The Only iPhone Review You’ll Ever Need

I’ve been enjoying the ballyhoo over the launch of the iPhone in the UK on September 5th:  Expensive and wait for the next version. Not even 3g. First phone to cost a GBP1000. O2 will never make money on it. Could get yourself a Nokia N95 and have money left over to buy a Nano and a nice shirt. It’s a dead duck.

Well, I beg to differ.  On many counts. I’ve racked up a dozen hours of calls, watched a few episodes of Lost Season 3, listened to a few hours of music and sent a couple of hundred texts on my iPhone in the last couple of weeks.  And it’s the Best. Phone. Ever. 

The iPhone is far from the “first GBP1000 phone”.  When the StarTac launched in 1997 it was priced at $3000, falling to GBP1000 by the time of the UK launch – that’s just to buy the phone, without the price of a contract included.  Back then you paid a premium and you liked it.  My Motorola 8800 in 1989 cost a similar amount. And now there’s always Vertu to consider – I doubt any of those phones come for less than thousand.  Oh, and they’re made by Nokia.  Jeeps my annual phone bill is more than a thousand and I suspect that most corporate phone owners are just like me.  I see the iPhone as almost disposable – perhaps as much as half the initial market will buy the newest one within a few days of it coming out, for the buzz, the newness and the chance to show-off.

We forget how recent it is that phones became available for “nothing” – i.e. were heavily subsidised by the operator in return for massively over-charging us for calls and, particularly, texts.  600GBP a megabyte for a 160 character text message? Wow!  Now of course, Apple is apparently over-charging us for both the phone and the contract.  Heaven forbid – an 18 month contract? How dare they!  I’ve got news for you folks – you want a shiny new phone from most operators now and they’ll drive you towards an 18 month contract.  They need to reduce churn and locking you in is their only lead on doing that so far – after all, no one has got particularly excited by any operator-led content so far.  The endless promises of iTunes-killing music stores that will let us wirelessly download music have yet to either materialise or to excite anyone enough to switch operators.  I suspect it’s simply that once you sign a contract you stay with that operator until you see a better phone that you like that’s offered by another network and not by your own.  Perhaps tens of thousands – judging by the number I saw on the street – of people switched to Orange when it began to offer Treos, not least because no other network offered them at the time.  The iPhone will drive the same behaviour – for a certain segment of the market that is probably very lucrative for O2.

I’m no Apple fanboy and Steve Jobs certainly doesn’t need an apologist.  He’s proved he’s an inspired yet occasionally ruthless business man many more times than most.  He’s had a long string of hits punctuated by some duds – the Lisa and the Cube for instance; but some of Apple’s worst moves – ugly, beige, boxy Macs (thank you John Scully) & the Newton, weren’t his.  Since his return to Apple the hits have far outweighed the misses.  $5.41 billion of revenues in the last quarter prove that. He may be winning no friends this week, first with the Apple price drop (criticised as too soon and too harsh by none other than the Woz) and then with the press release noting that those who hack their iPhone are not guaranteed future compatibility and may be left only with paper weights (no surprise – modding consoles, PCs, phones or whatever has always been risky and, let’s be clear, the iPhone is not yet a platform; it will be, but it isn’t yet) – let’s be real though, a couple of hundred thousand people bought iPhones on the basis that they would be or could be unlocked.  If you don’t want O2 as your network, you don’t have to use them; just bear in mind that every time there’s an update to the iPhone or iTunes you may have to wait a while before you can use it or you may just have to stay pat.

It’s also clear to me that Apple is not trying to be Nokia.  Over the last year Nokia’s mobile shipments have gone from 75.1 million to 100.8 million units per quarter – that’s a run rate of close to 400 million a year.   Nokia’s market share stands at 39.1% – therefore there’s a total mobile market of a billion.  The next on the list, Samsung, who have come from pretty much nowhere in the last 4 years, stands at 14.5% (37.4 million phones last quarter).  Motorola, home of the RAZR, is demoted to 3rd place with 13.8% (35 million phones last quarter).  Apple want to sell ten million iPhones in the first year.  But that, of course, is the total phone market.  Apple is in a different market – one for smartphones, converged devices, “cool gadgets” and “must have toys”.  Nokia had 56% of the smartphone market last year and sold 40 million devices. That puts the total market at around 75 million – for smartphones.  I believe Apple’s total potential market is much bigger than that and so 10 million is eminently achievable – and, indeed, far more than that over the coming years. (Source for all these figures is “The Business” 8/9/07 via Strategy Analytics). 10 million out of a billion?  Sure, why not.  Why not 100 million out of a billion?

So, here’s the only review you’ll need.  It’s in two parts after this part – those who think the “only” review in 3 parts is oxymoronic can think again.  Things that will make you realise you don’t ever want any other kind of phone and things that will make you wonder whether you should wait for version 2. Only you’ll know which of these is important enough for you to make the switch or to reject it all together.  In saying what’s good or bad about the iPhone, I’m generally using four other phones as my benchmark – the HTC Touch and the Treo 750/680 (the former being Windows-based and the latter Palm OS) and the Blackberry 8800.  I wanted to use equivalent touchscreen phones – with and without keyboards – and included the Blackberry as the standard corporate road warrior device, lack of touchscreen notwithstanding.

In the next two posts I’ll actually write “The Only iPhone Review You’ll Ever Need.”