studios do.

When the iGPS or whatever is announced next year - then it's iphone time. The phone applications and PDA funcitons will be ironed out. And hopefully the google maps feature will be added to something like a GPS. Until then, this is best understood as an ipod video + phone.

[Harry L]

Everyone I know ( myself included) is unhappy to find out that the actual battery life on ipods is close to half what is advertised. And the advertised life of the Iphone is not enough to last a workday, even for a commodities trader that takes a long lunch break. It seems like the
Iphone and Ipod will remain "must have" fashion items for kids, but I don't expect too many adults to need the Iphone.

[steve]

I'm very worried about how open the unit is in the sense of what programs can I run ... can I run an IM client or a reasonable VoIP client?

I agree about Cingular ... it is awful around here.

best to wait

[Jonathan]

Good points. Especially the one about: "Who would want a Mac that only ran iLife and iWork?" I imagine someone will find a way to get 3rd party software onto the iPhone. Perhaps the "no third party software" thing was a ruse necessary in the begining to placate AT&T? After all, Apple said that about the Intel iMacs when they first came out..."No Windows on our Intel iMacs"...then a few days later someone made a hack to show it was possible, and a few months later out comes Bootcamp, later yet, Parallels. I'm really hoping this is the case with the iPhone because the walled garden approach bit Apple in the butt back in the 80s too. I work for a company that develops phone recording software for windows mobile and we would LOVE to port to the iPhone. So all you code-junkies out there rev your motors, maybe we can change Apple's mind on the "no 3rd party software on the iPhone" issue!

[Hadley Stern]

Guy,

another big question I have concerns the vibrate feature. Does the iPhone have a vibrate mode? I haven't seen it documented anywhere but I can't believe it doesn't.

[Dan Sadler]

Your 12 year old son want an iphone? Of course he does! I did when I was 12, I designed a phone not so dissimilar to the iphone for a GCSE project like 5 years ago now, it was a cross between a touch screen pda and a digital camera and a phone, granted I didn't think of the pinching and stretching for zooming in on pictures, but I was young, and hey having a camera on a phone was unheard of back then.

[BG]

Great questions, #1 and #3 as the most important.

I have heard co-workers complain about the battery life on their Moto Q. I own a Nokia E61, with normal phone usage, Blackberry client and listening to 30-45 minutes of podcasts daily the battery goes for 2+ days. Blackberry 7280 that i used to own had a decent battery life too, but was not good a phone as the nokia. The Microsoft Mobile device i had owned long time back(Audiovox PPC 4100) was very unreliable and needed frequent charging and resetting, i have never felt like trying another MS phone since.

I also like the point about the keyboard, how could apple overlook such a key usage scenario. Speed-dial and shortcut keys are the most often used features on my smartphone. It is not just about dialing while you are driving.

[CARIBBEAN_MAC]

hi folks Guy company is shit with respect to support and customer care has he experience support lately.

Hereis my cry i bought a motorola slvr from tigerdirect.ca and some how the tele heated up i dont know how called motorola about the issue they refused to replace the phone or even repair it.
their reason the phone was not made in canada and the SW on the telephone is european hence the reason

now i know if i buy an ipod in europe and wanted support i know apple canada would repair the ipod

hence the reason why my eyes are on the iphone
GUY Your motorola support and customer care SUCKS BIG TIME and i hope Apple wike you out

[sewdough]

Like all new technology the first couple of versions that come out will have their glitches. Guinea pigs, such as your son, that feel the need to have the first issued, will save the rest of the consumers some money by figuring out the problems and reporting those back. Tell him to keep doing those chores and save that allowance! At $500 a pop, he could retire before he leaves the house ;).

[Creative One]

Wow Gk, you actually got your link posted at Gizmodo.com. I didn't realized talking about iphone would get your link posted here. iPhone is meant for web 2.0. I believe it is heading in the right direction.

"http://gizmodo.com/gadgets/cellphones/
guy-kawasakis-questions-on-the-iphone-241634.php"

[Chris]

Looks like the Mac cool aid drinkers are out in full force today. They're the only group that will resort to personal attacks to defend their favorite brand...ur...religion?

Get a life you cult freaks.

[JM]

Thou shalt not dial numbers on your mobile phone while driving at 60 mph. Please let your son know.

I believe that the iPhone will eventually feature a swappable battery. Too many people have been complaining about that, and Steve is increasingly open to listening to ideas other than his own. Of course, he will still keep the phone APIs open to big developers only, like on the iPod, which is a shame. Personally, I think that he should make the system fully open for development, but allow deployment only after a certification process has been followed. Developers could write apps that work on their own phone, for their own pleasure and for debugging purposes, but they would need the apps to be certified and "signed" by Apple to be able to run on other people's iPhones.

[Tim]

The Epic Fail of the iPhone,

It's amazing a 500 dollar device which only costs 248 to make but yet its price does not include HSDPA(3G). All it supports is EDGE(2.75G) Amazing while yet almost all devices out now support 3G. Wheres the GPS apple? The terrible lack of features. iPods and iPhones are turning into Handbags for women with their extreme prices. But yet all the kids are gonna go get one because they think they are cool but my Toshiba G900 with my Fingerprint scanner, 2 cameras, phone, full keyboard, touchscreen and much more will rip a iPhone to pieces. Anyone who even would think of buying a iPhone should look at the windows and linux alternatives and out and coming out. The stuff shown at the 3G Conference ripped apple's iFail apart. Another thing what about all the accessories you gonna have to buy? Cradle, charger are they all gonna be verified by cingular like verizon and razrs? Buy a device that you can actually customize. The iPhone's locked os we hope will be cracked and linux put on it.

