iPhone arrives but What Does it Mean?
by Aner Ravon

Ok, so the iPhone is here (read what Mike Arrington and Scott Karp had to say about it). Gil and I both predicted it (duh!) so the first good news is that one monkey is off or backs.

But what does the iPhone really mean?

The real news is that the iPhone is really an innovative converged device. It has a unique user interface (the back light is sensitive to the holding angle, for example). The interface is not the traditional iPod interface but one much further developed, including a touch screen and a virtual keyboard. Oh yes, the iPhone also comes with a 2.0 megapixel camera and a WiFi connection. A truly converged media device. Wow.

the second good news is that Apple did not co-brand the device with a handset manufacturer. We all remember the Motorola-Apple ROKR disaster although we all wish to forget. The iPhone, in order to really stand out, looks rightfully like a one stop Apple shop.

Now it’s time for the bad news. The iPhone is simply too damn expensive. $499 for 4GB and $599 for 8GB is not a mainstream device. This means that by the time the iPhone will be offered by a wide variety of carriers we will start seeing much more cost effective alternatives. Mike Arrington took a note of it as well, comparing the iPhone to professional handhelds such as the Treo and Blackberry:

“Once again, Apple CEO Steve Jobs wowed the crowds like no one else can. In his 9 am keynote at MacWorld in San Francisco this morning, Jobs announced the new iPhone cell phone. From the description in appears to be a game changing device, and the public markets seem to agree. As of the time of this writing, Apple stock is up over 7% for the day. Competitor Research in Motion (Blackberry) is down over 6%, wiping $2 billion dollars in market cap off the table. Palm, maker of the Treo, is also down, nearly 6%.”

The iPhone is a WiFi powered device but is currently only offered by Cingular. I’m not sure I understand Apple’s strategy by not offering it directly to consumers as well, but I guess Cingular has put some constraints on that for now. If selling mobile devices directly to consumers makes sense, iPhone is the one that should be carrying that flag. 

I haven’t changed my mind about the potential of the iPhone. Apple will be very happy with selling 50 Million a year, but that figure is marginal in the overall mobile device space. I expect the converged media-phone market to be dominated by Nokia et al, but it’s good to see Apple pulling the market forward.

And yes, I want one!

Aner Ravon
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