Jun 10th, 2008

One boring hour into WWDC 2008, Steve Jobs announced what everyone already knew was coming… and nothing more: the 3G iPhone. Despite an overly supportive crowd of 55,000 people, a reduced price of $199 and almost immediate expansion into 70+ countries, Apple’s stock fell 2.13% and lost nearly $4 on the day.

In fact, the “iPhone 3G Announcement” should be renamed the “yPhone OhGeez disaster”. The product seems rushed to market and unpolished. While the fanboy faithful blindly followed their Sensei Steve Jobs, the Stock market marches to a different beat… reality.

Lets bring this iPhone 3G clamor back to earth, shall we?

The $199 Lie.

Among the most “exciting” iPhone 3G announcements was that the 8GB version would cost $199 and the 16GB version only $299, compared to the $500 the initial iPhone adopters coughed up. Apple and AT&T didn’t just decide to be generous and give you a $300 discount… it’s coming from somewhere.

Oh yeah, in case you didn’t know, the iPhone 3G doesn’t come with the Dock and USB connection upon purchase… you have to pay an additional $49 for it. Geez, thanks, how generous of you, Apple. While you don’t NEED the Dock, it begins to illustrate how the price was cut – by removing value.

By the way, the majority of what you’re paying for when you purchase a phone is the contract. There is NO WAY to purchase an iPhone 3G without a 2-year contract. So lets take a look at what that might cost us:

  • Cheapest possible AT&T Plan = $40/month
  • Internet Data Plan = $30/month

So locking into that 2-year contract at a BARE MINIMUM of $70/month is going to cost you $1,680 over the course of the contract. Doesn’t seem so cheap now, does it? And its not likely you’ll be getting the cheapest plan possible – anyone buying the iPhone will likely use their phone enough to require a plan more costly than the $40 minimum.

Oh yeah, plus you’re going to want to buy some of the cool applications in the iPhone App Store. So, sure, $199 might sound like an absolute steal off the bat. But it isn’t. You’re actually promising to pay a WHOLE lot more than that in the long run.

If the $199 was WORTH it that would be one thing. But it’s not…

Behold: the Speed of the iPhone 3G Network!

The whole point of this 3G thing is that it should drastically speed up load times for things like web pages, streaming video, pictures and other rich media. So of course, Steve Jobs wanted to show off the goods:

And the iPhone 3G received a thunderous applause when Steve Jobs demonstrated its ability to crush the original iPhone in load time. While the original iPhone on the EDGE network loaded the page in 59 seconds, the new 3G iPhone loaded the same page in only 21 seconds!

Ummmm… are you kidding me? You’re showing off, and people are wildly applauding, the 21 second load time of a webpage? When you leave this site and click on a link, please close your eyes and count to 21 before looking at your screen to be reminded how painfully slow that is. Then be reminded that the device Mr. Jobs demonstrated this on was the only device in the universe running on the 3G network.

Once AT&T has the millions of predicted iPhone users on that 3G network, you’re going to have lightning speeds in the MarioKart, “I just got shrunk,” sense.

Enjoy that, Mr. The-iPhone-is-only-199-Bucks-I-Need-To-Buy-It-Now. And that, “I Need To Buy it Now” mentality is exactly what Apple was hoping to create. Because, if you buy it now you’ll miss out on the growing lineup of upcoming phones that could blow the iPhone out of the water.

List of iPhone Killing Hopefuls Grow

Samsung spent $100 million dollars on an advertising campaign that directly pitted the Samsung Instinct vs. the Apple iPhone. Obviously, the “fights” were fixed and the Instinct won every matchup. The Instinct launches on June 20th and many folks are calling it both Samsung and Sprint’s best phone ever.

Were calling it Samsung’s best phone ever. Today, the same day that Apple announced the iPhone 3G, Samsung announced the Samsung Omnia. Apparently, it blows the Instinct out of the water. And since the Instinct at least matches up well with the iPhone, that would inherently mean the Omnia is a bonified iPhone Kil… we’re not going to say it. It would only jinx them.

The iPhone Killer title is a moot point. The fact of the matter is the iPhone, pretty soon, will just be another phone in the crowd. Don’t believe us? Then perhaps you haven’t heard of the:

  • BlackBerry Thunder: the first ever full touch screen from BlackBerry. A lifetime exclusive on Verizon Wireless.
  • HTC Touch Diamond: a revolutionary product from HTC that borrows many of the iPhone design elements, both externally and software based, but features superior hardware.
  • HTC Touch Pro: an upscale version of the already superior Diamond.
  • Sony Ericsson Xperia: a full qwerty slider that is expected to give the iPhone extremely tough competition.

