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The Cheaper iPhone and Other Misconceptions

The Cheaper iPhone and Other Misconceptions

I’ve been at a number of events this week, and the one thing everyone wants to talk about is the new iPhone 3G. It may not have quite the hype of the original iPhone a year ago - what could? — but I’ve gotten a lot of questions, and I’m concerned that there are a lot of misconceptions about the phone out there. Here are some of the things I’ve heard and some reactions:

The new iPhone is a lot cheaper:

The price isn’t as low as it seems. At $199 for the 8GB version, plus $30 a month for the data plan (above your voice minutes, which start at a minimum of $40 a month), over two years, this comes up to $919. The older iPhone cost more, but the data plan was only $20 a month, so the two year cost (above voice) was $879. So over a two year period, you’re actually paying $40 more. Now, most of us look more at the initial cost, not the monthly fee, which is why the new iPhone should sell faster, but you really should consider all of it.

Now that the price is lower, Apple can sell billions of iPhones:

My colleague Sascha Segan, one of the most astute observers of mobile devices, used the “billions” comment in his take on the phone. But that’s ridiculous; I’m sure that’s not even in Steve Jobs’ wildest dreams. Yes, more than a billion phones will be sold this year, but a large percentage of these are very inexpensive devices - not even what we would consider a “feature phone” in the U.S. The iPhone - like virtually every other “smart phone” is targeted at a relatively affluent audience, one that can afford a data plan. Could it sell tens of millions? Maybe. Billions? Hardly.

With 3G, you’ll now be able to get a fast connection everywhere:

At the keynote, Jobs talked about how connecting to websites and downloading mail was now “nearly as fast” on 3G and with Wi-Fi. But of course, it all depends on your connection and on how many people using the wireless network at a particular time. Some of this is a location issue: AT&T’s 3G network doesn’t have the footprint of the older, slower network, so if you’re out of range of the new network, you’ll only connect at the slower speeds. (And of course, there remain places where you’ll find you’re out of coverage, period.) And if you’re in a location where you can get on a Wi-Fi network, the odds are you’ll find that faster (again, it depends on how many people are sharing the connection). In fact, I believe that AT&T will direct more of its customers to Wi-Fi locations, simply because it’s less expensive for the carrier to handle data that way than over a 3G connection. See the stories on AT&T rolling out Wi-Fi at Starbucks.

The iPhone is now ready to replace the BlackBerry:

Again, very doubtful. I’m very excited to see much better enterprise support with the new software, and the ability to have Exchange ActiveSync and control mail, calendars, and contacts through that is great. And enterprise administrators will be glad to have the ability to deploy applications and to be able to remotely shut off enterprise mail. But as my colleague Oliver Rist pointed out that’s not a particularly new feature - it’s an implementation of a feature Microsoft added to Exchange , Windows Mobile, and other devices over a year ago. The BlackBerry still offers a lot more control to network administrators - plus it has the advantage of familiarity. And today, there are a lot more business applications written for the BlackBerry. Just as importantly, BlackBerry has a sales and service organization that targets enterprises, while this has never been Apple’s focus. And for email in particular, there remains a lot to be said for a physical keyboard.

The iPhone will never get business support:

This is the flip side to the previous argument. Sure, Apple mainly targets consumers (and to a lesser extent, education), while BlackBerry - and to a lesser extent, Windows Mobile, are much more familiar to enterprise users. And I don’t expect that to really change. But that doesn’t mean that businesses won’t accommodate the iPhone. Apple has two big weapons here: The first is that iPhone users tend to be really passionate, and also relatively high up in any organization. Second, I’ve talked to a number of corporate developers who tell me that it’s actually much easier to develop for the iPhone than for the Blackberry or Windows Mobile. There aren’t enough people doing this yet to know whether this translates to the larger market, but I certainly think it’s possible.

Other phones are now as good as the iPhone: We are now seeing bigger screens, touch screens, and better integrated browsers in a lot of other phones. And that’s great to see. But I’ve yet to see anything that even comes close to the usability of the iPhone for general browsing or information surfing. In that regard, it’s still in a class by itself.

The new iPhone now has everything users want.

That’s just the fanboys talking - the iPhone is great, but no product is that good. Lots of people like the phone, but dislike the exclusive network. I’d love to see a better camera. I don’t care about the lack of a flash (cell phone flashes are rarely good), but no video recording? Video chat would be nice as well, but I’m not sure if the network can handle it yet. The lack of MMS support is surprising. I’d love to see voice command, or at least voice playback with turn-by-turn directions (using the GPS), although I won’t be surprised to see this as a third-party application. And how about cut-and-paste? Please?

Existing iPhone users should upgrade immediately.

It all depends on what you want, and in part, on where you live. I think lots of users will upgrade, but lots of users won’t. The good news is that other than the physical changes- mostly the 3G radio and GPS feature - everything else is software, and that’s available for free to existing users. (The other notable physical changes are the flush headphone jack and the different color.) Faster cellular browsing and a real GPS are nice, if you live in areas where they are available, but if you mostly browse over Wi-Fi, it’s not going to make a big difference. (Personally, I’m hoping AT&T has good 3G service on my train commute….)