In two weeks, Apple’s new product hits the market. Will its lack of 3G data speeds hamper its success?
The much anticipated commercial launch of Apple’s new iPhone is at hand, with AT&T Wireless set to begin selling it in its retail stores June 29. Apple is betting that the runaway popularity of its iPod music players will carry over to cellular handsets, and has set a worldwide sales target of 10 million units for 2008. That number represents only about 1% of the global market for wireless handsets, but given the expected hefty price tag and the fact that this is Apple’s first foray into wireless it may be difficult to achieve.
Usually, new products that offer flashy new technology are given a boost in sales by “early adopter” technophiles who are willing to pay a premium to own the absolutely latest in consumer electronics. Although the iPhone will certainly have plenty of flash, performance of many of its features will likely be hampered by its surprisingly limited air interface capability.
There is little doubt that the iPhone will represent a distinctive departure from traditional cell phone designs. The primary novelty will be in the user interface which is based (like the iPod) on touchscreen technology. Although major established handset makers have upgraded and to some extent standardized the way in which users access various features, there is certainly still room for improvement. User interface has always been a strength of Apple, so there is reason to hope that the iPhone will deliver in this area. But even the most seductive of user interfaces will likely not be sufficient to entice 10 million people to fork over several hundred dollars for a new phone.
The real driver for iPhone’s appeal will have to come from its feature set, which certainly seems impressive enough – at least on paper. Besides the obvious phone and MP-3 music and video player, there will be push e-mail, navigation mapping, a 2-megapixel camera, standard Wi-Fi (802.11g) and Bluetooth connectivity, and probably a bunch of others I haven’t heard about. And there’s that large (for a handheld device) high resolution touchscreen that will tie everything together. The list is certainly impressive even if there is nothing really new here (other than the screen).
Actually there is something else that’s kind of unusual for a cell phone: the Wi-Fi capability. What’s that all about? I mean, with the much-vaunted data capabilities of 3G wireless networks, why would a cell phone need Wi-Fi? Well, it turns out that one of the features that the iPhone does not have is 3G capability. Instead, for ubiquitous data capability, it will rely on the much slower EDGE technology provided on most GSM networks.
The lack of 3G capability in the iPhone, at least on initial rollout, appears to be a result of Apple’s global marketing strategy as well as a certain level of technical conservatism. For maximum market exposure, Apple chose to launch the iPhone with GSM capability. In the United States, there are more CDMA-2000 users, but worldwide the numbers still favor GSM.
Either by transition or deployment in dedicated spectrum, most of the GSM world is moving to W-CDMA to deliver better spectrum efficiency and 3G data services. So why didn’t Apple give the iPhone dual-mode GSM/W-CDMA capability? Traditional phone manufacturers such as Nokia have been delivering such handsets for a few years now, but the two air interfaces are different and combining them into a single handset is not an insignificant technical challenge. It’s not the sort of thing that a company might choose to tackle for its first cell phone design.
My guess is that Apple decided that the appeal of the iPhone would be in its features and user interface, and that the phone capability is pretty much a commodity these days anyway. But however they arrived at it, the decision to do without 3G capability may prove to be a source of frustration and dissatisfaction among iPhone users, since many of those fancy features fairly scream for the sort of ubiquitously available high-speed data services that only 3G can provide.
Consider, for example, the mapping feature. The iPhone screen is probably better than the ones on most portable navigation systems, and although it will apparently not have an integral GPS receiver, you can bet that a Bluetooth-connected GPS will be an early iPhone accessory. But the iPhone lacks sufficient memory to hold detailed street maps for the entire United States (to say nothing of the whole world) so they will need to be downloaded along with turn-by-turn driving directions. To allow for rapid in-and-out zooming, this sort of interactive mapping needs a fat data pipe. In fact, it’s a great 3G application, but at EDGE data speeds, it might provide a lot of user frustration. And when you’re out on the road trying to find your way, Wi-Fi is hardly a workable alternative.
Over-the-air music and video downloads also are likely to be frustratingly slow with the iPhone, particularly since there are a few combination MP-3 player/cellular handset products already on the market with 3G capability. What’s worse, it’s a pretty good bet that most of the technology early adopters that Apple is targeting are already using 3G capabilities on their current handsets. Will they give up the speed of 3G in exchange for the seductive user-friendliness of the iPhone? I guess we’ll soon see.
Drucker is president of the consulting firm Drucker Associates and can be reached at edrucker@drucker-associates.com