Apple's iPhone 2.0 'Bigger than the Personal Computer' 14 comments
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“Bigger than the Personal Computer.” Those were the words John Doerr used to describe iPhone 2.0 yesterday at the Apple (AAPL) SDK conference. I agree. I highly recommend you watch the video yourself and not allow 3rd parties to interpret this monumental event. Apple’s iPhone, SDK, application business model and enterprise integration provides a hardware and software platform so revolutionary that it will dominate the mobile computing space just as Microsoft (MSFT) owns the desktop: well north of 90%.
In the past this might have seemed like Apple fanboy hyperbole, but the event yesterday provided convincing evidence that there is no real competition for the iPhone. The SDK is extremely powerful and a fully featured version of OS X the most advanced desktop OS in the world. Furthermore, the SDK tools for developers provides an iPhone simulator and development environment so easy and intuitive, software developers and entrepreneurs will produce thousand of great applications. The Application Store (App Store) that Apple provides to those entrepreneurs with its 70/30 revenue split will more than compensate for their hard work and get content in the hands of owners.
The enterprise email, calendar and contact features that integrate with Microsoft Exchange are simpler and more convenient than any process on the market as it removes intermediate server and proprietary NOC steps. Trials with Genentec and Disney (DIS) have been impressive and proven its viability in the corporate space. No need to carry a Blackberry (RIMM) and an iPhone. Salesforce.com (CRM) and Epocrates demonstrated vertical business applications built in two weeks with the new SDK, clearly only scratching the surface for the future.
For entertainment, Apple, Electronic Arts (ERTS) and Sega demonstrated games that featured impressive 3D graphics and an accelerometer based interface (think Wii (NTDOY.PK)) that allowed for a more immersive environment than Sony (SNE) PSP. AOL (TWX) showed some great capabilities for its AIM messenger assuring that the social networking space will have unrivaled functionality on the platform.
Finally, the iFund announced by Kleiner Perkins, the famous Silicon Valley venture capital fund, will provide $100m in VC funding for new companies exploiting the iPhone environment. I am sure they will be joined by many other VC funds.
Not mentioned is how American business will use this platform for their own ends. Starbucks (SBUX) and Apple have already announced a cashless payment system for iPhone and I am sure we will see more of this. Given its location aware capability with cellular triangulation and the inevitable GPS integration in the next year or so (just speculation), business will be able to provide coupons and incentives in numerous ways for iPhone users.
John Doerr was right; the iPhone/iTouch will be bigger than the PC. Apple is years ahead of the competition with this June release of 2.0. Like the early 80s with the PC and 90s with the internet, the next few years promise to be exciting and exhilarating as one new application after another comes to the iPhone and it the platform becomes part of our daily lives.
Disclosure: Author has a long position in AAPL
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This article has 14 comments:
The same will probably happen with the iPhone. There's a certain percentage of the market that will pay a premium for the iPhone, but the rest will just go for a cheaper alternative that provides a *similar* product for 20%-50% lower pricing.
As for consumers going for a similar cheaper alternative, there are none. There is only one palm sized full featured computer on the market today, and that is the iPhone.
With the latest news out of Cupertino, the iPhone is about to blow up, making the iPod fenom look like a hobby.
The price gap is miniscule. If you look at TCO, the "price gap" has been NEGATIVE since 1984 (introduction of the first Mac). What it comes down to is institutional inertia. The How long did it take for the Former Soviet Union to smell the coffee and realize their system wasn't viable? About 40 years. Same with Windows cultists. They keep believing the NEXT iteration of Windows will have 1) security 2) performance. In fact Windows isn't even UNIX-based yet; the code base is likely to deteriorate over time, as we saw with Vista, rather than progress.
Walt Mossberg repeatedly touts the iMac as not only the best integrated desktop personal computer, but also the least expensive in absolute terms, and a knockout in price-performance. I recently bought a single-copy OEM edition of Windows XP at a CompUSA closeout, on sale for $189. The full list price for Apple's OS X is $129, and that inclused a professional development environment, web servers, SQL database engines (SQLite is in EVERY copy of OS X), and tons of other features that exist only in Windows server products. And Apple eschews the paranoid single-machine mania that Microsoft embraces with its cumbersome and heavy-handed authentication scheme.
Please show me your comparison data, a pattern of "more expensive", if you please, and not a single contrived configuration compared to another vendor's loss leader model, pretending that such a comparison represents the entirety of the truth.
