Apple iPhone: Market Sustainability?
The views expressed below are solely the views of the posters and do not reflect the views of Boy Genius Report, Inc.
Jibi: From my treasure chest of retained memory, I cannot honestly recall a single ’smartphone’ device that has managed to sustain a strong heartbeat without the support of Corporate America, or it’s step-siblings around the globe, pushing it’s success. There has been so much hype and so many rumors leading up to the Apple iPhone’s launch in a couple weeks that it’d be silly not to think that initial sales figures should propel somewhere into the stratosphere, but is the initial, short-term sales figure really what Apple wants, or even what AT&T is expecting to receive in return for selling it’s soul? Check out the rest of my thoughts after the jump, and some commentary from BG below it!
The main reason BlackBerry and Windows Mobile devices have been so successful in recent years is the adoption rates within the business sector. Sure, as it’s been reported time and again over the last year or two, there’s a lot of untapped resources within this future industry that promises a potential market share that could rival Big Pharma, but I cannot honestly see how the release of this particular over-hyped device will permeate the exterior walls of the Fortune 1000 companies or large government agencies. In order to ensure some sort market sustainability, these agencies and companies are where adoption is key for Apple and AT&T; without their acceptance and blessing of the iPhone, it will end up being nothing more than a consumer novelty item that will replace your personal cell phone and your iPod - it will NOT replace your BlackBerry.
Does Corporate America feel the heat of the iPhone craze? Sure. It’d be stupid and narrow-sighted to think otherwise. Within my company, concerns have been mentioned time and again, and we feel that it’s inevitable that people will be seen with these devices right and left. Does that mean they are approved, accepted, and supported? Absolutely not. The general consensus is that these devices will be obtained through personal channels and not through corporate-sponsored and supported purchases, which is already a huge red flag concerning smartphones within most companies. Companies around the world are gearing up for the device launch by drafting policies barring the use of the iPhone or providing reasons why it’s not to be added to corporate-support device lists.
There are simple reasons why this first generation iPhone will not receive adoption within Corporate America. For one, there’s no support provided for existing messaging platforms, whether it be Microsoft Exchange, IBM Lotus Domino, or Novel GroupWise, or messaging interfaces, such as BlackBerry or GoodLink or Direct Push. Does Apple think we’ll move our corporate messaging system to Yahoo to accommodate Push-IMAP? Yeah, I see that suggestion being well-received by the Information Security officers.
The Apple iPhone has no means of tunneling or secure communications back to an internal network, either. Sure, this may be a possibility with a future VPN client from the likes of Cisco, by way of their mutual agreements on the iPhone nomenclature, but at the time of the device launch, there will be no such VPN clients and thus no intranet connectivity. Oh, and let’s not forget the lack of corporate-ready messaging clients, either. In this day and age of security-conscious IT departments, large companies no longer offer IMAP or POP3 support to their internal messaging platform, so rule out the built-in interval-based retrieval of e-mail over these traditional protocols.
Lastly, where’s the friggin’ keyboard?! I keep hearing about this virtual touch-screen keyboard that’s light-years beyond current technology. Sure, the vector-based browser rendering is awe-inspiring to look at, but the lack of a real keyboard will make browsing almost painful. And let’s not even get into messaging technologies, such as consumer-based e-mail functionality and text messaging. I suppose this feature will be flagged as ‘wait and see’ before final judgement will be passed. I can only think of similar past innovations in virtualized keyboarding and the success rate of these products (and the fact that I cannot recall a single one succeeding is obviously having a biased impact on my assumptions of the iPhone’s "keyboard").
The Apple iPhone will have early success; Apple and AT&T have all but ensured this fact. It’s rare that Apple has failed with any product launch since the re-crowning of Steve Jobs and the first generation iMac. However, Apple has also been known to release rather faulty first generation products that tend to get better in the second and third and beyond generations - they never get it ‘right’ in the first go-round. Until the next generation iPhone is released, or until third-party application development and porting is opened up to allow integration within the messaging infrastructures of Corporate America, not web-based applications, do not expect to see long-term growth and sales figures to be anything to marvel about (although failed expectations may be mentioned in conversation).
