While I’m not a cell phone blogger/enthusiast/obsessor, I read a lot of commentary. Opinion is mixed on whether Verizon will get the iPhone this year–and of course, nobody outside the inner circle knows for sure. But, what we do know for sure are part of the specs and look of the next iPhone, thanks to Gizmodo’s degenerate journalistic practices.
One thing that the next iPhone makes clear is a large technical leap in screen resolution and processing power–particularly if we are talking about the same processor as the iPad. What gets interesting here with the huge upgrade are the price points. Does Apple dare to raise the price point?
Yes and no. What I think is most likely to happen is the following. Apple is faced with an ever-broadening demographic, from the early power-user adopters that spent $599 buying the first version to (probably) a lot of interested but not so savvy buyers that pick up the iPhone 3G for $99 at Wal-Mart. The Wal-Mart buyer does not need 80 GB of storage. However, the power user does. Particularly if HD video capture and playback is included in the feature set.
What I am getting to is stating the obvious: the broadening of the iPhone line as its popularity surpasses any previous Apple product. We have already seen Steve Jobs change the name of the company from Apple Computer, Inc., to Apple, Inc. Earlier this year the biggest point he wanted to make was that Apple was the biggest “mobile device” company.
One thing this implies is that I don’t expect a second version of Apple TV–I’m waiting for the iPhone and iPad to do the playing on the HDTV, perhaps even this year if the HD recording and playback rumors are true. This could be very conveniently accomplished through a somewhat inexpensive Airport Express type wireless connection with an HDMI output.
My digression is implicit–because it seems that Apple is working towards a convergence of devices now that the iPad is out. What they have set out in front of them is to increase integration. For example, I fully expect the ability to pair an iPhone to an iPad (instead of iTunes on a specific computer) within 2-3 years as the necessity for having a desktop/laptop computer decreases.
So, getting back to the original thrust of the post: with the introduction of the iPad Apple has broadened the iPhone OS platform. I expect this platform to be expanded, by both larger and smaller versions of the iPad, but not this year. Meanwhile, the real question for Apple regarding the iPhone is not “if” but “when.” By this I mean that the iPhone will be on Verizon, but if it were to appear on their current network it would mean that Verizon is paying Apple a very lucrative R&D and subsidy to get the phone out a year before the next convergent chipset tends to equalize the playing field. IF Verizon were to do this, I do not believe that they would have access to the highest performing, newest iPhones. AT&T has made great efforts in the last six months to try to appease Apple for the poor quality of their overburdened network over the past few years, and unlike the somewhat strained response Apple execs gave AT&T last year when they announced tethering, but “not yet” for the U.S., they seem to be on the same page this year. For example, where I live in Iowa City, it took the rollout of the iPad to finally get 3G, something which had originally promised to AT&T store employees in August of 2008.
Does it make sense to spend a lot of money retrofitting an iPhone to work on an outdated network? It all depends on how desperate Verizon is. Their last quarterly results definitely showed some iPhone pain. But what if Verizon actually asked to have a low-level 3G or 3GS phone made to be compatible for their network? The free (subsidized) iPhone may be a matter of time, or it may not.
One of Apple’s strengths is perceived value. They can convince savvy consumers to pay twice what they would pay for a bargain basement cheap PC notebook to get an entry-level MacBook or MacBook Pro. I feel that overall the company would like to maintain this pricing philosophy/methodology with the iPhone, with one proviso: they don’t want to lose market share the way that the Mac lost the market share race with Windows.
What does this mean? It depends on how scared Steve Jobs is of Google and Android. I think it’s evident at this point that Microsoft’s Windows Phone Series 7 has little chance of success against Blackberry and Android. Android has the momentum (and I’m not talking about Hillary Clinton Pennsylvania momentum).
One thing Steve Jobs realizes is that Apple generates press because of its secrecy, and that the App store generates more than its share of press. In the case of App Store rejections, I tend to side with the opinion of “no press is bad press.” Apple may look bad temporarily in a particularly egregious App Store rejection, but if they are indeed wrong then they have, in most cases, fixed the problem.
Can you remember this ever happening on Android, Windows Mobile Series whatever, or Blackberry? Does the fact that this doesn’t matter help show the primacy and importance of the iPhone platform?
I can’t make up my mind. Google’s partners will soon be offering free but subsidized Android phones. Apple wants to move the platform forward while still maximizing profits. I think it is possible that Apple might move the iPhone 3G down from $99 to $0 with contract, but this is unlikely, as iPhone OS 4.0 requires them to try to push better hardware going forward. It benefits Apple to have as much storage as possible on the iPhone so that people can fill it up with content purchased through the App Store and iTunes.
I expect the iPhone 3G to evaporate and be replaced by the 3GS in the $99 spot, probably the 16 GB version. I think it likely that the 3GS will still be offered in 16, 32, and possibly 64 GB models. I expect the iPhone HD to be offered in 32 GB, 64 GB, and, apparently, 80 GB models based upon the leaked specs.
This isn’t special thinking, these kinds of predictions are pretty obvious at this point. But back to the title of the post: if Apple is really scared of Android, then I can see them actually not having to get Verizon to subsidize the engineering to make the current generation iPhones compliant with their network. If they are very scared of Android then an underpowered iPhone 3G or 3GS, but still iPhone OS 4.0 could be a feasible Verizon entry, even at the free but subsidized $0 entry point.
I think that this is a possibility, but not likely, as I think Apple would prefer to maintain the value-added pricing philosophy in the iPhone. If they were to provide a free iPhone (with subsidy) I would be a little surprised. Consumers like perceived value and this is one thing that Apple knows in and out. If they were to have a free iPhone on Verizon I would be even more surprised, because this would signal that the war for market share with Android was one that Apple was not certain of winning.
I haven’t spent time with an Android phone, but people overall seem to be happy with it. Whether its popularity with users is something Apple is even concerned about will be revealed with the new pricing this summer. However, it is obvious that if Apple adopts an aggressive pricing strategy with the new iPhones (as they did with the iPad) then fear of Google is on the table. If they were to offer a free (subsidized) iPhone on Verizon then it would mean that Apple was very scared of Google’s Android.
I don’t think that this is necessarily the case: the iPhone is doing great and firing on all cylinders. But Apple has been known to preemptively kill products and not behave like the rest of the industry when it comes to things like product lifecycles. The nuclear bomb? Only if Apple is truly afraid of Android, which I doubt.