Or you could simply google "Mac vs PC cost comparisons" AND SEE THE RESEARCH OTHERS HAVE DONE.
And as for the iPhone, if you will simply look at the data, you will see that it now has, after less than a year of existence, 21% of the smartphone market. That's better than the initial results for the iPod, which carved a monopoly position out of an mp3 player market that was chock full of clueless participants. With over half of new Mac sales going to Windows users, the Windows market "dominance" only represents room to grow into.
Say, you wouldn't happen to be Steve ("Balmy") Balmer, would you? He had similar ideas about the iPhone, as I recall.
And as for the 70/30 revenue split with developers ... Do you know how hard it is to find, buy and install applications on my phone today? The effort it takes to figure it out is the main reason I rarely do it.
Reality Check is right -- this is bigger than the iPod.
"I highly recommend you watch the video yourself and not allow 3rd parties to interpret this monumental event."
It's right here:
events.apple.com.edges...
IMHO: this is just about the biggest apple announcement I have heard... well ever. ( i was thinking intel chips was big, but it just does not compare to this ).
I am long AAPL ... but its only worth like 2 Euros now...
What kind of PC is that? I've just read another article on Seeking Alpha that says SDK can only run one application at a time. The last time I did that was on a pre-Windows DOS 2.0 Compaq in 1986.
Can somebody tell me who to believe on this one?
"As the iPhone platform expands it should dominate the mobile market like windows dominates the desk top. As windows has made little impact in the mobile community (you have to operate it with a stylus - which hand are you using to drive) due to some boneheads idea of mobile being sitting in Starbucks."
exactly, who will kill the iphone now ? No one.
"When the latest Xserve was announced we did a feature for feature comparison with an HP server and the hP server was almost twice as much as the Apple Xserve."
"With the latest news out of Cupertino, the iPhone is about to blow up, making the iPod fenom look like a hobby."
Again, yes! The ipod will soon seem like a distant memory... ITS A CLOSED DEVICE. Investors need to get this. The iphone is not only a friggin' cell phone/computer/ipod/vi... games/whatever , but it's out of the box couldn't be easier wireless in your pocket.
The business possibilities of a wireless computer in your pocket ( that works ) are completely mind blowing. Not only can no other company develop hardware like this, but Apple just dropped an H-bomb in this space in the form of a developers wet dream. People are developing as we speak, and ALL of these apps will seamlessly port to any apple products ( which are extremely price competitive now) . The good developers will quickly find themselves rock stars that could be possibly flush with cash as their products are instantly available to all iphone users and apple will find itself with armies of developers and consumers addicted to their iphones.
Was Microsoft monopolizing the desktop a big deal ? What do you think will happen when Apple/google owns everypiece of software that you have become accustomed to having in your pocket 24/7 ?
Repeat: Apple is going to allow anyone to sell/show/give you whatever you want, instantly, in your pocket, and they will own all of it.
And you can also quickly forget about AT&T , why would I care to even pay for cellular when I could VOIP everyone with my Iphone ?
As for Microsoft, if Ballmer didn't shit his pants yesterday, he should be fired. How are they going to compete ? Give us a zunephone with vista development ? They apparently can't even build an operating system anymore.
"In fact Windows isn't even UNIX-based yet; the code base is likely to deteriorate over time, as we saw with Vista, rather than progress."
Right on the money, the fact that MS is still pushing DOS-based software is nearly delusional to me at this point. They have all but lost this game already ( well, after yesterday they should REALLY just go to UNIX, give it up )
Again, Microsoft is all but dead now, MS shareholders should demand a CEO that knows computers, Gates surely did, Ballmer doesn't seem to get it; at all.
O and what if google wins any spectrum ? I'm pretty sure we could just all use our iphones to hop right on and forget about their cell companies. I might even forget about my laptop.
Simple geopolitics are also playing a huge factor in this rape and pillaging of MS. Who's in the same exact area ? Apple, Google, Stanford, Genetech. O and I heard it's also the epicenter for VCs, biotech and tech startups. Microsoft is in Seattle and all the aforementioned companies are becoming no less than a bay-area hydra. Again, how can Microsoft possibly win now ?
