Apple Death Knell #52: The iPhone Will Fail

January 14th, 2007 at 2:00 PM - Columns and Opinions by Bryan Chaffin

Oh my. With all the hoopla surrounding the iPhone since its unveiling last week at Macworld, there was one tiny little benefit to its announcement I hadnit considered: The resumption of the Apple Death Knell Counter! Yes, folks, once again we can start adding to that list of chumps who has proclaimed imminent Apple failure. Though, to be fair, Matthew Lynn of Bloomberg proclaimed not so much the death of Apple, but rather that the iPhone will be a complete failure, marking Apple Death Knell #52.

Why, you may ask? Why, for a hodgepodge of bad logic, might-bes, jabs at Mac and iPod fans, and other seriously silly arguments that Mr. Lynn will likely wish to forget he wrote. Fortunately, we shall enshrine him in the ADKC for posterityis sake.

"The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks," wrote Mr. Lynn. "In terms of its impact on the industry, the iPhone is less relevant."

While Mr. Lynn gives the iPhone its due for combining the iPod, a phone, and e-mail all in one device, he offered three reasons why that wonit matter in the grand scheme of things. Allow me to condense and paraphrase:

Reason 1.) Apple is a johnny-come-lately to the cell phone market, and the established big players in this industry will fight Apple for every sale. In addition, needing a carrier -- say Cingular in the U.S. -- means that Apple will have to play nice with others.

"Yet Apple has never been good at working with other companies," he rightly stated. "If it knew how to do that, it would be Microsoft Corp." he incorrectly concluded.

I donit know about you, but I personally have a hard time giving serious credence to someone who uses faulty premises to reach erroneous conclusions. Apple is not Microsoft because they have two completely and utterly different business models and philosophies (Microsoft licenses in an effort to be everywhere, while Apple believes in the "Whole Widget" concept of controlling the hardware and software).

The fact that Apple can be a faithless dog to its partners, licensees, and developers has nothing to do with why Apple is "not Microsoft."

In the meanwhile, the fact that Apple is a newcomer to this market is a bona fide challenge to Apple and the iPhone. It is not, however, in any way whatsoever, a definitive reason that can only lead to the iPhoneis failure.

Apple will also have to play nice-nice with some other large(r) companies , and yes, this too will present a real challenge for a company used to writing its own rules. Once again, however, to say that iPhone will fail because of this challenge when the product isnit even released and Apple already has a signed carrier is a stretch of logic, to say the least.

Reason 2.) Network operators will be afraid to sign the iPhone lest they piss off Nokia, Motorola, and the other big players in the cell market.

Chicken Little much, Mr. Lynn?

This is a serious case of illogical nonsense. For instance, Cingular has already risked the ire of these would-be bullies by signing up the iPhone. Indeed, the company did so without even having seen a prototype!

The reality of this bad argument is that if the iPhone is a huge megahit, the big boys will fight back with big incentives and (hopefully) new and (also hopefully) cooler phones.

Will they threaten their customers in some way for carrying Apple? Thatis an exercise of cutting oneis nose off to spite oneis face, and I personally doubt it will happen. Appleis price point and direct-to-customer model -- at least in the U.S. -- means that Appleis footprint into this space is not going to be huge (anything over 3% would be pretty darned amazing). The market will adjust accordingly, and the world will go on.

Reason 3.) the iPhone is a "defensive" product designed to protect the iPod from a mad rush of crappy phones that do a crappy job of playing music, and gosh darnit, such defensive efforts "seldom" work.

Thatis another non-argument that uses its own premise to justify the conclusion. Nonsense!

He added, "Consumers are interested in new things, not reheated versions of old things."

Perhaps Mr. Lynn hasnit actually seen the iPhone, but I personally think itis almost as revolutionary as Mr. Jobs said it was on stage at the keynote. This is subjective, but anyone trying to write off the iPhone as "reheated" anything should check the dosage on his happy pills.

At least in my never-humble-opinion.

He also muttered something about the price point of the iPod being too high for consumers, while business folks wonit be able to get their companies to pay for it.

Well, I think weill see some surprises there. If the iPhone leads to greater productivity -- something I think will be the case due to the fact that working e-mail and calendars doesnit suck on an iPhone -- Apple will have some entres nous into the corporate world. That remains to be seen, but I donit see the price point of the iPhone being a real hurdle to hitting 1% market share in its first year.

Make sure you read the full column from Mr. Lynn for yourself, but in the meanwhile, it will live on in the ADKC.

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Bryan Chaffin began using Apple computers in 1983 in a high school BASIC programming class. He started using Macs in 1990 when the Kinko’s guy taught him how to use Aldus PageMaker, finally buying a Power Computing Power 100 in 1995. Today, Bryan is the Editor of The Mac Observer, and has contributed to the print versions of MacAddict and MacFormat (UK).