

IPhone Will Fail in a Late, Defensive Move (2007) - nuromancer
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aRelVKWbMAv0

======
thought_alarm
When you get past the author's ridiculous pooh-poohing of Apple's products,
the actual analysis of the cell phone industry that he quotes is pretty well
right on the mark and sadly still applies to the industry in 2012.

While the iPhone 1.0 lagged well behind established smart phones like the
BlackBerry in a lot of areas, the iPhone was revolutionary in its overall
quality, its user interface, and its web browser. It's often hard to predict
how important those things will be. And all people had seen at that point was
a demo from Steve Jobs.

But what the market research really failed to predict was that average
consumers would start dumping their carriers and switch to AT&T just to get
their hands on this new iPhone. That led virtually all other major carriers to
jump through whatever hoops necessary to get the iPhone on their networks to
avoid being left out in the cold. And the rest is history.

In an industry where it's the manufacturers who have to jump through all the
hoops to get support from the carriers, this role reversal between Apple and
carriers turned the industry on its head. Nobody would have predicted that in
January 2007.

~~~
InclinedPlane
_"Nobody would have predicted that in January 2007."_

To be fair, plenty of people did. Plenty of people didn't, of course:
[http://tech.fortune.cnn.com/2008/10/22/revisiting-the-
dumbes...](http://tech.fortune.cnn.com/2008/10/22/revisiting-the-dumbest-
iphone-predictions/)

The fact that so many people couldn't wrap their heads around the iPhone's
success is rather shameful. Sure, there's a lot of solid reasons why there was
plenty of friction and many hurdles, but at the end of the day money is
supreme. Is it shocking that $1400 of guaranteed revenue per phone would
ultimately be embraced by the carriers regardless of their reluctance about
some aspects of the process?

Ultimately what happened was that so many people fooled themselves into the
idea that they understood the market and the industry better than they
actually did. More so, they didn't want to admit that this development coming
out of left field represented a superior understanding their their own
knowledge, which was too much for their egos.

~~~
Someone
_"Is it shocking that $1400 of guaranteed revenue per phone would ultimately
be embraced by the carriers regardless of their reluctance about some aspects
of the process?"_

If you add "in a world where, each month, there are a zillion devices with
$1000 guaranteed revenue that, if you are lucky sell well for maybe a month" :
yes.

At the extreme, it can be not worthwhile to sell a product with a $1.000.000
guaranteed revenue if, in order to make that sell, you have to instruct
personnel at thousands of shops, provide marketing materials for those shops,
buy advertising space, etc.

It is not only that $1400 that makes the iPhone attractive, it also is the
fact that you just have to put up a hand-written sign "we sell iPhones" to
sell them in large quantities, not for a few months, but for over a year,
without any changes to the model. That is what surprised many people.

------
bcrescimanno
Hindsight, of course, is 20/20--but to be fair to this journalist, there were
some very real reasons to think the iPhone wouldn't really succeedn (at least
not in an industry shifting way). At the time, the carriers maintained almost
full control over the whole ecosystem and if entrenched players like Nokia
couldn't force their hand on anything, what reason did people have to believe
Apple could? Moreover, the initial price point was exorbitant for a phone in
that day--and people should remember that the real explosion of iPhone sales
didn't happen until the 3g brought about the subsidized model.

What _was_ underestimated was the public's desire for a smart phone catering
to people as people not people as employees.

And let's not forget that it brought about a "touch-revolution." In 2007, all
the anti-Apple group could talk about was how "without a physical keyboard,
it's just going to suck."

With all of that said, reading this piece suggests the author was more
drumming up pageviews by presenting a contrarian view than actually writing an
article he believed in.

~~~
jack-r-abbit
> _let's not forget that it brought about a "touch-revolution."_

And let's not forget that when the iPhone was released it was not the first
app enabled touch screen phone. I would say that Palm did just as much (if not
more) for the touch revolution. It just did it in a bit more clunky way. The
iPhone brought the _sexy_ into the mix.

~~~
minalecs
there were a lot of touch devices pre iphone. I owned the nokia 770
<http://en.wikipedia.org/wiki/Nokia_770_Internet_Tablet> around 06 and sony
p900 around 04 <http://en.wikipedia.org/wiki/Sony_Ericsson_P900>. The biggest
difference was the capicitive screen vs resistive screen and the requirement
of a stylus for most things.

~~~
ekianjo
Let's not forget a number of PocketPC touch (stylus) devices were also phone-
capable. That was YEARS before the iPhone. It had "apps" too, but we simply
used to called that "programs" at that time. And there was no central
market/appstore or anything. Most of these devices were very open.