Meh... that will never happen, its not like google and apple share and board members or google has been obviously developing Iphone apps from the beginning of this venture. That scenario wouldn't make any sense for either companies business models either. Google is definitely not pushing a free online desktop in the form of "iGoogle", they don't have ANOTHER UNIX-based SDK called android that is completely aimed at mobile computing as well. Ballmer should be sleeping soundly because Microsoft has the right hardware, the right software, server farms across the country, and the spectrum. Google/Apple aren't thinking any of these things, they are focused on the wired world.
Ok...Im done... but if you don't get this... as a friend I must tell you, you don't get this space... don't invest in this sector....
disclosure: I own a crappy amount of apple and google, though I just painfully sold some apple yesterday to fund a trip to europe ( do they still accept USD over there or are dollars just valued against toilet paper brands in the grocery stores? ).
I personally would let this recession bleed for a bit , then start moving into Apple once the fed cutting/ panic seems to have finally stopped. As historic as this was, I just don't think the stock can fight this recession. AAPL has resistance @ 120 and 100. Longterm, I would say it's a screaming buy at anything under 100, but I am simply not sure how bad this recession is going to be, so a buy @ 98 might leave you with a stock that can't break 100 for the next few years, or even worse a stock that hovers around 70, dipping into the 50's and 90's at times... so yea , short something else and buy energy/commodities....... into apple later and slowly ( as you think we are emerging out of this )
errr.... I should have a blog or something.... how many of you guys actually make real money ? I wonder who the poorest person commenting on this site is ?
One that fits into your pocket and connects to the internet with a real browser in about 0.5 seconds.
"I've just read another article on Seeking Alpha that says SDK can only run one application at a time."
um....seriously ?.... you are right, right now my 36 core laptop is running an app on each of its cores, it really sucked when we are using 1 and 2 core computers....wait...we still do.
Have you used this device ? Do you understand how the internet works ? Give one scenario where ANY smartphone will be able to do ONE thing the iphone won't. ( note: I'm not even asking for something better, just something )
and just for fun, please inform me of ANY "mobile" device that can do what the iPhone can't/won't be able to. You are going to either have to start bringing up laptops or a PSP in my mind, both are which are fairly irrelevant to the space that Iphone is going to simply create.
" if you have to ask what the Iphone is, you'll never know "
Go to
events.apple.com.edges...
and watch the video. I think Steve Jobs has done it again. Apple lost to Microsoft because its operating system was closed to outsiders. Apple learned its lesson. All they need is a GPS and a 4 megapixel camera.
Perhaps I should have been an instant convert and bought AAPL at $125? Pity it's now $85 and heading south... (I know that the whole stock market has gone down, but look at APPL vs. MSFT since the article was written)
My point about Apple products being "too expensive" was simply that while the Apple OS has been consistently better than the contemporaneous Microsoft OS, it is too expensive for the majority of consumers taste, because it comes bundled with Apple hardware. As far as I know you've never been able to order the cheapest available desktop or notebook hardware and choose to install either an Apple or Microsoft OS ;)
BTW, TCO comparisons don't mean much to home PC users or small businesses that only run a couple of basic apps (word processing, spreadsheet, accounting) and don't run a help desk etc. If you want an example of the price gap I have in mind, just look at the cheapest Apple notebook PC compared to the cheapest Dell laptop. Yes it's a comparison of apples and oranges (eg. performance, ease of use etc. isn't comparable) but my point was only that sticker shock might be an explanation for the relatively poor market share of Apple in the desktop PC space over the last couple of decades.
I'm just not convinced that the iPhone will capture as big a share of the mobile phone marketspace as the Windows PC gained in desktop space. Perhaps that's simply because I'm still getting by with the "free" 3G mobile phone that came with my $14/mo phone plan. It has a crappy keypad, miniscule screen, and ho-hum camera. It has internet access, but I never use it as it's easier to access the net with my desktop at work or at home. I've never felt a need to surf the net or watch movies on my mobile phone. Apart from the odd snap-shot with my phone, I use my digital SLR for taking photos. And I use a $200 GPS for driving - a phone-based GPS might do just as well, but would cost as much per month as buying a dedicated GPS outright.
So, on the one hand you have some consumers that just won't be interested in an iPhone-style mobile phone unless it's super-cheap (never an Apple selling point), and on the other hand they'll be phones from other players like Samsung, Nokie, RIM etc. that will eventually "get it right" and come out with a model that's as good as the current iPhone iteration.
Of course I'm probably wrong - after all, I decided not to buy any Microsoft shares when they listed in the 80's (I though they were overpriced!)