These “iPhone Killer” comments aren’t misplaced hope from an Apple hater, but simple facts based on comparing specs and features.

Shamefully Mediocre iPhone 3G Features

  • That 2MP camera is just great. Basically every upcoming iPhone rival has a camera greater than a pedestrian 2MP which now is becoming the “regular phone” standard.
  • Metallic back downgraded to glossy black/white finish. Guess they had to take out everything extra to get down to the slim $199 figure. All luxuries out the window!
  • Haptic feedback? It would be nice considering the touchscreen keyboard seems to suck so badly. But, alas, you’re stuck with it.
  • Video Recording? Nope, of course not.

The list goes on… here are some from CNET’s “what’s missing” in their iPhone 3G review:

“Unfortunately, we hoped for an even larger bundle of features in this round. Apple still leaves multimedia messaging out of the mix along with voice dialing and video recording. We still don’t understand why Apple can’t include these basic features, many found in even the cheapest and simplest cell phones. We were also hoping for a landscape keyboard, the capability to cut and paste, Flash support for the Safari Web browser, expanded memory, and additional Bluetooth profiles. Apple, you left us hanging in a big way.”

Timing Is Everything

Apple knows there is a swarm of competitors about to ambush them.

Perhaps they think that by rushing out with this 3G iPhone at a greatly reduced price all across the globe they’ll get people to “bite” immediately. And guess what, if you JUST bought an iPhone, chances are you aren’t going to buy a competing product in the next year or so…

… a competing product like Android.

Where does Android Fit in?

Apple knows that Android is coming. Once Android handsets are officially announced, specs confirmed and service plans detailed, it will give a LOT of people an alternative to the iPhone. So, rather than allow Android to waltz into the market, Apple rushes the iPhone 3G to market before consumers have an alternative to consider.

Consumers who buy into the iPhone craze now could be paying the price later. The Android OS is 100% free for manufacturers and carriers to slap on devices and service. That means it costs them $0… and they can pass this savings onto customers.

I’m not suggesting that elite Android devices will only be $199 or less but rather stating that you’ll have a lot more value packed into your phone because nobody – not the manufacturer, not the carrier and not you – is paying for the mobile OS. Google is footing the bill on that.

Summing It Up

The iPhone is an amazing product – I can’t contest that point. But what was supposed to be a huge leap from iPhone 1.0 to iPhone 2.0 turned out to be a teenie hop. With Android ominously looming over the iPhone’s temporary reign, and a number of upcoming iPhone rivals gathering like a pack of hyenas, the iPhone seems more mortal than ever.

The iPhone 3G will only be available for purchase IN STORE starting on July 11th. So, over the next 1 month and 1 day, how many new phone launches and announcements (besides the Instinct) will make potential iPhone owners reconsider? And, will any of these be Android enabled?

The strength of the iPhone seems to be wavering with this most recent news. And by the way, Samsung, perhaps now would have been a better time to announce the Omnia. Unfortunately, now we just have to wait.

UPDATE: A brilliantly quoted semi-rant about the ridiculous and misguided hype surrounding the iPhone was phone on ReadWriteWeb by a commenter named only as Ralph. Here it is, in all its truthful glory:

I am still looking for words to describe how pathetic Bubbleland looks like from a higher perspective, buzzing crazily around Apple, their conference, and the new iPhone.

Just look at that : an army of bloggers “liveblogging” what ? An event primarily addressed to people who write programs working on products of a (still) relatively small company that until now addresses only the 10% of the richer people in the world with their fancy gadgets.

And writing about what ? A BIG event : the second release of a phone that until now lacked what 80% of the phones sold in Europe and Japan have had for the last 2-3 years – 3G connectivity. And guess what : it also does portable music playing and GPS. Woaaah ! Excellent ! Nobody else does that on the market, do they ?

Now, don’t tell me guys that the iPhone was a revolutionnary phone : it wasn’t, except maybe for its stylish look. And this release is anything but exceptionnal. It basically is a “survival release”. Adjust the competition or die. And also adjust the competition’s pricing or die.

People are talking about this as the latest genius move from Apple’s Steve Jobs. It’s not a genius move. It’s the only strategy to avoid the short-term failure of the product. Except to Apple groupies (which are numerous in Bubbleland’s crowd), this phone had been bought until now for its stylish look. And that wouldn’t have gone much further than it was.”

Ralph’s Rant was found on this post at RWW.

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