Apple Inc. iPhone: Will It Sell?

Ok, now that the virtual dust has settled and the Steve Jobs reality distortion field has finally dissipated I think its now time to take a more critical look at the groundbreaking Apple Inc. iPhone. As many had expected, Apple did come through and announce the pending release of the much ballhoo’ed iPhone, a integrated (convergence device) of an widescreen iPod Nano, a cellular “smart” phone, and an internet communications device.

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I have to admit, I was very impressed with the iPhone during the Macworld keynote address but as the initial wow effect began to wear off I started to question if this was the breakthrough device Jobs was tell us it was. Once you get past the fantastic user interface and begin to look at the core feature set you quickly realize that this device has several major limitations:

1. No Expansion. No SD slot, nada, nothing.
2. No Removable Battery.
3. No 3G Internet.
4. Only 8GB of storage.
5. $599 Price tag. (and that’s WITH a 2 year contract with Cingular)

Of course there are several innovative features which may or may not offset the above limitations:

1. Best user interface on a smart phone yet. This is a no-brainer, Apple makes their money producing the best user experience possible so why should the iPhone be any exception.
2. Full and complete versions of included applications. One point where Jobs was right on the mark was by including fully capable versions of each included application. I especially liked the way you can zoom in and out on web pages!
3. iPod dock connector. Perhaps the most overlooked feature on the iPhone so far has got to be the standard dock connector Apple thoughtfully included in the design. Since this has been the standard connector for most iPods for years now there are tons of accessories which stand a good chance at working just fine with the new iPhone.

So what’s the word, is this the iPhone the next “big thing” for the computing industry? Maybe, but I would weigh in on the side of caution for several reasons. First off, the total lack of expandability beyond the included 8GB is going to really limit folks who had just gotten used to having 80GB at their disposal in the iPod with Video. Combine this with the lack of 3G internet services and you now have no way to even stream something (using the included flash player for playback) while on the go. Even if the iPhone maxed out at only 30GB I think the price would be a lot easier to swallow. Jobs talked about how the price is the same as the cost of a Nano plus a smart phone but reality will hit when he learns that its all about the total price. Unfortunately for Apple most of the folks willing to plunk down $599 for something like the iPhone are not going to be thinking of purchasing a iPod Nano so the 8GB limitation is going to be a real crimp in the iPhone’s sales once the I-must-have-it folks run dry.

Of course there is a huge upside to the new iPhone, and that is the simple fact that it even exists. For far too long there has not been any real innovation in the smartphone industry. When something as ugly as the Palm Treo is considered a quality offering it stands to reason that just about anything Apple brings to this market is bound to do well, at least initially anyway. I just hope they understand that to get 1% of the total cell phone market it is going to take a $399 price point or less.

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