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Macworld 2007: Apple iPhone Hits And Misses

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Steve Jobs, legendary CEO of Apple (formerly Apple Computer), has been described as a master of RDF. The Reality Distortion Field is an attempt to describe his power to say everything and nothing in a keynote speech and have people spend hours in bliss before they begin to realize what they didn't hear. Tuesday's keynote speech at Macworld 2007 is a prime example.

Macworld 2007

Opening with a report of amazing continued success with the iTunes Music Store, Jobs announced that Paramount movies will now be available for purchase.

The Apple TV (previously code-named "iTV") will be shipping in February, and contains everything previously announced and a little more. It has an internal hard disk and syncs with one Mac and can accept streaming content from up to five others.

Then the iPhone is announced, and the markets go wild. Rim (makers of the BlackBerry) and Palm stock plummeted as Apple stock soared. Listening to the speech, it is easy to think that this isn't really a phone, but a new Mac in a tiny form factor. It runs OS X, the operating system that powers my iMac and my wife's MacBook! It's got a lot of custom software and an intriguing touch interface, as well as some other nice bells and whistles, but isn't it really a full-fledged hand-held computer?

No, it's not.

Reality

First let's talk about what wasn't announced. No new software whatsoever. No iLife '07, no iWork '07, no OS X "Leopard," nothing. Does this mean we won't see these updates? No, it means that this show was about one thing only: the iPhone.

There were other brief announcements. Jobs did counter the rumor that the iTunes Store had seen a slowdown in sales. It may have seen a slowdown in traffic — which is what the rumor was based on — but sales continue to rise steadily. Jobs also announced the Paramount partnership, and as the first movie company in which Jobs doesn't hold 7% of the stock, that's a good sign. Jobs also provided a bit more detail — and a release date — for the Apple TV, which he announced last year. But that's it. Everything else — eighty minutes of the 108-minute speech — was about the iPhone.

It's interesting to speculate about the choices that went into this announcement, but so far, that's all it is — speculation. Would Jobs have announced Paramount if he had not needed to address the iTunes slowdown rumor? Would the Apple TV have made the schedule had they not pre-announced it last year? Did they pre-announce it last year because they weren't ready to announce anything else?

The reality is this: no shipping products were announced. None. OS X "Leopard" is still a future event. iWork and iLife updates are still future events. Apple TV won't ship until next month. The iPhone won't ship until June — assuming all goes well between now and then.

The reality is this: the iPhone is not a 3G phone. Jobs announced that Apple intends to make 3G phones in the future, but not yet.

The reality is this: despite the claim that the iPhone runs "OS X," reports from Time (page 2) and Jupiter Research say that you won't be able to download or run standard OSX applications from anyone but Apple. Sure, you need a special version of Safari to browse the web on a tiny screen, but surely there are plenty of developers champing at the bit to get their apps running on the iPhone!

We don't yet know what processor is running inside the iPhone, nor how stripped-down the operating system is. Is it "OS X" like "Windows CE" is "Windows," which is to say in name only? How many different processors does OS X run on now? Even the technical specifications at the official iPhone web site are sparse and not very technical. Presumably more details will slowly be released now that the secret is out, especially as the FCC approval process progresses. Since the iPhone isn't yet shipping, there's actually plenty of time for some of the details to change, too.

Will we eventually see the iPhone work with any carriers other than Cingular? Jobs described them as Apple's exclusive partner. It sounds as if Cingular had to do some work to enable the email-like view of voicemail that is a strong selling point of the iPhone. Since you won't be able to buy an iPhone without a Cingular contract, the $499 sticker price probably reflects substantial subsidies from Cingular already.

On the stock market, RIMM and PALM have been hurting since the announcement, while AAPL is soaring. But will the iPhone really take over the market from these "smartphones?" The forced coupling with Cingular could hurt it here, though many people in the early-adopters market won't balk at the expense.

One other big question: how will the iPhone sync? To succeed, the iPhone will need to sync with Microsoft Exchange running on Windows, something Steve Jobs didn't mention. It's hard to believe Apple doesn't know that, however, so for now I'll assume that Jobs didn't want to mention Microsoft during his big speech. I don't think syncing with iTunes is going to cut it.

