Apple Just Killed The Market for Phones

We’ll never see another Steve Jobs event like MacWorld 2007, when the original iPhone was unveiled, but boy did today’s announcements turn up the heat in the mobile space.

$199 for a better version of what has been almost unanimously hailed as the greatest mobile phone ever built.

$199.

And a year from now, it’ll be $99. That’s like an iPod Shuffle.

At the risk of sounding like a fanboy of the highest order, how on *earth* could the average customer justify purchasing any other mobile device at this point? If you can still get a free phone somewhere and that suits you, then great. But for the person thinking of spending between $99 and $799 on a Nokia, Motorola, Palm, or Sony, how can you even think about those alternatives given where the iPhone just went? The quality/feature/usability gap is so large that even a hatred for AT&T can’t keep people away now.

This sounds overly simplistic, but I really do think Apple just split the mobile world into two choices: settle for a free phone or buy an iPhone. There just aren’t many reasons to do anything else.

Even our Director of Technology and our CTO (both PC people) are both getting iPhones on July 11th… both having previously harangued the rest of the Newsvine staff for our incessant iPhone claqueury. When Apple critics turn that quickly, and without any prodding, you know a very important inflection point has been hit.

As for MobileMe, I was six months early in my call here, but most of the details are on target. Concurrent Exchange/Non-Exchange workflows, over-the-air syncing of everything that’s important to you, and finally a legitimate reason to pay a $99 subscription fee. I’m ecstatic to begin using this. It looks fantastic. Although the one thing I’m still not clear on is whether or not Apple Mail on my laptop will also be an Exchange client.

As a developer and designer, I’ve always hated “the mobile space” because I just viewed it as a really uninteresting transitional phase between regular cell phones and full-immersion goggles; but seeing how the form factor, UI, and engineering of the iPhone has transformed and freed the mobile experience is nothing short of astounding. Even more unbelievable is that Apple did it on their very first model.

Thousands of Nokias. Thousands of Motorolas. Hundreds of Sonys. And a single Apple buries them all.

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84 Responses:

  1. Geoff says:

    How do we know the 3G won’t be able to tether via BT?

  2. D76 says:

    Brendan: You’re comparing a public plan with a private, employee plan. Give me a break. That’s like saying that because you can get a t-shirt from your friend that works at The Gap for a discount that makes it lower than a t-shirt from Target that the Target t-shirt is a bad deal for everyone. Sprint is not handing out SERO plans to everyone who wants one. If you’re REALLY going to make a comparison, then why don’t you compare it to what ATT employees pay.

  3. Jason says:

    Do you think AT&T will always be the exclusive carrier or after a couple of years (like with the Razr) the iPhone will be sold for additional carriers. I haven’t had any issues with AT&T so far, it seems better than Sprint was (I broke that contract for the iPhone). Actually I believe I’m saving a bit of money thanks to roll over minutes.

  4. rand says:

    @tightwadfan : check out the following links for toughness =)

    http://www.ipodnn.com/articles/08/01/31/iphone.vs.18.wheeler/

    and

    http://baratunde.com/blog/archives/2008/02/i_inherited_an_iphone_that_was_run_over_by_a_car.html

    if that’s not tough enough, dunno what your expecting…

    /cheers

  5. Brendan says:

    SERO is Sprint Exclusive Referral Offer. Used to be for friends/family of employees, but not anymore. Anyone can sign up. All you need to enter is a @sprint.com email address–this could come from a business card at a Sprint store, or even Sprint’s executive bio page. And FYI, Sprint employees have their own plans which are even cheaper.

  6. […] is now so stark that even the Centurions should be able to tell the difference. Mike Davidson makes an excellent point. If I ever find myself in the position of needing to spend money to get a new phone, that phone is […]

  7. […] Mike Industries: Apple Just Killed the Market for Phones. Hell yeah! […]

  8. […] at least so says Mike Davidson: This sounds overly simplistic, but I really do think Apple just split the mobile world into two […]

  9. ketsugi says:

    Why does it have to be either-or? From what I’ve heard, in Singapore the iPhone will be offered at various subsidised prices depending on which plan you buy with it, with the most expensive business plan (S$120/mth) letting you pick up the iPhone for free.

  10. Cell phone service just costs too much. Even worse than before with this 3G phone.

    I’ll stay happy with my iPod Touch and a Tracfone from Wal-Mart.

