AT&T Inc. Chief Operating Officer Randall Stephenson said expectations are “too low” for Apple Inc.’s iPhone, which his phone company will start selling next month.
I’ll admit that from all reports the iPhone is going to be one impressive piece of hardware (albeit with some design flaws). But when it comes to understanding it’s market appeal, I look at it the same way I look at a robot that transforms into a building: I don’t get it.
Here’s who won’t buy it (remember, it’s a $499/599 phone, with a locked AT&T plan):
- “Business People” – they need their crackberries and their Treos for their mobile email. The iPhone doesn’t have fast (enough) Internet access, doesn’t sync with Outlook, and really isn’t designed as a business device. So with the exception of the wealthy segment who will buy it as a status item, I’m ruling out this market.
- “High school kids” – can’t afford it (again, without rich parents). Further, the lack of a 10-key keypad makes it difficult to send SMS messages while in class (teens do more texting than adults really imagine), since you need to look at the screen to do any kind of entry.
- “College kids” – really can’t afford it, same problem as with high school kids.
- “900,000 of the people on this list” – sure, people want to be on the “tell me when it’s here list” but how many of them will actually pull the trigger? Not so many is my hunch. I’ve been informally sampling friends, colleagues, family, people I’m interviewing for jobs, etc. Sure, everybody’s interested, but there’s another common trends: even those who say they want one don’t seem to want the first generation phone. It’s gonna be buggy, and even bigtime Apple fans recall the somewhat unimpressive gen-1 iPod.
So who’s left?
- “Trendy/hipster folks with lots of money to burn” – yup, they’re ALL going to buy it. But there aren’t 10,000,000 of them.
Do I believe Apple has a chance to be a big player in this space? Yes. Over time. But in my opinion, 2008 is going to be a learning year for the company as they move quickly into production on gen-2. My predictions for that unit:
- Removable battery
- 10-key or force-feedback touchscreen
- Faster Internet access
I will admit, back in 1997 I was one fellow who didn’t envision PDAs ever needing color screens, so uhh… oops! Let’s see if I get this one right – we’ll check back in 18 or so months to see if I have egg on my face.
Agreed. I DO think, however, that the initial sales of the product are going to be quite large, in the 1-4MM range, but NOT the 10MM that apple THINKS they can sell. (as a shareholder I sure HOPE it is 10MM, but I’m placing my bets on other more confirmed revenue streams)
It will be adopted by Hollywood elites (okay, they will probably get them for FREE!) and the Hollywood Elites wannabees (the ones who work at Waffle House, but aspire to work somewhere on Rodeo Dr, and be “found) ca 500K
It will be adopted by about 5% of the 30MM Mac Freaks (okay I am one of the 30MM, but not one of the 5% and am NOT buying the iphone) ca 1.5MM
It will be purchased and adopted for about 2.0% of the children under 18 who have a cell phone and about 7% of Gen Y. So add 500K there, and 2MM.
What do we have, about 4.5-5MM. About HALF of what apple expects. That is what I am expecting.
I’ll buy the 2.0 version though, if it has 3G data services, removable or DUAL batteries and confirms the ability to connect a Bluetooth keyboard for email.
It SHOULD have IMAP integration though as does MAIL.app, so working with exchange should not be an issue.
So, in about 3.25 months, I should have a 100$ coming to me. I’ll BET that 100$ right now, that apple won’t sell 10MM in a year!
I think the SMS issue is a big one, Jeremy. Kids can 10-key text with one hand without looking at the screen. How will that work on an iPhone?
“back in 1997 I was one fellow who didn’t envision PDAs ever needing color screens, so uhh… oops!”
No worries, man – I was one of those guys who thought CD-ROM drives were ridiculous, that we’d never have enough data to fill discs. Doh! (Though I was one of the first people to own a DVD player.)
I want to touch the iPhone, but without a physical keypad of some sort, I don’t want to own it. Current and imaginary phones that interest me: Blackberry Curve, Helio Ocean, Nokia N95, my Blackjack with WM6, Melissa’s Dash with 3G.
I don’t know about your estimation on the business folks. I work in a thoroughly Crackberry environment with people who sneak to the bathroom now that the president has suggested “no Blackberries at staff meetings” rule.
A huge chunk of them have their own personal phones and are drooling over the iPhone for their own, non-business use. Basically, work has accustomed them to all of the features of their Crackberry, so they can put to use something more than the freebie phone for their private use. (Plus, a couple of them have figured out they can forward messages through Outlook to a pop account and check work emails on their own equipment selectively, and release the short leash of the Blackberry.)
You’re right that it isn’t targeting the business market (no corporate email support or hard buttons) and you’re right that teens text a lot. But on everything else, I disagree. The teens who can afford one will get it anyway, and in general, you’re simply defining the market too narrowly. Don’t get me wrong, I was skeptical during the keynote ($500, no 3G, no hard buttons, non-removable battery, non-expandable memory, closed platform) but after the keynote I got to spend some time hands-on with a prototype and came away impressed.
I have seen other iPhone-like products that are coming to market soon (at least one will be announced really soon) but in the U.S. market the iPhone will stand apart for a whole bunch of reasons. I’m working on a (client-only) report and a (free) RCR Wireless Analyst Angle column that will spell out the iPhone Impact in more detail. Look for those in a couple of weeks.
Allright, I’m not going to up my target here at all, but I AM going to lower my respect for the analysts at piper jaffrey. Forgetaboutit!
I’m JUST about ready to sell the stock, taking a bit off the table as we speak.
Hope you like egg. This is not Apple’s first trip around the block. They used a similar marketing strategy with the iPod and we ll know how that turned out. My best guess is that the iPhone is here to stay.
last I checked, 700,000 does not equal 10,000,000.
I never said it wasn’t here to stay. Wave one was good, and I believe they’ll push another 400-600K users into iPhone adoption fairly quickly. The big question is: how many follow after that…
Pingback: Jeremy Toeman’s LIVEdigitally » Blog Archive » So what’s a G1 iPhone worth now?
It’s fun to look back at this post. 🙂