Tidbits

At 42:48 into the keynote address, to demonstrate the iPod features of the iPhone, Steve Jobs chooses the Beatles. Given the long history of legal issues between Apple Records and Apple Computer (now Apple), this is either a sign of thawing relations or a serious poke in the eye.

At the time of Steve Jobs' keynote speech, Apple and Cisco hadn't yet signed paperwork on an agreement allowing Apple to use the name "iPhone," currently in use for some Linksys products. The paperwork was in Apple's hands, however, and has presumably been signed by now.

The Future

As the Time article reveals, initial development on the new touch interface was done for a possible Mac tablet computer, presumably one better than the third-party ModBook announced this week. So far what we've seen is a very small and constrained Mac tablet — the iPhone. Will the next-generation iMacs or MacBooks make the mouse and keyboard optional?

Will we see hard-drive based iPods later this year or next year with the same touch interface, minus the phone features? If the iPhone price reflects major underwriting by Cingular, it could be a while before the multi-touch interface makes it into lower-end iPods.

The Bottom Line

For software releases and iPod updates, we'll have to wait. But not long, I think.

The iPhone is one of most beautiful products I've ever seen, a product that could only come from Apple. Two hundred patents notwithstanding, every other company with any connection to the market is now rushing to see how much they can do to make their own iPhone knockoffs. I suspect Apple will be able to keep ahead of the competitors with the iPhone, though, just as they have with the iPod. The iPhone will be a huge success.

But while it's a marvelous and unique combination of iPod and phone, with Internet features, it's not yet a handheld computer in any real sense. It has built-in Wi-Fi, but can't download and run programs. It's a marvelous idea that this hand-held device is running OS X, but until it's more open — either officially or unofficially — it's just an idea.

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  • Tbone

    What a ridiculous post. Take a hike you muppet.

    “Omg these little problems are so complex apple will not be able to solve them! The iPhone will die!”

  • macPinche

    Not a bad take

    The iPhone *will* sync — wirelessly, just like Blackberry/Exchange server — via “push” IMAP connections through Yahoo!. That’s essentially the email portion of the Blackberry/Exchange duo. Whether it will sync calendars, notes, etc. — maybe through .Mac — remains to be seen.

    The iPhone will *also* access *any* POP3 or IMAP email account. You can have multiple email accounts, all going into their own inbox on the iPhone.

    No one knows at this point whether there will be an iLife suite, an iWork suite, or third-party software developed for the iPhone. But can you think of any reason why there wouldn’t be? And if there were, would that make it more of a qualified candidate as a handheld computer?

    It may not be *the* handheld computer that you’ve been lusting for, but it’s certainly a far sight closer than anything else on the market. I’m betting a lot of people will buy it for just that purpose.

    It’s gorgeous and Apple is going to make money hand-over-fist.

    :-)

  • tt

    Hi,

    I agree that the content of the Keynote was a bit underwhelming. Particularly for non-US clients.

    There still aren’t any movies or TV shows to be bought on iTunes in UK/Europe.

    And there is no Cingular here either, so we will have to wait for the iPhone, no doubt. Not that anyone over here would buy a phone that isn’t 3G anyway.

    But the iPod wasn’t perfect when it was first launched back in 2001 either. It took a couple of iterations until Apple got it right.

    The iPhone’s got potential. Apple just needs to iron out some of the shortcomings, such as:

    – 3G
    – up to 80Gb disk space
    – Ability to run MS Office (or iWorks that can read/write MS Office files)
    – Ability to update Calendar and Contacts, not just download from the Mac or PC.

    brgds,
    …tt

  • http://www.nakedcleaner.com Ashleigh

    QOUTE – It may not be *the* handheld computer that you’ve been lusting for, but it’s certainly a far sight closer than anything else on the market. I’m betting a lot of people will buy it for just that purpose.