  11. […] Mike Davidson – Apple Just Killed The Market for Phones Free phone or iPhone… which will it be? (tags: blog article technology iphone apple editorial) Bookmark this post:Bookmark and Share This Page | « CloseSave to Browser FavoritesAskbackflipblinklistBloglinesBlogMarksBlogsvineBUMPzee!CiteULikeco.mmentsConnoteadel.icio.usDotNetKicksDiggdiigodropjack.comdzoneFacebookFarkFavesFeed Me LinksFriendsitefolkd.comFurlGoogleHuggJeqqKaboodlelinkaGoGoLinksMarkerMa.gnoliaMister WongMixxMySpaceMyWebNetvouzNewsvinePlugIMpopcurrentPropellerRedditRojoSegnaloShoutwireSimpysk*rtSlashdotSphereSphinnSpurl.netSquidooStumbleUponTailrankTechnoratiThisNextWebrideWindows LiveYahoo!Email This to a FriendHTML: If you like this then please subscribe to the RSS feed.Powered by Bookmarkify™ More » […]

  12. Mike G. says:

    I am curious with MobileMe … is it using IMAP-IDLE for email, CALDAV for Calendar and LDAP for Address book push-syncing? Just curious how MobileMe is able to work.

    It would be nice if there were alternatives to MobileMe for Over the Air Syncing with iPhones. Like if one was savvy enough to maybe have a home server (/w IMAP-IDLE, CLADAV, LDAP services) setup on DYNDNS to act as the “cloud” (as apple calls their service).

    Just a thought.

  13. […] world (aka the US), iPhone is the only subsidised smartphone available. Otherwise, for example, this post announcing the death of smartphone market doesn’t make any sense. As I’ve pointed out time and time again, the mobile markets are totally […]

  14. Kirkrr says:

    On Verizon: As long as Verizon sticks with CDMA technology, which is only available in the US, Japan and S. Korea, and not the ubiquitous, global GSM standard, then Verizon will not get an iPhone. If you want market share, go after the dominant network technology, unless there is a compelling reason to use the other.

    It is all about the mobile ecosystem. Blackberry did not get to a dominant position it the smartphone market by having cool, sexy hardware, but in the back end infrastructure that provided instant email, calendar, and contact info. iPods are not the best MP3 player, but the iTunes infrastructure makes the entire experience so easy, that iPods dominate the music space.

    MobileMe, along with Exchange support, and the IBM announced, iPhone NOTES support, will make the iPhone infrastructure even more attractive to connected smartphone users than Blackberry. Combined with the very functional (read: great user experience) iPhone AND the massive opportunity as a gaming platform (something that Blackberry will never have, as long as you have to write 18 different version to support all the BB models), and you have a strategy that eclipses all the other players.

    Does Samsung, Nokia, LG, etc. have some great hardware? Yes, but it has never been about hardware – hardware is a commodity. It is about the software, access to the data, and making the user productive.

    The rest of the cell phone community has a long way to go to catch up.

  15. Tom Ross says:

    I don’t agree. For most people, those who have never used their phone for anything but calls and sms before, it will be $30 more per month. That’s still a price tag too big if you aren’t convinced about the particular features of the iPhone.

  16. Harsh says:

    @ iPhone being smaller than razor.

    That info is really interesting Mike – Thx. I will def have to take a look when it comes out here in Canada.

  17. Chris says:

    The thing that really blows me is the number of applications being created for the iPhone by independent companies world wide.

  18. MyDogBen says:

    Joel deserves a little more applause than he is getting, because he hit the nail square on the head. Up til now, the phone companies treated the cell carriers as their customer. Apple comes in, and treats the end user as the customer. This is how the revolution was born. Game changing. I hadn’t looked at it that way before, Joel.

  19. […] no es matar el mercado de teléfonos móviles. Es cambiar el modelo. El 11 de Junio le toca a Nokia mover […]

  20. Beth says:

    Interesting point MyDogBen.

  21. I’ve been thinking about this article overnight, and I think you (Mike) would be right if Apple had every major carrier. I think switching carriers is more of a pain than you think, and may not even be a choice for some people, depending on coverage or family plans or businesses or what-have you (as mentioned above).

    If I could walk into a Verizon, T-Mobile, Sprint, or Alltel store and see iPhones on the shelf, your headline would be very true.

    I ask this: how many people walk into the phone store with a $200 budget and *don’t* know about the iPhone? (Or how much it costs?)

  22. Alex says:

    I think that on top of the data portion being $10 more, SMS is no longer included, so that’s another fee to tack on top.

  23. […] Apple Just Killed The Market of Phones mikeindustries.com […]

  24. Porter says:

    I’ll say this much: as a UI dev, I’ve never had a net-positive reaction to having to deal with another browser for compatibility issues.

    But making sites work on the iPhone browser is interesting, and opens up all sorts of considerations that are fun to think through and implement.

    This substantially increases the business case for actively dealing with the iPhone browser for a broader range of sites.

  25. Jerry says:

    I have had an iPhone since day 3. It is the best multifunction device I have ever owned. It is certainly not the best phone and it doesn’t have the best carrier, but is good enough for my use. I must say though that the Blackberry Bold is tempting me…if they can match the web browsing capability of the iPhone with the new OS and promised browser refinements.

