Is the iPhone really a Phone?

Even in europe it’s not escaped my attention that the iPhone is being released on Friday.  Notwithstanding the amount of media interest that Apple has managed to generate around this device I think it deserves some more comment.

A question that I’ve been asked repeatedly recently is "what impact do you think the iPhone will have on the phone market?"  The odd thing about the iPhone is that it’s not actually a very capable phone.  It only has 2G data – it’s capabilities are limited (it has SMS, but no MMS).  It’s big, heavy, and the battery life is unlikely to be "market leading".  All of these items will have been beaten by the big 5 phone manufacturers on multiple handsets in their lineups – so what’s in it for Apple?

The great "sleight of hand" here from Apple is that the iPhone isn’t really a phone competitor.  If customers want a phone they will continue to buy the phones that they are doing today.  So what is the iPhone?  The iPhone really is a rich media device.  It’s a new "category creator" that addresses a tired, old market that includes folk who make portable DVD players, hard disk media devices (Archos is a major player here).

Why are consumers going to rave about iPhone?  Because they get to easily consume media on the move.  This of course requires there to be media that they can consume on the move – which is where we see Apple’s real vision come in.  The iPod has been a category success not because it invented the MP3 player, or because it invented the hard disk MP3 player – but because it integrated iTunes Music Store as part of the MP3 player expereince.  So iTunes becomes "part" of the iPod experience – not the entire experience (the majorty of music on iPods remains ripped CD music – remember this ability to rip music is part of iTunes too) but part of the experience.   iPhone is part of the extension of this integrated media consumption experience to mobile.  Once the hype has died down I expect that we’ll see video consumption on iPhones and growth in video downloads – via WiFi networks, not mobile networks become the growth area.  This growth in digital downloaded media consumption plays to Apple’s strengths in computers and software, and also builds a new line of consumer electronics to drive Apple’s revenue growth.

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