All-in-one iPhone may be too trendy
By BOB KEEFE
The Atlanta Journal-Constitution
Published on: 06/10/07
Andy Whatley is crazy for cellphones.
He bought a Motorola Razr as soon as it hit the market. He soon replaced it with the music-playing Rockr, then an even trendier Slivr.
iPhone: Do you believe the hype?
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So it's no surprise what the Columbus schoolteacher is eagerly awaiting now: the Apple iPhone.
When the elegant cellphone/music player/entertainment/Internet device arrives at his local AT&T store June 29, Whatley plans to be one of the first in line. He's got his eye on the 8-gigabyte model, priced at $600.
"On a teacher's salary, shoot, $600 is almost a week's pay," said Whatley, 46. "But how often does [a phone] come around like this one?"
Whatley is exactly the sort of consumer Apple is aiming for in new ads for what could be the most hyped electronic device in recent history.
But will the average consumer pay $500 to $600 to own it?
"Like any new hot fashion item ... it's almost inconceivable that you're not going to see a huge surge in orders over the next eight to 12 weeks," said David Yoffie, a Harvard Business School professor who studies technology and strategy.
"But after that," he added, "it depends on a lot of unknowns."
According to a survey last month by J.D. Power and Associates, more than 36 percent of cellphone users get their phones for free, and free is hard to beat.
When consumers did pay for a cellphone last year, the average price was about $93, slightly less than a year earlier.
At the same time, many consumers already have music players and other multimedia features on their cellphones, but don't use them.
In a recent study by technology research firm In-Stat, about 80 percent of consumers who had phones that can play songs said they rarely — if ever — used the feature.
Ken Dulaney, an analyst with technology research firm Gartner Inc., said the jury is still out on whether most consumers want all-in-one-devices like iPhone or separate devices that might work better independently.
"The real question is, do you want a hammer that also acts like a saw?" he said. "There's a certain customer group who would prefer" separate devices.
Especially, he added, if they already own an iPod or are happy with their current cellphone.
As a phone, iPhone is mediocre compared to other products on the market, Dulaney said. As a media player, it's good, but a separate iPod might be better. As an e-mail device, other devices are better.
As a result, Dulaney said he's expecting the iPhone to have limited appeal.
"I believe this is a much tougher project than [Apple] ever imagined," he said.
IPhone also comes with its own set of special concerns.
With so many features, some technology analysts worry about its battery life. Will its striking touch screen hold up over time as well as regular old buttons?
And while Apple knows computers, it has never made a cellphone before.
Of course, naysayers have doubted Apple in the past and have been dead wrong.
Take the iPod. Critics initially scoffed at the idea of a computer company selling portable music players, and in six years, Apple has sold 100 million of them.
Jen O'Connell, a former cellphone industry executive in Atlanta who recently published "The Cell Phone Decoder Ring," a consumer guidebook, said whether the iPhone is right for you depends on what you want in a phone.
If you're just getting comfortable with that new iPod or don't need a portable music player, or if you don't want to do a lot of Web surfing or e-mail checking with your cellphone, don't get one, she said.
Likewise, if AT&T wireless service is spotty where you live or where you frequently travel, definitely don't get one, since iPhone works only on AT&T.
High price tag
And then, of course, there's the cost factor.
"It's going to be extremely appealing, but the biggest limitation is going to be the price," said O'Connell. "That's a lot of money."
And that high price tag is just for the device. AT&T has not yet disclosed the charges for the monthly service or special functions.
In announcing iPhone in January, Apple Chief Executive Steve Jobs said he expects to get just 1 percent of the cellphone market.
But with an estimated $8.8 billion in U.S. cellphone sales last year, there's plenty of room to make money.
Apple officials declined to comment for this story, but Jobs is expected to reveal more details Monday about the phone and its launch at a software developers conference in San Francisco.