I spend my time investing in handset companies Bento: understanding the industry is my job, and I am quite good at it. So I try to educate my public, point out to them that not all about the iPhone launch is quite as it seems, to let them know it’s OK not to be a fanboy. Expecting adulation I receive instead a deafening silence. No calls, no interviews, just a few comments from enlightened individuals. Unlike Spinoza I have no coterie of supporters to cheer me on, no faithful, like-minded friends. Moreover, Bento, I know you are one of the glazed-eyed pod-people (iPod people).
Of all the articles written about this sodding iPhone in the press, most of which are silly, factually challenged Apple fluffer pieces, I have finally found one, ONE, which gets it. Some of the comments are good too. Never mind the editor chose a photo of the author that makes him look like he has busting for a pee, and has just found a toilet:
Why can’t they just have normal, non-smirky photos? I am sure the guy looks quite normal in real life. But never mind! Smirky or not, this guy understands that the iPhone venture is a risky one for Apple, a venture into shark-infested waters, where two types of sharks swim, jealous operators and frantic handset vendors. He writes:
the iPhone’s new business model is an aggressive attempt to place Apple at the center of the consumer wireless market, increase the company’s competitive power and diminish the role of the wireless carriers.
Given the tough dog-eat-dog dynamics of the telecommunications industry, that is a heck of a big bet that even Steve Jobs might lose.
The operators are the main barrier to greatness:
while Apple talks about “partnerships” with carriers, the carrier really is just a necessary distribution mechanism for the iPhone and the Apple brand. In effect, Apple sees the carrier as a competitor for the customer’s wallet whose power will diminish over time as the iPhone catches on. . .
Apple’s battle with the music labels was like a fistfight with neighborhood punks. Taking on the telecommunications industry is more like nuclear Armageddon.
Me, I think the handset competitors aren’t going to go quietly. Neither does Herr Newmark.
The handset business is ferociously competitive. At the high end, Research in Motion and Nokia. At other price points: Samsung, LG, Motorola, Sony, the new Chinese entrants. Today, Apple’s iPhone may have unbeatable design and functionality. And that may be enough to attract loyal Apple customers and the phone-as-fashion-accessory crowd. But it isn’t enough. Apple must win over the mass-market consumer. Here the going will be tougher. . .
It could get pretty bad. Remember the market for personal computers? Crushing price pressure and rapid commoditization left only a few mass-market competitors, such as Dell, Hewlett-Packard and Lenovo, standing. Along with who else? Apple of course–which survived by playing by its own rules and carving out a profitable niche.
Spot on analysis. I wonder if he read me first, one month ago? It is possible to come to the same conclusion independently. Leibniz and Newton invented calculus at the same time, didn’t they?
UPDATE: actually, Felix looks like he is not drinking the iKool Aid, either. Healthy scepticism levels there. I’d probably still buy one, though. Hey, in the UK, you get one for “free” (OK for 45 squids a month). My lizard brain says “oh me get good deal!”