Why the iPhone will not succeed – Yet

The new Apple iPhone is set to launch on June 29, 2007 and the press and investors are making it a darling. Investors have run Apple’s stock price up from about $85 per share before its announcement to $125 per share recently, but the iPhone still will not succeed – at least not yet.

The problem with all this media hype is that it ignores the simple fact that the iPod was not a success. I mean, it was eventually, but it was far from a success out of the gate. “Blasphemy” you might say, “everyone has an iPod” you might say, but the fact is that the iPod was not successful until about the third generation. The iPod was not a success until its killer application was available to the masses. The iPod was not a success until the Windows version of iTunes came out. Then and only then, did iPod sales skyrocket and install the iPod as a cultural icon.

It’s the software that made iPod a success – the Windows version of Apple’s jukebox software that enabled easy synching and organizing of songs. Apple of course has noticed, and this time around they have decided that Safari (Apple’s web browser) will be the iPhone’s killer application. As a result, Apple has launched a Windows version of its Safari web browser. This is to help facilitate development of 3rd party applications for the iPhone. To the groans of developers who were hoping to be able to write stand alone applications for the iPhone, Steve Jobs announced at Apple’s Worldwide Developer’s Conference that the only way to write applications for the iPhone was going to be to build a browser-based application. So, having a Windows version of Safari expands the universe of people with the ability to build and test web applications that will work on the iPhone. Apple may have noticed that cross-platform software is key to iPhone’s success, as it was for the iPod, but Apple is still wrong…

While it will help to give developers using Windows machines the chance to build Web applications that will work on the iPhone, Safari is not the cross-platform application that will make the iPhone a success. Instead the killer application (once available across Mac/Windows/iPhone) will be iChat AV. The iPhone already has H.264 Compression hardware on-board that it is using for a YouTube application and unless I’m missing something there is no reason that iChat AV on the iPhone wouldn’t be possible. A cross-platform version of iPhoto would also help the phone gain adoption, but it will be video iChat, and a hardware revision or two, that will lead to ultimate success for the iPhone. Cross-platform iChat AV and maybe some great next generation Bluetooth headphones, and Apple will finally be on its way.

Look for the iPhone to be a success in its third revision (late 2008 or early 2009) with these key features:

• 5-megapixel swivel camera (or paired with a 2-megapixel screen-side video-enabled lens)
• Video iChat capability (iChat AV)
• Next generation Bluetooth
• A slightly bigger screen (every millimeter counts) – if the bevel can be reduced
• 16gb or 32gb of flash memory
• Hopefully a faster 3G or WiMax network connection
• 802.11n WiFi
• Faster processor with lower power needs
• Improved battery life
• Lower price – $299 or less

Postcript

There are a few other possibilities that I don’t hear anyone talking about with the iPhone:

1. One of the weaknesses of the iPod as a music player, is that it has never had a radio. But now with a network behind it (and an Internet connection), the iPhone could have access to receive every Internet radio stream that iTunes can
   • Reducing the viability of portable satellite radios as a competitor

2. Zune introduced the concept of music sharing. The iPod still can’t do music sharing, but again, with a network behind it, the iPhone could allow users (with approval of the music labels) to send songs to other iPhones for single play or purchase.
   • Just imagine scrolling through your library, picking a song, picking a recipient, and clicking send. Effortless song sharing in a matter of clicks to all your friends with an iPhone, not just those nearby.
   • The recipient could listen to the song and then either choose to buy it or not (in which case the song would be automatically deleted from their library) and then have the option of replying to the sender by text message, and possibly even submitting a vote of whether you liked it or not.
   • These votes could be tabulated and shared as top ten most shared songs, top ten liked songs, and top ten disliked songs, thus creating a community and extra stickiness on either Apple or AT&T‘s Web site

3. People don’t talk about how much easier it will hopefully be to send photos (at least to other iPhone users). I must admit that I gave up trying to send photos to my wife, even from Motorola RazR to Motorola RazR, after the first try. It was unsuccessful, and not being free, there is no way in hell that I am going to waste money trying again.

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Braden Kelley is a Social Business Architect and the author of Stoking Your Innovation Bonfire from John Wiley & Sons. Braden is also a popular innovation speaker and trainer, and advises companies on embedding innovation across the organization and how to attract and engage customers, partners, and employees.