With Macworld right around the corner, waiting to jump out at you like that crazy guy with the branches on the San Francisco waterfront, speculation about the Stevedialer 30000 (aka, the iPhone) has reached a pitch so feverish that the CDC has declared Moscone a “hot zone.” No. Not for Wi-Fi.
With all of this rumor and innuendo going around, I decided to consult my most trustworthy source on all matters Apple: Frank, the guy who comes around to steal the soda cans out of our recycle bin every week. If there was something to find out about the Stevedialer, Frank would know.
Meanwhile, I sat out on the front porch, considering the potential of an Apple-branded cell phone. But one question kept tugging at the shirt tails of my mind, like a kid asking for ice cream. And like that kid, who I told he couldn’t have ice cream, it kept repeating one word “Why? Why?”
I’m hardly the lone nay-sayer on all matters Stevedialer-related, but I get the feeling that all the buzz has pushed us into the minority. Despite the “incontrovertible” evidence that an Apple phone is coming, I can’t quite get myself to believe it. It just doesn’t add up. Call me the “denyPhoner,” if you will—okay, never mind, don’t call me that, it’s awful. But I think you see where I’m going.
First off, consider Apple. The company has two major platforms, reflected by the fact that it’s divided into two major divisions: the Mac division and the iPod division. If a third had been created to support the entirely new platform of a phone (if, for example, the “first 30 years” teaser alluded to a phone), I think Apple would have had a hard time concealing all the overhead necessary to set that division up. So, the Stevedialer probably needs to fit into one of the existing divisions. If a phone were to run a slimmed-down version of OS X, the Mac division might make sense, but I call that unlikely on both counts. The iPod division seems a much more reasonable home for a small portable device, if for no other reason than an Apple phone would likely want to capitalize on the iPod brand.
Having placed the Stevedialer under the auspices of Tony Fadell’s iPod division, the next question is what does adding cellular capability to the iPod platform gain Apple? There are, after all, two parts to the iPod: the actual physical device and iTunes (both the software and the store). Selling a physical phone device is obviously beneficial by bringing in revenue and profit, but how does it fit into Apple’s larger business model? The key would seem to be iTunes—leveraging the Stevedialer as a platform to purchase music from the iTunes store. Which almost makes sense, until you consider that iTunes sales are intended to drive iPod sales, not the other way around.
Now, like the iPod, the cell phone market is divided into two markets: the physical handsets and the service. This is the continual sticking point for me when it comes to an Apple phone. The company could make the best cell phone out there, but that device is useless without service. There are two options when it comes to service: Apple can make a deal with some or all of the service providers, or Apple can roll its own service as a Mobile Virtual Network Operator (MVNO). The former presents its own problems: which networks do you deal with, what technologies do you use, how do you handle the fact that many of these networks are trying to sell their own downloadable music, etc. Unless Apple makes phones that rely on multiple cell technologies (GSM, CDMA, etc), some users are going to be left out in the cold and neither making multiple devices nor blocking off certain potential buyers seems like something they’d want to do. Most of all, it means that there is a large portion of the Stevedialer’s functionality that is out of Apple’s hands. Traditionally speaking, that’s not how Jobs and Co. like to roll.
The MVNO option would seem to be more Apple’s style; they get control over the whole cell package: phone and service. But here’s the rub in that strategy: I don’t think Apple wants the hassle of acting as a service provider. I mean, raise your hands if you love your cell phone provider. Anybody? Sure, Apple might be the first, but there’s a lot of kinks to work out. I asked before why Apple would want to add cellular capability to the iPod platform. Let’s flip that question on its head and ask why Apple wouldn’t want to add cell capability. By and large the major uses for cell phones are still voice and text messaging. Admittedly, Apple has some interest in these matters (cf. iChat), but moving that interest over to a cell phone platform seems odd. It doesn’t quite fit. I don’t think Apple wants to be in the position to have to deal with things like dropped calls, text messaging rates, etc. There are a lot of little details to deal with. For example, people expect a certain more reliability from their cellphone than they do from their iPod. Which one do you really need to work in an emergency? I have a hard time picturing Apple having to an engineer a device on which your life could potentially depend.