[Jxer]

Guy--

Love your ability to repeatedly show yourself to be a moron and rotten investor but yet continue to act as though you and your opinion matter.

My favorite line from all of the above is when you asked about dialing an eleven digit number. As somebody in another comment has wisely asked, who dials numbers from their cellphones anymore?

The better question is who still dials a "1" then the area code and number on their cell. My answer: probably the same people dailing-up at 9600 bps.

Please go away.

[Xian]

> 4. Is there voice navigation? This will help the keypad issue, but I haven’t seen anything that says that there will be. If you can do this on a Windows Mobile smartphone, I’d be astounded if you can’t on an iPhone. But I’ve been astounded before.

Since iPhone will essentially be running OSX, voice navigation should be a cinch. I too would be astonished if it wasn't integrated from the get-go. Certainly Steve Jobs & Co. in California are keenly-aware of the growing problem of distracted driving caused by cell phone use. VoiceNav will save lives, because there will always be idiots who must make that call.

[sdlvx]

I think everyone neglects the fact that iPods have been notorious for scratching. How do you think this screen is going to look after a few months? On top of that, you have to use your skin? I always thought that alot of smartphones needed a stylus. I might be off here, but if the iPhone doesn't work with anything other than skin, the screen is going to be riddled with fingerprints. It seems like it'd be awfully annoying to see nothing but fingerprints on your screen, specially when the light interferes.

I do see battery life being a big problem. People act like it's not going to be, because the new iPods are better. iPods are NOT left on nearly as much as a phone, so your comparison of apple's work with the ipod really doesn't apply here. How well do you think your iPod would work if you used it ALL the time. Even one without a hard drive and that was flashed based.

So, you have this device that's left on all the time, and when you want it fixed, you have to send it in to apple for them to replace the battery. If I recall, lithium ion batteries are only good for around 500 recharges. Now, if you use this phone everyday, and you have to charge it every day, it will last a year and a half. Not surprising, the iPhone probably only has a one year warantee. So, when you need your new battery, Apple will be there with open arms to "fix" it for you and charge, when it SHOULD be a feature built in.

And, while I'm at it, what open source software did Apple steal, write a pretty GUI for, and close, and then sell for a high price this time? Do they make UNIX that can run on a device like that?

haha

[michael]

"Can a person dial an eleven-digit number without looking at the touchscreen at sixty mph"

I hope not. Anyone stupid enough to drive and dial at 60mph probably deserves to be taken out of the gene-pool.

[Martin Scheffer]

Hi Guy,

1) Apple announces 16 hours of battery life when playing music, 5 when using the web browser or calling. that sounds pretty good (if true), standby is probably way over 24 hours, and who talks for 5 hours on the phone anyway ?

2) that's a USA only problem.

3) aren't phones forbidden in cars ?, who still types phone numbers ?

4) if not that's very easy to add.

6) Apple would be really stupid not to use the iPhone as a basis for the next generation iPod.

8) yes that's too bad !

Martin (friend of Larry the Silver Surfer, we met a few times, a very very very long time ago)

[David]

I agree with most of those things Guy with the excpetion of number 2. Verizon has a number of issues that Cingular doesn't. EVDO is very spotty. I run between Phoenix AZ and Tulsa, OK constantly and there are several dead spots on Verizons network where as Cingular/AT&T works great. Also, Cingular/AT&T seem less like jerks compared to Verizon, who purposely criples phones with bluetooth so that you can't do anything useful with them like, say tranfering pictures to a computer. No they would prefer to have you send them (and pay them) through their "fast" network. No thanks, I'll stay with Cingular/AT&T.

[4rank]

1. Are we still crying over the batteries in the first gen ipods? I think there's been some things learned by Apple since then.

2. I'm on T-mobile and anything is better than T-mobile. Again, stop crying and go get a CDMA phone if you want Verizon

3. Yes it will. And you shouldn't be driving and texting at the same time. And if you are, you should get your driver's license taken away texting at 60mph. If you want to do that, go into an empty field and hit a tree. Nobody wants to risk their lives because you're a solid idiot.

4. Is there holographic video? Can it shoot pheromones to attract women? I think the iPhone should have the ability to cure cancer. The iPhone is meant to focus on certain capabilities...not be the end all of end alls.

5. Trixie and Tiffany will used the phone to call people instead of writing a f-ing novel on their phone.

6. Yes, people will buy it or Apple wouldn't sell it. You're going to buy it too when it comes out you hypocrite.

7. If there's a problem with the battery, you're going to do what everyone does. Get it serviced or DIY. Quit whining.

8. Someone will making something for the iPhone. Just like someone hacks a PSP, just like someone hacks a....blah blah blah.

I love these new negative campaigns that come out on new products before they launch (ala sony). There should be a new term for it.

[Jay]

Not to mention a name, I have a connection with a top employee and someone with VIP at Apple who loves to gossip about what is said in places where the average person doesn't hear. The iPhone is planned to be open for software later. The acutal issue is with Cingular. The network is not secure to the use of OSX in an integrated network with the phone, data, and messaging servers as of yet. This puts into question what someone could do to the phone network given the correct equipment, but basically, until Cingular can protect itself from an open OSX, Apple will not be able to put a developer kit out to build apps for the phone.
I know this sounds silly because Windows Mobile, RIM, and especially Symbian phones are capable of having 3rd party applications, but the iPhone has network integrated features and that is the key to the lack of security thus far. Since there is no timeline on third party software compatibility, I hope that Apple has it all cleared up by the 3g release.

[CR]

Dude, you have more to worry than the iPhone if you don't question what values your son has at 11 to want a $500+ cell phone. At least you're assigning a monetary value to his "chores" so that he can "earn" the money to buy one. Good luck.