    What? have you never seen Windows Mobile? and WM6 is looking VERY sexy. Agreed it is a sexy device, but it’s certainly not running ‘OSX’ maybe the kernel but that’s about it….. That’s like saying WM devices run Vista, not gonna happen any time soon.

    That said I would love to have a play, I hop other vendors take on the screen technology cause that is sexy as hell.

    If they dropped the phone features and put a hard drive in it I would buy one tomorow!

    That said almost all of there sexy features are Mobile Network reliant, and how many networks are going to invest in the technology required for one phone? 3G support is essential for any ‘connected’ phone/device nowadays and there is no excuse it not having it, we don’t all live in SanFran after all. The price is a big put off as well, we are talking in excess of $1000 for the device off network, it’s just too much.

    Personaly I’ll stick with WM for now, I only have 4gb of memory on it, but hey i’ll live with that because I have a device that is quick, reliable and most importantly (and I don’t care what his Steve’ness says) a keyboard, i’ve used WM devices since the first batch of iPaq’s were released and the keyboard is the single best thing to happen to them, touch screens just dont cut the mustard.

    Wait for generation 2 and 3, they will be much better.

    I just hope they use the general design for the video iPod.

  • http://www.breakingwindows.com Ken Edwards

    I can’t believe this keynote. This ran more like a Special Event for the iPhone than a keynote for Macworld 2007. They don’t sell the iSight anymore, where are the new Cinema displays with built in iSight camera?

    No new Mac hardware? At a Macworld keynote? Not even a look at what is to come?

    Nice new screen for the iPhone, now how about putting that on a “real” iPod why don’t ya. I was expecting new iPods at Macworld, not a 8 GB model that is also a phone. I guess we will have to wait for another “Special Event” for that.

    And not one sentence about Leopard, or iLife 07, iWork 07. Microsoft Announced Office 2008 for Intel- and PPC-based Macs this year, doesn’t that belong in the Keynote too? It has in the past.

    They announced a a/b/g/n AirPort Extreme, though hardly covered it at the keynote. They spent very little time on the Apple TV appliance.

    This was not a Macworld Keynote. This was a Special Event for the iPhone, it just happened to be held at Macworld.

    As for what was shown off, here is my take:

    iPhone is on par at the $499 price with others in its class. The extra $100 for another 4 GB is a joke. Cingular is a joke. That network is going to hurt them plenty.

    I don’t think it is running OS X at all. It might be a BSD based OS, not Symbian or another mobile OS. Dashboard widget support is cool, but I bet they have to be custom compiled for the iPhone’s “OS X.”

    But damn does that phone look nice. And man do I want one. But not on Cingular. That is the one reason I will not be getting it.

    The Apple TV is quite limited, and I am very disappointed in it. That 40 GB hard drive is quite anemic, especially with laptop hard drives topping 160 GB these days. There is no reason the Apple TV does not come with at least 100 GB internal. No one wants to stream all their stuff, at N speeds or not.

    That thing only supports H.264 and MPEG-4 video. Isn’t that a little limiting for a set top box?

    The eality Distortion Field was in full effect of course, but this time, I was not buying it.

  • http://blogcritics.org/ Phillip Winn

    Tbone (#1), how do you get from my “The iPhone will be a huge success.” to your “The iPhone will die!”? Or did you not bother to read the article? Sorry I didn’t state that all competing companies should immediately file for bankruptcy; the iPhone is clearly going to be a winner, at least in the U.S., but it isn’t perfect.

    macPinche (#2), the email connectivity options are wonderful. It might be a reason to start using my Yahoo!Mail account again instead of Gmail, even. I guess the concern about Exchange specifically is because the iPhone promises to be so much more than just a Blackberry, and push IMAP doesn’t sync contacts (AFAIK), which seems like an important piece of the iPhone.

    tt (#3), I think you may be underestimating Apple, even with your plaudits. Some people suggest a non-3G phone won’t sell well here, either, but I think Apple is going to prove otherwise. Nevertheless, Apple has already stated that 3G and other things are coming, so you’re right; it’s just a matter of time. I’ll be really curious to see — in a year or two — just exactly how big an 80GB iPhone will be!