Let’s switch directions again. It seems to me that if you put together the parts and technologies that Apple has at its disposal—tech it’s already got an interest in—it seems to me that there’s a much more logical direction for them to go. While they may not want to add cellular technology to the iPod, I don’t dispute they do want to add wireless in general. Microsoft’s Zune showed one thing: people want wireless on their music player—albeit, a better version than what the Zune allows.
What I expect, and not necessarily at Macworld next week, but probably sometime in 2007, is an iPod with Wi-Fi sharing and syncing capabilities—perhaps it will even let you download your podcasts from a Wi-Fi hotspot. In the future, it might also let you buy tracks from the iTunes Store. While Wi-Fi is not as pervasive as cell technology, two things work in its favor: it’s faster than cell technology, and it doesn’t really require that Apple deploy an infrastructure around it. It’s also just pervasive enough. And the rumors of Apple deploying a “second” Stevedialer with iChat capabilities seem to suggest to me a device that handles iChat, VoIP, and perhaps even video conferencing also over Wi-Fi.
As I said above, the question that haunts me when it comes to a Stevedialer 3000 is “why?”. I can’t quite fathom why Apple would want to enter a market as splintered and saturated as the cell phone market. I’m sure they could design a device that’s far superior to any other cell phone that exists, but just because they can doesn’t mean they should. You have to know how they pick your battles.
All that said, I feel that I’m missing something. A Wi-Fi enabled iPod device—even one with VoIP functionality—adds up, but it’s hardly revolutionary. And I fully admit that my entire anti-cell phone thesis could be totally and utterly wrong—I’ve been off the mark before. Maybe Steve Jobs, in a fit of rage with his lackluster cell phone, hurled it against a wall and demanded that work on the Stevedialer 3000 begin immediately. How about this arrangement: if I’m wrong, you all can buy me an Apple phone. If I’m right, I’ll buy you one.
I waited on the stoop for hours, hoping to eventually hear the squeak of Frank’s shopping cart wheels, but he never showed up. Whatever he knew about the Stevedialer must have been just too volatile. Apple must have silenced him. I turned around to go into the house, feeling all the while like I was being watched. I hope they don’t come after me nex—
Nice and funny analysis :)
I just wanted to raise a point... you talk about how the iPhone doesn't fit into either division at Apple. But does the iTV fit in one of them? It runs a modified version of OS X and Front Row, so it's in a way connected with the Mac division, but it's also a consumer electronics device, it costs $300, and it could maybe connect to Windows as well (through iTunes). What do you think?
I agree with much of your analysis Dan, though surely even if it's just a Wifi enabled iPod you could call it a phone of sorts? Whatever. Certainly there are a load more technical and organisational mountains to climb with a 'Stevedialler' than there were with the original iTunes/iPod package. But perhaps as you suggest, Apple will refuse to follow the crowd. I certainly hope so anyway. They're not going to just create a phone to mimic all the other phones out there, neither will they create TV service that's the same as the TV we all already know. They will want to reinvent the phone, and reinvent the TV, just as they have already claimed to reinvent the music.
It seems like the iTV fits in either the iPod or the accessory division of Apple.
The iTV could be thought of as an iPod for video. The differences from the hand held iPod are that it synchs through AirPort rather than through USB and it uses a television screen rather than its built-in screen.
Or, the iTV may be more akin to the AirPort express accessory where it is primarily a way of porting audio and video to a remote location.
I've also seen some people suggest the iTV is a stripped down mini.
In any case it doesn't seem like a stretch for Apple to make this device.
Good analysis. Following the reasoning presented would lead to the conclusion that Apple is not working on a mobile phone version of the iPod.
My counterpoint is the growing ubiquity of mobile phones and their ever increasing capabilities. Evenutally everyone will have a phone with a decent camera, large music capacity, Bluetooth, etc. Will people still buy iPods when their phones already play music? Will people still want to carry two devices when one will do?