Boy Genius: Jibi’s made a great point — Corporate America won’t embrace the iPhone. Nor should they. After all, this isn’t targeted at the business market. This is a consumer product that enables the user to stay in touch through multimedia, occasional emailing, web browsing, and phone calls. When Apple set forth with their master plan to "revolutionize the mobile industry," they surely thought to themselves, "what market are we aiming for here?" I don’t think that anyone in their right mind expects Fortune 500 companies (or even small businesses for that matter) to ditch their BES servers, and Exchange servers to switch 50,000 users to the iPhone. This is a consumer product, marketed towards consumers. I also think that when the hype has settled down, you will see a lot of enterprise users actually carrying this device. Yes, they will have two phones (as if they didn’t already). They will still have a BlackBerry on their hip. RIM has "freed" a lot of suits from boredom and I think the iPhone will too — just in a different way. When you look at the grand master plan, it seems as if an Apple server nestled deep inside the wireless carriers network is required to enable all of the iPhone’s features. Much like the T-Mobile Sidekick, or the BlackBerry. This is genius on two levels. One, it deters a number of people from using the handset outside of the intended network. Sure, people like us will either find a way to enable the features if possible, but if not we might be content with a touchscreen video iPod that can use WiFi to browse the web and check emails. Yet, I don’t really see consumers shelling out $500-$600 for a product, and not be a little nervous about losing the internet and cellular functions if they’ve strayed from the intended carrier’s network. Second point, is that the next Apple iPhone product we see, might actually be geared towards the corporate market. Apple will have a nice little head start by integrating these servers already. And lord help us if that happens. Anyone care to guess what the iPhone will sell the first week? My bet is around 250,000 handsets the first week. It’s gonna’ be a fun summer! What do you guys think?
My phone switched to reflect AT&T this morning. Phoenix, AZ market.
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what’s he mean by imbedded servers that apple will use? huh? i agree, hard not to imagine that a gazillion handsets will sell this summer but it WILL be hard to sustain recurring sales over the next 12 months. there’s too many features missing on the iphone - goofy keyboard, no 3G, no real email access options. a good browser but at slow EDGE speeds it won’t take off
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The iPhone is definitley a cosumer based product as opposed to a business product. Therefore, most of what jibi commented on is pointless. Apple wants to get its name out in the wireless market in a mass way. Instead of trying to gear towards a business crowd that is a small percentage, they gear it to make everyone, child or adult, happy. I am sure apple will release a handset for the business consumer soon enough, but right now they just want to be known for their wireless capabilities. Like a sidekick, this will not be the business man’s phone, but unlike a sidekick, this will be a phone that will not just be a novelty. It has great funtionality and will change the way we all look at our cell phones.
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this is exactly why i’m getting a iphone for my wife and i’m going to stick with my BB. this way i can at least test it out and let the rest of the company know that it’s not gonna work for their corporate email!
trust me when i say that corporate people want it!
i think it’s nearly perfect with the exception of flash, 3G, and i’m not sure if the keyboard will switch to landscape mode…. maybe i’ll get some info today at WWDC, we’ll see!
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My guess is around that amount, BG. Here’s my prediction: those who have been into the hype and waiting these 6 months just to get the iPhone will buy it within the first 2-3 days of release. After that, countless thousands will casually walk into AT&T stores just to play around with it.
Some will be impressed enough to buy it on the spot, more will have to wait until their contract is up with another wireless provider, but for the most part, it will be a matter of curiousity.
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My phone (D.C. market) still says “Cingular.”
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Anyone is who has recently updated their sim card will now show AT&T on their display as opposed to cingular. Older sims will take longer to show AT&T. This is true for all markets.
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All of the above comments are valid. Apple is a consumer oriented company and consumers want technology that is easy to use and is reliable. This is what iPhone is trying to do - give the end user a great iPod, a totally new and FULL feature web browser, and an easy to use Phone.
Imagine all the soccer moms out there that would love to have one place to put all of the pictures of the kids, get emails, be able to use a desktop class web browser, and have an easy to use phone. The iPhone will do to the consumer what the Blackberry did for mobile workers. I have a blackberry and use Macs at home and I am not ditching my blackberry but could see myself buying one of these just for the iPod and wifi browsing experience. And this thing will sell very well and growth will initially be parabolic after Europe and Asia come in to the mix.
I do need to diclose that I am very long both Apple and RIMM, and have been for a while, in my personal portfolio. There is a good reason for this - I see a smartphone duopoly emerging as Windows Mobile is seen as a bastardized version of poorly written software with no value proposition.
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Sure you will get a big rush the first week the phone comes out for the people who have been waiting the last 6 months to grab one, but $5-600 is a big pill to swallow especially coupled with being locked into a 2 year with att….. look at sony, sure the ps3 hasnt done too bad, but its no where near what sony expected, plus the $5-600 price point and lack of games/ developer support is killing them right now. the iphone with its lack of 3g, true keyboard and compatability only with att makes it similar in most regards to the sk3 only wrking with t-mo, with a better browser, screen and music/video functions. I may be wrong but i dont think that this thing is going to flying off the shelves like the wii has been. Why do windows based computers still dominate the market if apple makes a better product? The reason…. price. If i am going to be stuck with att for 2 years, I will save 250-300 bucks and get a tytn and have a more capable device.