  • http://blogcritics.org/ Phillip Winn

    Ashleigh (#4), after thinking about a bit more since submitting this article, I think we’re looking at 2008 before we see an iPod with this interface. Although, iPod announcements have tended to come later in the year, so it’s *just* possible we might see one in late 2007, but I doubt it.

    Also, I’ve seen a lot of complaints about the lack of a physical keyboard, but I’m not so sure. Jobs wasn’t all that quick typing during the keynote, but he appeared to be holding the thing “wrong.” If the touch technology is as good as they say, I think we might all be pleasantly surprised to see how well the onscreen keyboard works.

    Honestly, it’s *almost* as if you’re saying “I’ve tried a computer before and it was awful, so this Mac will be no different.” Just because other onscreen keyboards have sucked doesn’t necessarily mean this one will. We’ll know for sure after June!

  • http://blogcritics.org/ Phillip Winn

    Ken (#5), why don’t you tell us all how you really feel? I’ll play devil’s advocate, though.

    Steve Jobs clearly believes that this is Apple’s third world-changing product. We could argue over the Apple II and a few other things, but he’s essentially: the Macintosh and iPod were (looking back, at least) massively disruptive products. He had his family sitting in the front of the MacWorld crowd because he believes the iPhone is on par with those product, and you know what? I think he might be right. I think that the iPhone is a world-beater in ways that don’t show up on spec sheets, just like the iPod invigorated and redefined the MP3 player market.

    Given that, it makes sense that the keynote would be seriously focused on the iPhone, yes? It would be silly, I think, to launch either the Mac or the iPod with ten minutes at the end of a big speech about other things!

    On Cingular — I’m not thrilled about this either, since I signed my wife up with a new Verizon phone on Monday (!), but all complaints aside, Cingular is the #1 network in the U.S. Not Verizon, not Sprint, but Cingular. More subscribers than anyone else! So for everyone who says Cingular is the worst ever, I can probably find someone who says the same thing about Verizon or Sprint. Heck, I’ll say that about Sprint, but others love it. The point is, people are voting with their monthly payments, and they’re voting for Cingular.

    On the Apple TV, there may again be a few things you’re missing: this is Apple TV 1G. The iPod started at 5GB, and grew slowly. I believe Apple TV will grow, too. The supported formats match iTunes, and it’s easy to convert between formats these days. And finally, did you know that there’s no DRM built into the box?

    Seriously, none.

    That’s a pretty big deal, I think. HDMI and component output, and no DRM.

    Anyway, you haven’t seen yet how well it streams, and H.264 is remarkably low bandwidth and ought to stream quite well. I’ve got considerably more than 40GB of video content on my iMac, but I’m not worried.

    Then again, I don’t have HDTV yet, so I don’t really care, either. :-)

  • http://blogcritics.org/ Phillip Winn

    Update: Cisco Files Suit Over “iPhone” Trademark.

    Looks like Apple didn’t sign the agreement in time. Perplexing.

  • http://www.breakingwindows.com Ken Edwards

    Was I really that harsh? Well, they are held to a high standard because they put it in place.

    I agree, H.264 is the codec to go with. It has insanely high bit rate at a low bandwidth cost. But you would think it would have supported more.

    The only DRM supported is from iTunes, but we don’t really yet know how much of a PVR this thing will really be. So yea, no DRM for all other content is pretty cool.

    Good point about the 1st gen. Apple TV. But I think the iPod had it a little different, at that time 5 GB on an MP3 player didn’t look so small!

    Full length 720p movies can get rather large with full 5.1. But yea, I agree, it will get bigger HDD in the future. As with the iPhone, I will wait for 2.0 hardware.

    I hear ya on cell phone providers. I have had many people tell me Verizon sucks, but I have not had any problems. I also live in a city that is drenched with Verizon towers. I have heard bad stories about Cingular, just like any other cell carrier.

