Apple iPhone: stab in the cellular dark or invasion iPod next-gen?

After an entire months-long game of hopscotch, peek-a-boo, and “What Will Jobs Do Next”, Apple finally reveals the… iPhone. Steve, you can be quite the stubborn cookie – we shall now have to differentiate between the Apple iPhone and the Linksys iPhone. Anyway, what’s probably interesting about the iPhone is not what it has out of the box, but what it DOESN’T have, for a phone that costs as much as a PS3 – 20GB and 60GB.

Let’s keep it short: no 3G. As a cellphone, that could potentially be crippling to the iPhone (especially when Steve wants 10 million on the streets by next year). And if he tries to sell the phone to Japan – that country is true-blue (or blood-red) 3G country – it’s going to be murder, so we’re thinking that Apple might want to keep this as a North American release for now.

Still, the global (let alone NA) cellular industry isn’t Apple turf – the iPhone is not going up against late entrants and also-rans (e.g., Zune), but against the monoliths of the cellphone industry: Nokia, Sony Ericsson, Motorola. Steve Jobs says that the iPhone is five years ahead of any other mobile phone. Well, not in the 3G department, most definitely.

But we’re not going to simply surrender to the belief that Steve Jobs’ fair-haired boys didn’t think of this when they drew up the iPhone’s specs. They could always market it as a luxury product (at that price, it better well be). But for a company that has made its mark as a mass market trend-setter (even given the price of the 5G iPod), that could be a bit odd.

But we still think that the iPhone is, as our gaming cousins in the QJ network put it, FTW!!! 1st post W00t!!!. Find out why after the jump.

After an entire months-long game of hopscotch, peek-a-boo, and “What Will Jobs Do Next”, Apple finally reveals the… iPhone. Steve, you can be quite the stubborn cookie – we shall now have to differentiate between the Apple iPhone and the Linksys iPhone. Anyway, what’s probably interesting about the iPhone is not what it has out of the box, but what it DOESN’T have, for a phone that costs as much as a PS3 – 20GB and 60GB.

Let’s keep it short: no 3G. As a cellphone, that could potentially be crippling to the iPhone (especially when Steve wants 10 million on the streets by next year). And if he tries to sell the phone to Japan – that country is true-blue (or blood-red) 3G country – it’s going to be murder, so we’re thinking that Apple might want to keep this as a North American release for now.

Still, the global (let alone NA) cellular industry isn’t Apple turf – the iPhone is not going up against late entrants and also-rans (e.g., Zune), but against the monoliths of the cellphone industry: Nokia, Sony Ericsson, Motorola. Steve Jobs says that the iPhone is five years ahead of any other mobile phone. Well, not in the 3G department, most definitely.

But we’re not going to simply surrender to the belief that Steve Jobs’ fair-haired boys didn’t think of all this when they drew up the iPhone’s specs. They could always market it as a luxury product (at that price, it better well be). But for a company that has made its mark as a mass market trend-setter (even given the price of the 5G iPod), that could be a bit odd.

The other, and more viable, option is to play to their strengths. Try thinking of the iPhone less as a phone whose cellular features don’t stack up to the cutting edge in the industry, but as a “next-gen” iPod which happens to have cellular capabilities. After all, with all the word flying around of a full-screen, touch-screen iPod, this might as well be it. And then the US$ 600 tag might be more justifiable, although it will most likely drop in the latter half of the year to reach to a wider audience. And as an iPod, it’s pretty cool, especially with OS X and web browsing capabilities. Oh, and it makes phone calls, too.

The lack of expanded 3G cellular capabilities won’t cripple the potential sales of the iPhone (at least not in North America) if it doesn’t become a critical issue, and if the iPod features take hold of the public imagination. The most likely scenario is that early adopters will trade in their iPods (especially earlier models) for the iPhone, precisely for its iPod features, but they won’t mind having a new cellphone at the price as well (they will have to switch providers, though, unless they’re with Cingular).

The rest of the market will move in after a price drop, and if they can afford to part ways with their current cellular provider (except if they’re Cingular already), OR if Apple decides to open up the iPhone to other providers as well. Opening up would be a very smart move for Apple after the early adoption phase, to reach out to the market with what will still undoubtedly be quite the expensive cellular phone/iPod, although we don’t know what the details of their contract with Cingular is.

Do we think that Jobs will shake the streets with 10 million iPhones by 2008? As an iPhone, no, but as an iPod, probably. And with Apple Computer, Inc. changing its name to simply Apple, Inc., to reflect a greater emphasis on consumer electronics and not just the Mac lineup, expect the iPhone marketing to reflect a similar philosophy of having your cake (iPod) and eating it, too (with a built-in phone). Apple may be moving to convergence, but it should be moving with its best foot forward.

Heck, if they find a way to make iTunes on a wireless work, they could even undercut Microsoft’s networking strategy with the Zune and make music on the iPhone wirelessly tradeable with other iPhones. That will really do wonders for iPhone sales. Steve Jobs is not as insane as some doomsayers think he is, moving into uncharted territory for Apple.

Next bet: with that motion sensor inside, they might want to make the iPhone workable with the Sony PS3 or Nintendo Wii. Now that’s insane.

A big thanks to our resident Apple worm Chris S. for helping develop the ideas in this article!