The Far Side of Tech

I’ve invited my friend, fellow geek, and former college roommate David Chen to discuss Apple’s recent announcement of the iPhone. Dave also blogs at More Than Fine. If you have been away from civilization and haven’t heard about Apple’s latest, you can read more at Wikipedia and ogle pictures at Engadget.

Devindra: So first reactions: Wow. Of course this is usually my first reaction to every major Apple announcement though (see the unveiling of the Core Duo computers, the potential of Boot Camp). The device is shockingly futuristic-it’s the sort of thing we expect in science fiction, not real life.

David: Agreed. The geek in me found the keynote address riveting. Steve Jobs is a consummate speaker and showman, and you could just feel the excitement in the room, through the video on your screen. The iPhone looks like the next big must-have item, with the potential to be an incredibly disruptive technology that will shake up both the cell phone industry, as well as the portable music player industry (again). But they also have a lot of challenges ahead of them; they’re basically entering a whole new market.

One of the concerns I have is in the execution. Will the execution be pitch perfect, as Jobs makes you believe it will be? The iPod has come a long way since 1G; technologically and stylistically, the new nano is light years ahead of the original ipod with manually moving clickwheel. In many ways, the advancements (i.e. its new, sleek style and great usability) are what has made it so successful. How drastically will iPhone v.2 differ from v.1? Can the battery life really last as long as they say it will? Will the three types of sensors really work flawlessly? There was an awkward moment during the keynote when Jobs was waiting for the web browser to “catch up” to him moving around the screen…obviously what was shown of the web browser is impressively more advanced than what’s available now (especially with the great screen), but will the execution really be as smooth as Jobs claims’?

Devindra: I wouldn’t worry so much about execution. If there’s one thing we can be sure of from Apple, it’s that they will ship a quality product. Their products may not always better than their competitors, but they are still quality products in the end. It’s a better track record than most big-name tech companies.

Still, your concerns are valid and I’m sure they’re also on the minds of most other technophiles. You’re right about the iPod, there have been significant design changes in only a few generations of the device’s existence, so I’m sure we’ll see something similar with the iPhone. I don’t think the differences in future revisions of the iPhone will be as drastic as the iPod though. At the time of the first gen iPod everyone was still coming to grips with usability and aesthetics for portable players. After making significant progress in those areas I think Apple is bringing a lot of their previous experience to this device, subsequently, there should be less major changes to the iPhone over the years.

Just as with any portable device, I’m really worried about the battery life for the iPhone. Even though Apple claims 5 hours for talk/video and 16 hours for music those are most definitely ideal numbers that don’t take into account realistic usage of the phone. It also runs into the same issues every multi-functional phone comes across, chiefly of which is the conundrum of pairing a device that often serves crucial functionality with entertainment features. If you only have 5 hours of talk time (which is still pretty good for a cell phone) would you really want to waste any of that by watching videos and listening to music? When you’re stuck in an emergency situation with no battery life, I’m sure you’ll be kicking yourself for indulging in that last “Desperate Housewives” episode. The iPhone may be the one multifunctional device to rule them all, but it certainly doesn’t signal the death of specialized devices.

As for the touch sensitivity, I’m taking a wait and see approach with that. I’m fairly certain it’s going to be just as intuitive as it looks though. They’re basically taking mouse gesturing a step further by using your finger as the pointer-you can’t get much more intuitive than that.

David: Two other issues with the execution I wonder about: How will that expensive screen stay clean and protected? Will cell phone screen protectors work with it? And also, what about people with fat fingers dialing on that tiny screen keyboard? Will there be a voice that says, “The fingers you are using to dial on your iPhone…are too fat. To order a special dialing wand, please mash the keypad now…”

Devindra: I’m sure there will be screen protectors, although I wonder how that will affect the touch sensitivity of the screen. My DS Lite’s screen protectors don’t bother the stylus much, but then it causes a lot less friction than your fingers. I also need to see much more of that screen-based keyboard before I can tell if Apple has truly eliminated the need for a dedicated keyboard.

David: It also costs 2x as much as the iPod.

Devindra: Cost is certainly a problem, but it’s also pretty competitive when compared to Treos and Blackberry’s. It’s not going to be anywhere near mainstream for a while though.

David: Indeed. I can’t emphasize enough that I think their key challenge right now is how well they handle entering this new market.

Devindra: What exactly is your point with that?

David: Well, people have different consumption patterns for phones than they do for portable music players. For example, people often exchange ipods for birthdays or as Christmas presents. But people don’t do that for phones as often, both because of the price and because of the nature of the product. People consume it differently, meaning they buy it in differing frequencies and for different purposes. They will, consequently, expect it to do different things. So I’m saying, if it can compete in the same market as palm and treo and outdo them, then you probably have a winner on your hands. However, even if it doesn’t, it still has a chance for success because of Apple’s sky-high brand loyalty.

