Friday, January 12, 2007

The last word...

I don’t want to keep on about the iPhone as it will bore most of my family but I would just like to respond to a couple of comments yesterday. I really do appreciate the feedback and see it as a challenge; it also gets my mind working so thanks Abs and Muzza, it's been fun. Herb, Mum & Dad, I’ll post something a little more interesting later today.

1. It’s just a phone, with video/music and browsing capability
Is it just a phone? Running a version of Mac OS X it has one of the most powerful operating systems in the world (OS X is based upon UNIX). What does that mean? Well its robust in comparison to Windows Mobile, easy to deploy applications (remains to be seen) and a useable, secure OS? What made the iPod such a success was its elegant design, but more importantly the very simple user interface. You can operate the thing with just your thumb. Of the top 10 MP3 players by sales on 5 are Apple products. Microsoft comes in at number 19.

2. There are dozens of devices out on the market that do the same thing
Motorola RAZR V3i or the new Z6 – Motorola make awful phones. Great to look at but have you actually used one. Worst GUI I have ever seen. Uses a Micro SD giving it a massive 2 GB capacity!!! In its favour it does use a version of iTunes which will allow you to play protected content.

Sony Ericson W850i – Nice phone and it looks good, small, but with only 4 GB capacity and no memory card slot. Doesn’t run an iTunes compatible application.

What a lot of these phones don’t offer are storage, compatibility with tracks purchased from online music services such as Apple or Napster and a decent user interface.

3. New device or expensive catalyst – Market shaker
I’ve come to the conclusion that it’s a market shaker more than anything else. The iPod came out in October 2001 (click here for a great article about the design process) and what competition did they have? Nothing, apart from some third rate products that were designed for the geek rather than mainstream user. Microsoft launched their version, Zune a few months ago (now with 2% market share). Read this article to understand what the impact on the market could be, it’s quite interesting.

4. The failure of Apple Newton
Very true and I’d forgotten all about that. Perhaps that was Apples problem, trying to invent a new technology rather than perfecting an existing one. See the New York Times article here. It goes on to discuss his failures and some of the issues surrounding the phone.

5. Not in production, competitors have an opportunity
I agree, why announce the product this soon. Perhaps due to the intense media hype or because he didn't have anything else ground breaking to launch? Who knows? Apple TV was announced last year and the new Wireless Access Point isn’t anything to get excited about. They had to do something; city analysts were expecting a major announcement. Look at the share price after the announcement, 6% rise. (I would appreciate your comments on this Mr M.)

Apple has left its audience with a lot of unanswered questions. Its being sued by Cisco for the right to use the name and is it really going to compete with the commercial players (RIM & Smartphone Manufacturers) or just target consumers? Does Apple think consumers will pay in excess of £300 for one? And how will this hit iPod sales? I mean, why have both? Is this a mainstream product? Possibly not? Then again look at the iPod and its many variations, perhaps this is just the beginning.

In conclusion I think this is going to be a waiting game and the version demonstrated on Tuesday isn’t going to be the production release. They have several months to refine the design; it may be that some of the features weren’t even announced. Who knows, who cares (I do) but that’s enough on the subject now. I don’t want to bore you all. Let’s just wait and see what happens in the not too distant future.


Muzza said...

I agree Rob that the conversation in this forum has run its course...for now. I will however respond to the share price rise. Impressive to say the least but let us not forget the meteoric rise of Enron's share price despite the fact that all the traditional warning bells were sounding (off book deals and management share sell offs etc). I quote an article on the fall from grace of Enron "Markets are imperfectible human artefacts and always subject to gross error, not to mention high-stakes fraud, because the transactions are always the work of human beings. Computerization and esoteric mathematical formulations do not change that humble fact; neither does the Internet." So while I'm not suggesting that Apple have fiddled the books we must be wary of looking to the share price alone when making a decision about the long term success of a product. Apple is owned by a LOT of institutional investors who have a lot to gain should Apple's new product do well. The reciprocal is also true and herein lies the rub. Apple must succeed with this new product as the mobile music device market is rapidly approaching saturation. The ongoing growth of sales will rely heavily on consumers’ refresh rate ie how often they choose to trade up to a new (albeit only slightly different) device. This is a dangerous strategy and I must say, not a game plan that Apple have traditionally bought into. Share market traders do not have the iPhone’s functionality and ease of use as their triggers for trading in Apple shares. Their concern is primarily to make money and this can be done as a share price goes up or, most importantly, while it goes down as well. This is the beauty of option trading.

Anonymous said...

Don't knock Motorola - they made a phone which did all I required - it unabled me to make a phone call from the middle of Dartmoor. Trying to get a replacement 'telephone' is virtually impossible.