Video: AT&T bets big on the iPhone

By Columnist
msnbc.com
updated 6/26/2007 12:05:35 PM ET 2007-06-26T16:05:35

It doesn’t matter whether critics like this device.  It also doesn’t matter whether you already own a cell phone or an iPod.  The iPhone was a game-changer long before money ever changed hands for the first device.

No handset — not even the ultra-chic (in its day) RAZR — has ever generated this much pre-release buzz. And it is sending shockwaves through the wireless industry, forcing it to search frantically for ways to compete with Apple’s iPhone. 

Smartphones, which until now were heavily used by businessmen and corporations, will soon be reborn as a popular communications tool for everyone else. 

If iPods are any measure then the iPhone should be a more than respectable performer. Any early production problems that may soon come to light will be handled shortly thereafter. You can be sure the next generation will be even better. 

Apple’s iPhone doesn’t really break all that much new ground. But based on current flash memory-based iPods the iPhone will have a solid foundation. Add to that a GSM world phone, EDGE data capabilities plus Wi-fi, an easy-to-use GPS system and lots more and you’re dealing with a formidable mobile device.

Blackberries and other smartphones do e-mail very well and are handy portable business tools.  But that’s not the customer Apple will be aiming for. They are targeting the non-corporate e-mail users – people who currently type on typical cell phone keypads or tiny little keyboards.

iPhone won’t be businesses’ first choice for distribution to their workers in part because of corporate security requirement. And I can’t see businesses paying for devices which are really iPods that also make cellular calls. Apple likely wouldn’t be marketing its iPhone as the “best iPod ever” if it intended to aggressively go after the business market.

Apple wants to sell the device to iPod junkies — which are legion — and to devout Apple fans.  They will spread the word.  And those people will get other people to spend money on iPhones and more importantly on music and video downloads from the iTunes store.  Apple is counting on those very people — the ones already camping outside Apple retail stores to spreading the gospel.  The iPhone will be a big hit.

I do, however, have some questions about the device:

  • Cell phone users love flip phones. More than two-thirds of all cell phones sold worldwide are flip phones.  What the industry calls “candy bar” designs aren’t as popular.
  • Will users ultimately find happiness using a phone without buttons?  This style phone has never caught on in English-speaking countries.  But they’re very popular in the Far East where conventional keyboards are useless to input characters and words.  Apple’s on-screen keyboard might be better than previous attempts, but how much better?
  • Battery life is said to be up to 8 hours playing music. But what about music lovers who also make a lot of phone calls?  How will they fare?
  • This is Apple's first attempt at designing and having a cell phone built to their specifications. How will it hold up to constant use of the screen for all functions?
  • Apple announced that iPhone will have a glass screen.  All other smartphones have plastic screens for a reason — they are somewhat easier to keep from cracking and breaking.  Apple has had problems with screens in the past — especially when the Nano was first released.
  • Price.  The 4GB iPhone will retail for $500. The 8GB model for $600.  If you look at the device as an iPod with a big screen — a smart world phone — and a GPS device all rolled up into one — then those prices are actually reasonable.  The question will really be how many cellular users will ultimately be willing to part with that money for any cellular device?  We’re talking about the money actually coming from the user’s own pocket, not from their employer’s expense account.

AT&T will be handling the phone service end of the iPhone. With a two-year contract, monthly charges will run from $60 for 450 minutes to $100 for 1,350 minutes. That includes unlimited data (e-mail and Web), Visual Voicemail, 200 SMS text messages, AT&T roll over minutes and unlimited mobile-to-mobile calls.  There’s also a one-time activation fee of $36. These prices are in line with what business people pay for their monthly smartphone service. It’s somewhat steep for the average caller.

In a few days we’ll be inundated with a mountain of stories and opinions. Whether or not you intend to buy an iPhone, it’s exciting that a single device is focusing so much attention on an established industry. When iPods were first launched, nearly six years ago, there were few similar devices. Not so for cell phones in 2007.

I’m sure Apple has thought this out very carefully and will market the device to the people who will be able to afford it. We’ll see soon enough.

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