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First this phone is and will be a great device for those the like of movie stars, pop stars and the common person that does not use anything for business and where glamour is everything. As all have stated the lack of any corporate email or security sevice that doesn’t require a huge overload will not be adopted anytime soon. ISO love gagdgets and will look to the iPhone as a possible device for their personal enjoyment but the lack of any true mobile device features will eventually lead to WM or BB being even more popular. So let’s wait, enjoy the new technology placed infront of us and let the next wave come.
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I can agree with you seeing a lot of people carrying the two phones. One for work and one for fun. I have wanted to get to a once device that fits all. But I think they will sell about 300K the first week.
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The iPod was a consumer not enterprise device and it took 70 percent of the market. 80% of the market have ‘dumb phones’. iPhone is a compelling enough solution to get regular consumers who care diddley about enterprise apps to want to dip there toes into smart devices. Then there are those like me who want the flexibility to have both an enterprise and consumer device. I have a Nokia e61 and am only a sim card away to access the iPhone. Iphones COMPLEMENTS enterprise devices.
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I don’t see what the problem is. The sidekick is doing just fine and if anything iPhone is going after the sidekick, razr (some), & chocolate market. I don’t think they’re aiming at BB, WM, or PalmOS.
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Up ’till now, the terms smartphone and consumers don’t mix in the same sentence. Nokia has some success to a certain degree, mostly in Europe and Asia. They sold tons of smartphones to people who don’t even know they got a smartphone on their hands.
The iPhone will change that permanently. It will be a global phenomenon. It will eat away that market shares that are currently held by Motorola, Samsung, LG, and Nokia. RIM is safe though. Windows Mobile, well, Microsoft ought to be scared; if not, they will be in trouble 3-5 years down the road.
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I don’t disagree. I was just saying that the iPhone is more like the sidekick. A closed archetecture with a limited number of apps that they do well.
The iPhone really isn’t a smartphone (I guess it depends how you determine this gray area.)
Also, we don’t know that Apple won’t add corporate email support down the road, do we?
Even Palm OS didn’t have wireless exchange email except through GOOD or Seven until very recently, and Apple may invite Good to run on their platform.
Despite that, corporate america won’t adopt it. This is and will remain a consumer novelty.
What will kill the iPhone is the price. Business people can justify the price of a PDA for ‘cost of doing business’ but a consumer won’t.
Just like the Sony PS3, it’s price point is just out of reach for all but the devoted fans.
I agree it’s not sustainable at it’s price point.
If it were cheaper, I could see it being the next sidekick.
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I think the one common link related to the success or failure of the iPhone will sit with the reliability of the device itself. Simply put, will it work? With this essentially being the first multi-touch sensor released within any widely available device, the potential risk of the device having multiple issues is not only possible, but probable. A sea of complaints would potentially cripple the phone division as consumers shy away from a $400-$500 problematic device. I don’t want to cry wolf here, just noting that with great reward comes risk – risk that may shake the foundation of Apple who seem to have invested a bunch into the idea (remember why Jobs was shoved out before in 1985?)
If the device works, the consumer sector will explode; becoming the most popular phone ever and the smart technology VP’s within the corporate marketplace (not unlike myself) will continue to demand and push for similar functionality. Blackberry has set the standard, but they haven’t been progressive enough in developing tools outside of push email (blame it on NTP). The unknown question is whether Apple with try to change for the corporate sector, or if the corporate sector will change to include Apple. I’m personally excited enough to dump some good money into Apple’s stock (not recommending anyone else do it – just saying so to make a point that as I type away in my office overlooking the Dallas skyline my iPod is nestled up to my monitor charging away for my work out later.
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I agree with the above posters who suggested that apple is not after the pure business market. They never have been with any of their products…apple computers may have a small place in some of corporate america (or canada where I am), but windows is king for PC’s, and RIM will remain king for the business market for a long time. Apple is looking to change the cellular market just like they did with the digital music market. Before iPod there were very few DMPs, now you can’t walk 5 minutes without seeing someone with some variety of iPod. When iPod first came out it was also in the $500 neighborhood, people still bought it, and it got better, and then 4g and 5g came around and its popularity exploded. I expect to see the same evolution with iPhone, give it 2-3 gens, and it will dominate the cellular market. I would also expect to see various types and prices (eg, ipod, nano, shuffle) to get all potential customers. With all of the people already addicted to iPod, and smartphones for the non-business customer becomming ever more popular, the odds seem to be in apples favor. This is assuming the iPhone lives up to the hype (a very big assumption!)