  26. Mike, as usual for us Europeans it’s a bit more complicated. Buying an iphone in Belgium without any carrier lock-in will set you back around 500€ or a bit over 700$.
    199? I don’t think so…

  27. […] Отсюда […]

  28. Martin says:

    After I got a SE K800i a few years ago, I can’t imagine going back to a phone with a “unusable” camera. The day iPhone gets a proper camera (won’t happen in the nearest future), and also letting people run background apps, then I’m on!

    While i’ll wait i’m deffinitly going for the new C905 :D
    http://www.engadget.com/2008/06/17/sony-ericssons-8-1-megapixel-c905-breaks-free/

  29. I’m with Brendan. I have an HTC Touch with Sprint
    $40 1000anytime, unlimited text, data, and phone as a modem
    (I only use about 200 minutes a month)

    I’ve been with them 13 years.

    I wouldn’t buy the touch again. Wish I could get an iPhone on the Sprint plan. wooooo eeeee! That would be suite.

  30. […] most Singaporeans are not ready for Smartphones yet, or perhaps the other way around. Mike Davidson wrote that the recent price drop for the iPhone in the United States would “split the mobile world […]

  31. How can you pick another phone?

    How about a phone that:
    you can tether to your laptop
    record videos
    has a focus on the camera
    has a zoom on the camera
    has a light or flash on the camera
    has a second camera on the front of the phone for video conferencing
    has an 800 x 480 touch screen (2.5 times the resolution of iPhone)
    has a QWERTY keyboard
    supports MMS messaging (does the iPhone support this now?)
    has voice recording
    runs open source software
    supports HSUPA
    supports HSDPA 7.2 (actually, the iPhone may support this; I’m not sure)

    The iPhone does none of the above.

    The Sony Ericcson Xperia does all of the above and supports almost all of the same features that the iPhone has except for internal storage (however the Xperia supports microSD cards). I don’t know about you guys…actually, I DO know about you guys…but I’m going to rock the Xperia. The only thing I’m giving up over the iPhone is the internal storage which can be matched (exceeded if I buy multiple cards) via microSD.

    If the iPhone doesn’t support HSDPA 7.2 (I know it doesn’t support HSUPA), the Xperia will be able to download data twice as fast as the iPhone. Uploading data from the Xperia is going to be several times faster than on the iPhone.

    I like Apple. The iPhone is rock solid and you can’t really go wrong with that device. I may get one for my wife who is a casual mobile device user.

    But make no mistake. Apple mobile devices are about software and services. The iPod is about iTunes and the music store. Apple wants the iPhone to be about iTunes and the marketplace. They want to control what goes on your device. I’m opposed to that kind of restriction.

    Think about everything open source software is. Look how almost everyone reading this blog supports open source. The iPhone 3rd party apps are the exact opposite of the open source software movement.

    And I know WinMo has problems. I’m in my 3rd year of WinMo usage.

    I think I know what I’m getting into.

    Look at the iPod hardware. Today and even back then when the iPods first came out, you could find MP3 hardware that was superior (that is, hardware that had more capability). However, iPod took the marketshare because, well, Apple is Apple and they had a rebirth; great software and services, thousands of publisher deals, and a slick and simple UI.

    History is repeating itself with the iPhone. Phones are out there that have better hardware capabilities. Heck, the 3G iPhone lack features that were on phones years ago.

    However, Apple is going to have a winner with it’s software and services, AT&T carrier deal, and iTunes app store. People are going to love it.

    I would love it, but I’m picking another road. It probably won’t be easy, but that’s the price I’m going to pay for a few more features.

    Maybe the next iPhone after the 3G will have the hardware features I want.

  32. alphadog says:

    Let’s see, do I hate AT&T less than I lust for the new iPhone?

    I really, really, really hate AT&T. Really. Their customer service is absolutely the bottom of a bad mobile barrel in the US. It may be fine for the retail space, where there isn’t a strong dependency on a good provider, but for an IT manager in a small company like me, AT&T is a horrid partner.

    And, I speak from experience. As an example, a recent order for a batch of 5 phones resulted in a bad setup. I spent five hours on the phone, going through nine(!) departments, and six the next day to get the issues resolved. That’s just one example.

    It’s really too bad that Apple went with AT&T. That is one of the principal factors preventing my personal and work-related adoption of the iPhone.

  33. wesley says:

    I hate AT&T. Never ever will I go to them. Just a personal preference and past experience. I’m going to see what the Instinct has to offer. The iphone is so hot and looks so cool, but I just can’t make the switch. Sounds like I’m trying to get off windows again… Nevertheless it’s rather Apple of Apple to create an exclusive agreement with AT&T. I wonder when that contract expires and if they will open it up to the rest of the providers out there. Unless Apple has a stake in AT&T maybe ponying up for a takeover?) what reason would they have to remaining exclusive. Everyone wants one, only AT&Ters get it. I mean they got on the app-store bandwagon quick after millions of hacked phones. I mean, I use a hackintosh for christ sakes.

  34. i actually think they messed up the name. It should have been imac nano and then had a smaller just phone version.

    I use my iphone as a mobile computer more than a phone.

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