~~~
Terretta
Had one of first Compaq iPaq GPRS sleeves, ordered directly from Hong Kong
before US availability. (Late 2001, early 2002.) And Handango was my "app
store" of choice.

The 5 years from 2002 to 2007 were interesting, but in hindsight seem to share
so little with post iPhone industry.

~~~
ekianjo
It clearly did not reach critical mass at that time. There were a number of
obstacles to adoption - devices were powerful enough to do things, but
compatibility with office software was not well built-in (If I remember
correctly you could not synchronize emails with Outlook right out of the box).
But third party applications were often very good and feature-plenty. The
media players were especially capable and well designed.

It was however, impossible to upgrade the software at that time (the OS),
which rendered your device obsolete every time a major WindowsMobile version
was released. This is happening again with Android and I can't say this is a
very good idea.

------
dasil003
Keep in mind this was right after the iPhone announcement. Although he lays it
on a bit thick with the "Apple cult" nonsense, it's understandable given the
extreme level of hype at the time. The analysis of the state of the industry
was good, and really it's an amazing accomplishment that the iPhone was good
enough that none of the powers that be could stop it.

The only part where he goes off the rails is this:

> _Lastly, the iPhone is a defensive product. It is mainly designed to protect
> the iPod, which is coming under attack from mobile manufacturers adding
> music players to their handsets._

This is just a blatant misunderstanding of how Apple operates that anyone
could have refuted in 2005, 2000, 1995 (maybe not quite as strongly here),
1990, or 1985. The potential of the iPhone as a smartphone was obviously a lot
more than a simple music player even if its feature set seemed weak compared
to Blackberry.

~~~
meric
It was both "defensive" and "offensive". Rather than standing still milking
profits of the iPod until the entire market slowly dwindles as other mobile
devices begin to incorporate music players as well, Steve Jobs moved onto the
next thing with one foot firmly planted in the portable music player.

It was exactly how Steve Jobs operates, from the Apple II to the Macintosh
(personal computer), from the Mac to the iPod (hardware + software), from the
iPod to the iPhone (mobile device, battery). All transitions were done from
positions of strength, stride to stride.

------
ethank
People get so caught up in existing paradigms and the resultant hegemonies
which enforce them that they become blind to the obvious.

This journalist is not alone in this. Examples permeate both media history and
just criticism in general. For anything that is "obvious" there is always a
contrarian who seems unable to see movement which we see as obvious.

Anyhow, the iPhone announcement in 2007 was interesting from my viewpoint
being in a major record label because of how it portended the complete and
utter end of control. It brought domestically something that was already
happening in South Korea, where "ownership" of content meant little to the
average consumer.

Of course the label folks thought it would mean more money from ringtones, and
were bitterly disappointed that it didn't support custom ones out the gate.

Basically people saw what they wanted with the iPhone announcement, not what
was actually there.

~~~
rkwz
>It brought domestically something that was already happening in South Korea,
where "ownership" of content meant little to the average consumer.

Can you expand on this?

~~~
ethank
What was happening in SK was that the hardware of the device started mattering
more to consumers than the content on it. They tried to duplicate this in the
US with Helio and failed. Unlike in SK, the bandwidth doesn't' make up for the
crappy device, since our cell network is so far behind.

South Korea made content owners supper optimistic about things like "Comes
with Music" (from Nokia) and the "dead-before-launching" Beyond Oblivion. Lock
in via cell hardware was their last hope.

------
rudiger
The original 2007 iPhone was ridiculously good. It's five years later and it
still feels ahead of its time. There's no way Apple would put that amount of
effort into their version 1.0 if it was just a "defensive" move.

~~~
drivebyacct2
What about iOS feels ahead of it's time? iOS is showing it's age in my
opinion. With Contracts and Charms in Windows and Intents in Android, I feel
cramped and limited every time I use iOS (where Twitter integration is
"magical" and things like Instagram are _necessary_ ). Even with ICS and it's
makeover and hardware acceleration it's hard to give iOS the "magic" edge
these days.

That having been said, it's of course very popular and better received on
average than Android (I think ICS adoption will help with this), and dooms-day
articles like this are silly when written and fun to look back and laugh at.

~~~
jimmyvanhalen
> What about iOS feels ahead of it's time?

-iOS doesn't crash as often as Android

-iOS doesn't have nearly as many security/privacy issues/virus/spyware

-iOS is not(as) fragmented like Android

-iOS is faster (no lags) and not as buggy as Android

-iOS developer and user support way better than Android

-iOS ecosystem/app market way better than Android

-iOS user interface is simpler/easier to use/more straightforward than Android/TouchWiz/HTCSense/etc.

