Video: Is iPhone a sure bet for Apple?

By Silicon Valley Bureau Chief
CNBC
updated 6/19/2007 2:54:15 PM ET 2007-06-19T18:54:15

The much anticipated Apple iPhone is scheduled to release on June 29th, less than two weeks from now. The expectations of the phone are still rolling high, but some critics are railing against its key features and casting doubt on the big gamble of Apple.

Bloggers have dubbed it the “Jesus phone;” some analysts have named it the “most anticipated consumer product in the history of time.” Though Apple is venturing into the competitive wireless market, investors are confident in the move.

“We estimate they'll do $15 billion in revenue with the iPhone, and $13 billion in computer sales (in 2009),” said Gene Munster, a technology analyst at Piper Jaffray. “In other words, we estimate their phone business is going be actually bigger than their historical legacy business.”

But to other iPhone watchers, the astronomical expectations on what this phone can do and how many of it customers will buy can be just the problem.

The iPhone integrates phone, iPod, camera and Web browsing, and features an all touch screen system besides just one physical menu button. It sells for $500 to $600 dollars before carrier’s subsidy.

To spend $500 to $600 on a phone, of course you’d wish it to stick around for long. Criticisms have been dogging this product around battery life and screen durability. When a company's future rests on success of a single product like this one, Apple apparently can remain silent no longer.

In a press release issued Monday morning, Apple said it has updated the battery so the iPhone will feature eight hours of talk time, six hours of Internet use, seven hours of video playback and 24 hours of audio playback, along with 250 hours of standby time, outperforming all existing smartphones in every aspect.

The company said it also changed the touch screen surface from plastic to optical glass for better scratch resistance and optical clarity. Scratch was a problem for Apple when early versions of iPod were released.

Apple is relying on a unique yet untested way for consumers to communicate - a 3.5-inch touchscreen without buttons.

“I think the iPhone may really change the whole phone industry,” said Apple’s CEO Steve Jobs in Jan. 2007 “It's a category that needs to be reinvented, needs to be not only more powerful but much easier to use and we thought we could contribute something.”

But some critics remain unconvinced that the magic screen will make the iPhone stand out in the cutthroat competition with Nokia, Palm, Motorola and many more.

“People who use a Blackberry are probably not going to be as enamored with the iPhone for doing a heavy load of email,” said Charles Golvin, a consumer communications analyst with Forrester.

But they are likely to be the only people in the market willing to pay $500 to $600 for a phone, said John Heilman, a contributing editor the New York magazine. The general enthusiasm for the iPhone in the market does not necessarily translate into a business success.

“A large part of the market is interested. You have a $600 phone to people who generally pay $100 or $200 for phones, and that may be a problem,” he said.

Critics also question iPhone’s ability to repeat the success of iPod, Apple’s innovative music player.

“There are many things in the iPhone that are not ground-breaking,” said Golvin.

Rather, it looks like an update of iPod aiming at higher profitability, said Heilman.

“The iPod itself starts to get eroded by on-line music services. Apple is looking at what to do to make a product that can get out of the grips of commodity pricing, and that's what the iPhone is. It's a $600 phone at the moment that has less capacity than most iPods do,” he said.

© 2012 CNBC, Inc. All Rights Reserved

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