Devindra: Okay. The thing is that Treo’s and the like are traditionally business oriented. Apple? Not much so. This is more of a sexy consumer device than a classy business utility. I’m also unclear what you mean by this:
“People consume it differently, meaning they buy it in differing frequencies and for different purposes. they will, consequently, expect it to do different things.”
Yes, people consume phones and iPods differently, but how does that correlate to your point?

David: I’m just trying to say that people have different expectations for each one, and therefore, you can’t say that just because they’re successful in one category, they will be successful in another.

Devindra: But if you look at the device, 80% of it is something we know they can do. The only things we’re not sure of is the phone technology and the cross functionality between all of its features.

David: Yup, so that’s what the big question is. Again, my initial reaction is the same as yours, which is “Wow…that thing is cool, and I want one” (if I could afford it). But yeah, there are many factors to take into consideration before I’m willing to declare it a success

Devindra: Fine fine. But that’s entirely from an analytical standpoint. I’m just a bit more interested in the potential for change that this phone holds. It just amazes me how easily Apple can just put something out there and completely change our mindsets–and this is coming from someone who is not generally that fond of Apple. MP3 players existed before the iPod, but it took that device’s combination of style, simplicity, and a well-timed debut to make digital audio players the successor to the Discman. I’m not a fan of the iPod, but I recognize it’s influence on our society. I just wonder what we’ll see now with the iPhone…

David: One thing that bothers me is that the whole announcement raises as many questions as it answers. Specifically, I wonder about their business model. The business model for cell phones is completely different than with ipods. IPods are profitable right out of the box (Apple makes roughly 50% profit on the price of every nano that it sells). For cell phones, typically the cell company eats a huge amount of the cost of the handset, in exchange for signing up a person to a long and painful contract (which the company then can make back their money on). I wonder what iPhone’s model will be.

Devindra: I’m confused by that as well. $500-$600 with a two year contract? That’s the price of new phones before subsidy!

David: Not even…that’s more than a typical a phone without subsidy would. A new Motorola Razr is like $250-350. I got mine new for $0 with a 2-year contract. And I like my Razr!

Devindra: $500 for the latest tech isn’t unusual. I’m thinking of the crazy-cool phones being released in Asia though. I’m just wondering if there is any sort of subsidy going on here, or does the device actually cost upwards of $800 to make? And then there is the phone plan, which is usually the biggest money sink.

David: So I have to wonder: Will there be any special subsidies for the iPhone when it comes out? What is the target market for this thing (current iPod users?)? And when will non-Cingular people get to use this thing?

Devindra: Not much detail, but we know it’s an exclusive Cingular contract, and it will most likely stick with them for a few years.

David: Their goal is modest and definitely achievable: 1% of the worldwide cell phone market. But I think we can agree - the day that people jump ship from T-mobile and from Verizon just to get an iPhone is the day that you know this thing is a success.

Devindra: I don’t think they’ll be able to get 1% in a year, but once the price falls to the $300-$400 level, probably sometime next year, I’m sure we’ll see wider adoption.

David: But going back to the contracts, many questions remain. If iPhone users are locked into a two-year contract with Cingular, what happens when the next version of the iPhone comes out? Two-years is like eternity in Apple-years, in the sense that in the past two years, the iPod and iMac and Macbook have all gone through many different iterations. I wonder what their timetable will be like for iPhone, v.2, or the iPhone Nano and so on.

If they keep cranking new editions of them out like they have been with the iPod, you may end up with some very sad people, i.e. people who switched over to Cingular, spent $500 on the phone, then are forced to watch as the newer, cooler one comes out a year later, forcing them to re-up with Cingular for another 2-years just to be able to spend another $500 on the new iPhone.

This was never a concern before; with iPods, there was never any contract for you to sign. You paid for your iPod, Apple made its profit, and that was it. People already resent their cell phone companies and their draconian contract restrictions; it will be curious to see how this resentment may bleed over as they start to consume Apple products. In any event, we can all agree that the iPhone has the potential to change the way cell phone providers and makers operate by changing the way people think about their phone.

Devindra: I can only hope that Apple realizes they’re playing in a different field and keeps the hardware revisions to a minimum. I also think Cingular wouldn’t let them pull anything crazy with multiple revisions either. At the very least, we should only expect one revision per year, which is pretty much what we’re seeing for most cell phone product lines. There’s always a cost for early adopters, and it looks like that cost will be particularly high for buyers of this first generation iPhone.

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