AT&T: iPhone changes how we’ll do business

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Referring to Nokia’s upcoming answer to the iPhone in Remember who said, ‘Great artists steal’? Russell Beattie says:

Actually, let me say this definitively: Not only does Nokia have the more advanced device now, but it will take Apple several *years* to come up with a competing product that has anywhere near these level of features. Apple just doesn’t have the mobile hardware chops to do it themselves. Until you easily can get things like GPS, 5 megapixel sensors and HSDPA 3G on the commodity market, Apple won’t be launching a device with those features. They don’t have the experience, know how or partnerships to get it done and still be profitable.

Not understanding just what Apple products (perhaps iPhone more than any other) mean to users seems to be a professional punditry handicap. Is a mobile device a simple collection of its hardware components, as Beattie clearly lists above? More pixels and more speed equal utility and delight? If that were so, how did the iPhone ever become AT&T’s top selling phone, the fourth top selling handset in the US market? AT&T spokesman Mark Siegel:

In its first weekend we sold more iPhones than in the first month of any other wireless phone AT&T ever offered. That’s how good it’s been.

Clearly, Apple knows something Nokia does not. (Actually, it turns out Nokia knows more than Beattie as well: CEO Olli Pekka Kallasvuo has said he is “paranoid” about Apple’s entry into the cell phone market.) Beattie is not alone in his inability to appreciate that a consumer device is more than the sum of its metal and plastic parts or whether it’s ‘open’ or not. Morten Hjerde:

But Apple has created a closed walled garden product and who wants to live in a walled garden? Tying the device to a particular operator, not letting anyone install as much as a small Java game or a ringtone on the device without Apples consent?? Please! Do you think we live in Albania or the US or something?

So how innovative is the iPhone then? How does it advance the mobile devices industry? Let’s skip the obvious industrial design, the multi-touch interface and the overall integration of hw/sw components that make it a delight to use. Let’s instead focus on how the iPhone is already changing the industry, just after a few weeks on the market.

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Nobody knows this better than the largest U.S. carrier AT&T. Company CEO Randall Stephenson outlined at the Forbes MEET II forum yesterday two distinct ways the iPhone is changing the industry, as reported by electronista:

Safari

While most users have typically been sparing with Internet use on their phones, the frequency of access “jumps by multiples” when existing subscribers switch to an iPhone, the carrier head noted.

Video

The executive also observed that the Apple handset’s ability to play video had changed his and the company’s approach to video playback, as he and many at the company had never thought it likely that customers would watch video on a cellphone until the iPhone became public.

This sudden discovery of the usefulness of video plays significantly into the motivation behind buying 700MHz spectrum from Aloha Partners, Stephenson said…Large amounts of built-in storage on the iPhone and similar devices are helpful for now, the AT&T chief added, but will be less essential when subscribers can stream the content instantly regardless of their location.

How can AT&T (which Walt Mossberg recently likened to “Soviet Ministries”) be moved by a mere device? And agree to hand over to Apple $400+ per iPhone contract in revenue sharing? Similar deals have been done with European carriers as well.

Has Nokia ever done that? Has Nokia ever really taken any bet-the-company type of risk to alter the balance of power in the cellphone industry? It’s been expedient for the Nokias and Motorolas of the cellphone industry for over a decade to let carriers dictate pretty much everything customers can do with their phones. They are now riding on the coattails of Apple, hoping to leverage iPhone’s acceptance by the market into getting concessions from the carriers.

Reminds one of another market altering move by Apple just half a decade ago: the iTunes/iPod revolution in the music industry. The recent tantrums by Universal and NBC in their quest to dethrone Apple shows just how much success Apple has had in that endeavor.

All the critics of the iPhone are betting on is that history won’t repeat itself. Will it?

10 thoughts on “AT&T: iPhone changes how we’ll do business

  1. By the way, Beattie has become a critic of everything Apple. Today’s screed was anti-Leopard. So best approach is to just ignore him (since he doesn’t listen and doesn’t let anyone comment at his site), and soon he will become irrelevant.

  2. “Apple just doesn’t have the mobile hardware chops to do it themselves. Until you easily can get things like GPS, 5 megapixel sensors and HSDPA 3G on the commodity market, Apple won’t be launching a device with those features. They don’t have the experience, know how or partnerships to get it done and still be profitable.”

    This is the strangest statement. First off, Apple has been building portable devices for what, 6 years now. I would say it’s gotten pretty good at cramming a lot of components in a small space—probably better than anyone else in the industry.
    Second, Apple will have the same access and pricing to those same components that Nokia has. That’s what happens when you become a major player.

  3. “Nokia is falling into the trap of the competitors who compete against the ipod – they think it’s ALL about a series of features”

    Exactly right. Moreover, EACH iPhone is ALSO an iPOD. We have seen how easy it is to compete with the iPod, right? Heck– you could take out the phone part and sell an iPod with just the new UI. OOPs! They already thought of that, didn’t they?

    When my Nano dies, I’ll take an iPod “touch” over an actual iPhone– my wife requires me to use Verizon.

  4. Nokia is falling into the trap of the competitors who compete against the ipod – they think it’s ALL about a series of features just like the Isuzu can out-corner a BMW in some traffic cone tests but overall?

    What is Nokia touting? 5 MP camera? 3G, GPS? That is swapping out THREE chips – that should literally take the factory 5 minutes but useability? That’s where Nokia falls down. Features, yes, mostly attractive or not unattractive? Yes. World class usability? NO.

    95% of the ALL the features on the iphone can be accessed with ONE tap and the other 5% with TWO TAPS.

    The problem with every cell phone prior was NOT it was missing feature, it was people unwilling to pay a lot for it because they knew they had no idea how to use it.

  5. So if Nokia has all these super hardware chops and access to all this bleeding edge tech, how did the iPhone have any chance at all?

    Mr. Beattie needs to learn the difference between a bulleted list of features and a shipping product.

  6. Look, it has never been about the hardware or “features”. It is about the interface. What good are 100 extra features if the interface is so poorly designed that it is a hassle for the average consumer to readily access those functions (I like my old Sony-Ericsson, but the interface is fairly appalling). The iPod often has fewer features than its competition (no built in FM tuner), but the interface is great and the controls intuitive. That’s why it is a winner. That and a drive to revise the product regularly.

    Apple has largely put together a new way to interact with the phone, and as a result, I think that the industry should be a little paranoid.

  7. The problem is that “no one innovates”, they are just trying to replicate what Apple does.

    As with the bunch of “iPod killers” (Zune included) there will be a bunch of “iPhone killers”, “Leopard killers”, “iTunes killer”…

    In the meantime, Apple would be “inventing the future” and being ahead!

    p.s.: In the old days, there was a banner (before internet pages’ banners) thar said; “The best way to predict the future is inventing it.”

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