Admittedly, even while writing this I realized that the iTV is kind of the "elephant in the room." Where will it fit into Apple's platform line up? Much of that rests on what the iTV ends up being. As a device that merely streams your media, it's like a tricked out AirPort Express (which would seem to put it in the Mac division), but adding the ability to buy content from the iTunes Store through it would seem to land it squarely in the iPod's bailiwick, which is also suggested by the article of Jason Snell's I linked to, suggesting that the iTV may be renamed the "iPod Home." And unless this has been firmly established and I missed it, I don't believe that the iTV's software will be OS X with parts stripped away; it seems more likely (and far more Appley) for them to build a new OS from the ground up (or, as with the iPod, buy one).
@Bregalad: Will people still buy iPods when their phones already play music? Will people still want to carry two devices when one will do?
Hard to say. The thing with convergence is that while one device may eventually be "good enough" for two functions, it will rarely be as good as a device designed specifically for one function (i.e., playing music). I don't think the iPod is in imminent danger of being out-musiced by phones, any more than my digital camera is going to be out-photoed by a cameraphone.
I agree with you, Dan. Apple isn't one to venture into a market in which it doesn't have at least a small guarantee of success. I think delving into the movie download industry is enough for ol' Stevo to chew on for now. Apple doesn't like to play with other companies very well and it would almost have to if it were going into the cell phone industry. Steve likes control too much and he wouldn't have very much if Apple went in this direction. An iPhone is just too far of a stretch from Apple's business model.
I'm glad you have asked why Apple would release an "iPhone". I am a business school graduate turned graphic designer, so I am accustomed to analyzing how a product fits into a company's strategy. I completely fail to understand where a cellular phone does Apple any real benefit.
I believe Apple is at a critical point where they have gained a lot of exposure and success, but they haven't fully broken out. They need to perfect the products they already offer and develop compelling packages for logical usage in combination. Although I probably wouldn't buy an iTV because my funds are limited, I at least understand how it expands their media prowess and encourages me to use it in conjunction with other Apple products.
Apple has more pressing matters at hand: Continual development and advancement of the Mac OS and its feature set. Plus, there needs to be a truly updated iPod. Constantly tweaking tiny aspects such as screen size and thinness will put it in an ongoing battle with the Zune. I am still using a 3G iPod (thanks to AppleCare replacements) and although I think the new iPods are attractive, there aren't any irresistible differences that convince me to upgrade before this one dies.
I feel lament thinking that Apple will make the wrong move, spread themselves too thin, and forget to sell their best product: the Mac. Regardless of how many of my non-artistic friends think my Mac is the coolest thing, none of them have converted... but Apple has wowed me in the past, so we'll see.
I can see the point of this article, but this same argument could have been made about Apple entering the digital media player and music download businesses before the iPod and iTunes appeared.
Did they have any guaranteed success then? Considering all the services and media players that have come and gone, I'd say the answer is no. Yet they did enter not one, but two markets simultaneously. By tying them together, they made both better.
Would it really be that unthinkable that they believe they can do the same thing for cell phones?
George, you're not wrong that digital music was a seemingly odd choice for Apple, but there were a couple of big differences. For one thing, the digital music market was pretty paltry before Apple. There were a handful of music players available, and they were not nearly as prolific as cell phones are today (how many people do you know without a cell phone vs. how many without a music player?). The cell phone market is established in a way that the digital music market was not.
The other difference, and this is more on the speculative side, is Steve Jobs. "Music," as an idea, seems like something that Jobs got behind because of his long love of music. The cell phone doesn't really inspire the same sort of warm fuzzy feelings, unless of course your phone's battery is overheating. Admittedly, that's a bit more on the psychological than the business side, but the former often plays a part in the latter, especially at Apple.
While I agree that cell phones are more established, they various cell phone providers do not provide a very coherent experience. Provider X has one feature, Provider Y has another feature. If you've got service from X but really want a new feature that Y has, what can you do? Spend $200 to break your contract and buy a new phone.
Even the same phone has different features from different providers. Verizon disables most bluetooth protocols and mp3 playback, others don't.
What I see Apple doing is providing coherence. The phone will have the same feature set regardless of carrier. I could also see it requiring that it be actived with some sort of mobile web service that way it could also have the same services on every phone. Services hosted over the web that would be carrier agnostic. Like mobile iChat, .Mac integration, etc. No fear that if you buy you're phone from T-Mobile and your friend picks it up at Cingular that his phone will have features and services available that you can't get.