-more well-designed, well-written iOS apps than Android

-better battery life, better hardware, better screen, better user interface, etc.

~~~
drivebyacct2
None of those are facts and in my experience the anecdote goes the opposite
way. My Galaxy Nexus has locked up ONCE on me ever, my iPhone breathern crash
often enough that it happens weekly just from being at the bars.

Fragmentation is a joke. My phone has never, ever, ever had a privacy issue
and that's also hilarious given the weeks of iPhone privacy issues (GPS, iOS5,
Contacts)

>-iOS is faster (no lags) and not as buggy as Android

hahahahaha

>-iOS ecosystem/app market way better than Android

hahahaha

Do people really believe this stuff still? Yes. Faux wood and fake plastic
looks great in apps. So futuristic.

Better hardware? Verifiably false. Better screen? Pft, mine's AMOLED 720p.

~~~
CountSessine
Sorry - I have to address this for posterity - I'd hate for this post to
become the HN word on the Galaxy Nexus.

I have access to 2 Galaxy Nexuses - one is mine, and another is a work phone
used as a sample MTP USB device. Both are the the most crazy, crash-happy
computing devices I've ever had the misfortune of using. For a.while my GN was
literally crashing once every 2 days. I'd pull the stupid thing out of my
pocket after feeling it vibrate to discover that the case over the CPU was
burning hot and OS was rebooting and showing that ugly startup animation.
Online forum complaints suggest that i'm not the only obe seeibg this.

Then there's the flaky behavior. Once every week a system process on my GN
will crash. This service has something to do with the radio modem because I'll
turn my GN on and discover that it isn't on 3G and that ive been missing phone
calls and texts for who-knows-how-long.

I cant believe that i returned an iphone 4S to buy this lemon.

~~~
drivebyacct2
I'm sorry your experience has been like this. I would argue that you did get a
lemon and you should talk to VZW about getting it replaced. Both of the Nexii
I had were fine (until I broke one of them :/) and the other hackers in my
dorm love theirs as well. I'd recommend at the very least a system restore and
then paying attention to what apps you install.

I have one that will happily restart itself and run my GPS down all damn day
long. Got rid of it pretty quickly.

------
jinushaun
Clearly these people did not see the same Jan 2007 demo that I did. Grown men
were going apeshit in the audience and millions around the world were glued to
their computer frantically refreshing live blogs. My entire office officially
stopped working to "watch" the keynote. Hundreds of thousands were already
talking about dropping Verizon for the iPhone. Hindsight is 20/20, but no one
in their right mind would've predicted it would fail. Apple sealed the deal
when they finally subsidized the iPhone in Sep 2007.

------
eli
To this day it's remarkable how big a chance AT&T took on the iPhone and how
big a departure it was (and is) from how the industry usually works. They only
went to AT&T after Verizon told them to take a hike.

------
gbhati
i wonder if he still works in tech journalism!!

~~~
markrickert
That's the thing. These guys never go away. They keep getting paid to write
flawed versions of the future that will never come to pass.

That's why I don't put any weight in anyone who has "analyst" or "tech
journalist" in their credentials.

~~~
bcrescimanno
Don't forget that there's a whole segment of these guys who are basically paid
to get it wrong--being the one guy who says, "this obvious winner is going to
fail" attracts a lot of eyeballs.

Remember, being a pundit isn't about being correct; it's about getting people
reading what you write.

~~~
adrianonantua
Also, in the remote case he gets to be right, he will get known as the wise
told-you-so guy.

------
guccimane
This one hits all the bullet points for clueless Apple punditry, including
calling Apple a cult and asserting that people will buy anything Apple makes,
however stupid and useless. Nothing has really changed in this regard, there
are still tons of bloggers and other assholes lazily tossing out the same old
talking points about Apple selling overpriced toys to vain idiots.

------
mthreat
I had my doubts too, until the minute I used one at the Apple store. I walked
out with it, $599 poorer.

~~~
hippee-lee
Are you sure your were poorer, in an overall wholistic sna. Did your purchase
enrich your life by $599?

I know I got more than two years of use out of my iPhone 1 and then passed it
on to my 2 year old daughter who used it for over a year. Well worth the
investment and for all the little gripes or complaints I did have I still feel
like I got more than I paid (including phone cost + carrier fees).

~~~
mthreat
You're right - I'd say the phone improved by life by more than $599. I was
coming from a typical crappy phone with a joke of a web browser. The iPhone is
the first phone I really used to access the web.