    On Cingular, I can get a 450 minute plan with unlimited mobile to mobile for $39.99. This sounds great until you realize it comes with NO unlimited nights and weekends. I thought that was a given by now with cell carriers. Guess not. You need to spend $59.99 to get 900 minutes, only then do you get unlimited nights and weekends. Rubbish.

    Cingular seems to be on par with everyone else on their Data packages, starting at $49.99 for unlimited, $39.99 for 4 MB. My problem is with their voice packages.

    I don’t mind the EDGE network either, although some would call it 2.5G. It looks like a solid phone, I eagerly await the reviews.

  • http://www.breakingwindows.com Ken Edwards

    Ashleigh, I also have doubts on seeing a true video iPod with the iPhone like controls any time soon. 2008 would be a pretty good prediction.

    I always wait until Macworld in January before I buy new Apple hardware. Since we didn’t see any new iPod, I just bought a new iPod, something I have wanted to get in a while. My 60 GB iPod photo is getting so old you know!

    Of course you know what this means. It gives Apple the go-ahead and announce a true video iPod with touch screen controls tomorrow.

  • http://blogcritics.org/ Phillip Winn

    Ken (#10), the Apple TV doesn’t currently support 720p (480p max so far), so the size of those movies really doesn’t matter. 😉

    Cingular has an unlimited data package that goes for $20/month which applies to devices without a QWERTY keyboard. My guess is that they’ll say that the iPhone does have a QWERTY keyboard, albeit a virtual one, and force subscribers to choose the $50 package you mention. We’ll see, though. Rumor is that they’re underwriting the price of the iPhone very heavily, which may mean not a lot of discounts on the service.

    All of this — pricing especially — is first-generation, and every product improves almost every year. They’ve just got too many to pack them all into one speech these days.

    For fun I ought to write up a speculative piece on how many different annual events they’re going to need to announce updates from now on. I suppose they can break them down into some rough groupings, so iPod and iTunes and Apple TV go together, iMacs and MacBooks go together, and the iPhone stands alone. But they’ve tended to split up laptop and desktop announcements, so they’re gonna need three or four major speeches a year now!

  • http://www.breakingwindows.com Ken Edwards

    Video formats supported: H.264 and protected H.264 (from iTunes Store): 640 by 480, 30 fps, LC version of Baseline Profile; 320 by 240, 30 fps, Baseline profile up to Level 1.3; 1280 by 720, 24 fps, Progressive Main Profile. MPEG-4: 640 by 480, 30 fps, Simple Profile.

    I also remember Jobs stating something along the lines of “up to 720p.”

    I assume we will see pro product announcements at WWDC. And another one or two for iPod, the consumer MacBook, and the software.

  • http://blogcritics.org/ Phillip Winn

    Shoot, I completely forgot about Pro products. And here I’m in the market for Aperture, too!

  • Matthew

    “Since you won’t be able to buy an iPhone without a Cingular contract, the $499 sticker price probably reflects substantial subsidies from Cingular already.”

    I dunno about that. iTunes exists to sell iPods, and the iPhone seems to be just another extension of line. Cingular might be taking a nice hit on the price, but it wouldn’t surprise me a bit to find that Apple is getting as much as 5/6 of that total selling price.

    As for the device itself, I had really hoped that Apple would just release it, unlocked, and tell GSM users worldwide to go crazy. It would piss of off the service providers to no end, but damn if it wouldn’t be entertaining to watch.

  • http://w6daily.winn.com/ Phillip Winn

    Matthew, I think you misunderstand what I’m saying. I’m suggesting that Apple is not only getting 100% of the price of the iPhone, but that Cingular is paying Apple for every iPhone sold! The only question for me is how much Cingular is paying Apple for each unit.

    When you can sign up, after June 2007, you’ll pay $499 for the iPhone, plus sign a two-year contract worth another $2000+ over time. That’s at $83.33 per month, which I suspect is a low-ball number. Of that estimated $2499, I think Apple is probably getting closer to $1000 than the $415 you suggest.

    Which is one of several reasons, by the way, that Apple is not releasing an unlocked phone. Another is “visual voicemail,” which apparently required a significant development effort by Cingular.