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The thing to look at is what market steve-o is after - the whole ‘digital lifestyle’ mission is still it. With the iMac he wasn’t trying to replace computers, he was trying to replace VCRs and boxes of old printed photos. The iPod was about replacing traditional music players. I can only assume the iPhone is about replacing that clunky old Moto which people use without really thinking about how crappy it is. To that end, we’ll have to see how successful he is, but certainly corporate focus doesn’t seem to be what they’re doing.
I can’t think of any smartphones making it without corporate support either but I don’t suppose any of them were released with epic media fanfare, 30 bazillion in advertising and an enthusiastic SV mogul to send it off.
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The iPhone is definitley a consumer based product as opposed to a business product. Therefore, most of what jibi commented on is pointless, just like The Pope stated above.
For the naysayers among you, just wait, they will sell through the first 3 million iPods very, very quickly. This is a company that revolutionized the computer industry, then the music industry, and now the mobile handset industry.
Remember, they have already sold 100 million iPods, and this is just the latest, most amazing new model…and it comes with a phone, your calendar, your email, contacts, notes, music, etc
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Sorry, I think this article is all wrong. It makes tons of assumptions and states total conjecture as fact. Where’s this proof that companies around the world are “drafting policies barring the use of the iPhone or providing reasons why it’s not to be added to corporate-support device lists”?
And where do you pull out the concept that “large companies no longer offer IMAP or POP3 support to their internal messaging platform”? I know of HUGE mega companies that still happily support IMAP and POP3. Entire government branches also have not adopted Blackberry/Palm devices and are still using old fashioned POP/IMAP.
And this idea that smartphones rely on corporate adoption is pretty outdated. RIM recognized the obsolecence of this thought pattern and started targetting consumers a long time ago. I’ve seen University students, bartenders and even street kids are running around with Pearls and emailing and PIN’ing each other. Having talked to owners of such devices I know for a fact they dig the smartphone aspect of the phone, and nearly every single person agrees: once you use a smartphone device you cannot stand the typical regular phone’s clunky interface and useability.
The iPhone is about useability, fashion sense, and replacing two devices in one. People who carry an iPod and a phone might consider it as a viable alternative. People who don’t have an iPod might consider getting the iPhone instead. Before Apple started promoting the iPod the market was pretty tame. People that own an iPod now would never have dreamed of buying an MP3 Walkman or MP3 device from Creative, RCA, etc. They CREATED an entire new market. I think they’re out to do it again with the iPhone.
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@ R, I personally work for one of the most influential and powerful companies in the world and am in constant contact with messaging administrators for other Fortune 100, 500 and 1000 companies, so I tend to think that I have some factual basis about messaging security policies within these companies. As for the other comment, unfortunately it is based on communications between myself and other messaging administrators with some of these companies, so my proof is simply within my words. Again, these are just my opinions, some of which are actually based on discussions with the administrators within other large companies.
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Sorry if I came across as hostile, Jibi, and I appreciate the response Jibi. But I felt your article was blowing certain issues out of proportion by virtue of sweeping statements - which in fact would sensationalize your points in the absence of proper factual backing. I think it would be more beneficial to your readers and more accurate reporting if you were to indicate these claims are more in the form of annecdotal reference reflecting your own exposure to many companies.
Just an opinion, sorry for being so picky :(.
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In all honesty, I will not get a first gen iPhone. I’ll wait until 2nd gen iPhone comes out with 3G and more bugs worked out. Plus HTC/Sony/Nokia etc. are not sitting still. Apple introduced the iPhone and everyone has to step their game up in some way shape or form. I like the fact that Apple is forcing its competitors to be more innovative. But, Apple, in order to maintain any gains it makes in this field will be forced to have some of the bare essentials that the corporate world requires. That’s just good business period.
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@ R, sensationalism sales, no? Plus, BG added a nice little disclaimer at the top.
@ Vision77, some employees of Apple have been told the units will be shipping with locked hardware features, such as 3G capabilities, that can be unlocked at a later date via a firmware update. While I would assume this as a worthless gesture of information from a friend, it’s not necessarily beyond the scope of imagination that Apple would do something like this.
But like you, I really appreciate Apple putting a LOT of pressure on other companies in the mobile space to innovate rather than remaining stale. If they simply offered compatibility within current enterprise messaging platforms, I would safely say that this would almost single-handedly dismiss all current and mid-future competition from RIM/BlackBerry, HTC/Microsoft and Nokia/Symbian… virtually overnight.
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@Jibi, While I agree the phone will have some features locked for future updates, the 3G capabilities isn’t a reality. It would require a different chipset and would have to be tested by the FCC (which wasn’t done).
Look for a new device late Q4 2007 or Q1 2008 that will include 3G, and a more robust feature set that was left out of this model.
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