Finally, the real iPhone
There’s a theory favored by savvy Apple watchers that the first generation iPhone — greeted with such hoopla last year — was not actually the real thing.
That iPhone – the one that hundreds of thousands of Americans queued up to buy for up to $599 apiece, the one that Time magazine named the Invention of the Year, the one that six million people purchased before Apple finally stopped making them in May – was just a trial balloon floated by Steve Jobs to test the airwaves.
According to this theory, the real iPhone – the one aimed at the broadest possible market here and abroad — would start at $199, the magic price point at which consumer electronics devices seem to take off and become mass market phenomena. It would have built-in GPS location tracking, "push" e-mail, and wireless syncing with corporate enterprise networks. Most important, it would run hundreds of third-party applications available through an online App Store and operate over so-called third generation (3G) cellular networks that are two to five times faster than the one used by that first, prototype iPhone.
If this theory is true, then the real iPhone era begins on Friday, July 11, at 8:00 a.m.
That's when the iPhone 3G goes on sale at Apple (AAPL) and AT&T (T) outlets in the United States and at the stores of Apple's cellular partners in some 20 other countries around the world. (Strictly speaking, the era begins early Thursday, when the device goes on sale at 12:01 a.m. New Zealand time. Given how the Earth turns, that corresponds to 8:00 a.m. July 10 at Apple's New York City flagship store and 5:01 a.m. at its Cupertino headquarters.)
Some things about the new iPhone haven't changed. Physically, it's almost identical to the first. Same touch screen, same dimensions — except for the back, which is slightly bulgier and made of black plastic instead of metal.
Conceptually, it's still one device that combines three of today's most popular technologies — cellular communications, portable digital music and wireless access to e-mail and the World Wide Web.
And the fundamental breakthrough is the same: unlike most devices that combine several functions and do none of them well, the iPhone puts together three must-have functions and does at least two of them better than they have ever been done before.
Early reviews suggest that the one thing the first iPhone was not particularly good at — telephony — is much improved in the second version, thanks to a redesigned audio system and, perhaps, improvements in AT&T's network.
There's still no physical keyboard, so devotees of RIM's (RIMM) BlackBerry who were turned off by the lack of tactile feedback when dialing or texting on the first iPhone are not likely to be turned on by the second. The battery is still not user-replaceable, a shortcoming that may be even more important this time given the power demands of operating at 3G speeds. (One early reviewer who was getting nine hours of Internet use on the first iPhone clocked less than six hours on the second. See here.)
The built-in camera is the same under-2 megapixel device that can't do video. There's still no way to cut and paste text. And you are still married to AT&T's cellular network for the life of a two-year contract, at least in the United States. In fact, the bonds of that matrimony may be even stronger this time around, given the way AT&T has set up the in-store activation procedure, and will cost U.S. customers at least $10 a month more.
There are many small improvements. You can search address books, delete e-mails en masse, set parental controls and save e-mailed photos. (These improvements will also be available to owners of the original iPhone as part of a free software upgrade.)
Investors will note that Apple has made major changes in its business model. Rather than testing the waters with a handful of exclusive contracts — first with AT&T, then with O2 (TEF) in England, T-Mobile (DT) in Germany and Orange (FTE) in France — Apple has gone global this time, with deals in six of the seven continents and more than 70 countries. To do this, however, it has had to largely abandon the arrangement — unique among cell phone manufacturers — by which carriers sold the iPhone for full price and kicked back a share of their monthly revenue to Apple, which was accounted for in monthly increments over the life of a cell phone contract (usually 24 months).
Steve Jobs was able to dictate these terms — quite advantageous to Apple — because the carriers recognized that being first to sell the iPhone would win them thousands of new customers. In most of the new markets Apple is entering this year, it is acting more like a conventional cellphone manufacturer, taking its (sizeable) profits upfront and letting the carriers subsidize the device with voice and data plans as costly as local market conditions will allow. (See Canada's Rogers Communications (RCI), here for example, to see what kinds of problems this can lead to.) The price of the iPhone itself also varies widely, from as much as $888 for pre-paid phones in Italy to $75 in Mexico and free with certain data plans in the U.K.
Except for those costs, none of this affects the experience of the users.
For them, what will really distinguish this iPhone from the one that preceded it — and from every other smartphone out there — is the flood of software expected to be unleashed when the App Store opens on Friday. Apple has already demonstrated more than a dozen third-party programs for the iPhone, and over the next few months you can expect to hear about hundreds more: business apps that take advantage of the iPhones ability to "push" data down the network when it's available (rather than when it's requested); games that use the device's accelerometer to navigate virtual space; shopping and social networking programs that use satellite tracking to tell you what shops or restaurants and which of your friends (or enemies) are near the spot where you are, right now.
In the end, every successful computing device is ultimately a software "platform," a vehicle for the programs that give it its true value. This is where the real iPhone will stand out, and judging from the interest among the 4,000 third-party developers who have already signed up to write for it, it's got a good headstart.
I notice that even with the price increase, the iPhone still comes in significantly below having a BlackBerry with Verizon. Verizon's BlackBerry prices are truly outrageous; by my reckoning, an iPhone with 450 voice minutes and a text plan is going to be $75 a month with Internet access as standard, while a BlackBerry Curve on VZN is going to be $100 a month with the Internet option enabled, or $85 with email ONLY.
AT&T's plans aren't cheap, that's for sure, but they've set the rates they have because thanks to Verizon's arrogance, they can. I hope Verizon are forced into some more reasonable rates.
Philip, why would I "send you an email" to get the names of people who should have been quoted directly in your story? Is everyone supposed to do that?
vg,
You are half right. It was Verizon, not sprint, who was first approached about the iPhone. They decided against carrying the handset because apple wanted a cut of the monthly revenue from each iphone user.
Also, T-Mobile is just now starting to roll out a 3G network, with only one area launched (Chicago). AT&T which is the largest carrier per subscribers is still behind Verizon and Sprint in 3G coverage.
@ Yelenak
Current iPhone SDK does not allow access to low level stuff like ability to video record, zoom camera, background apps. All those things can be done only on jailbroken phone.
"There’s a theory favored by savvy Apple watchers…"
And who might they be? I've never heard *anyone* proclaim this "theory". Why does it sound like some harebrained conspiracy theory *you* dreamed up Philip and are floating here as if it were news"?
Please – name *one* "savvy Apple watcher" Who posited the theory – cause you don't name any of them in your "news story"…
ex ped: Send me an e-mail Shawn and I'll give you some names and addresses.
@ Travis D:
The 32 GB iPod Touch has 2 16 GB chips in it.
The iPhone 3G cannot have 32 GB because the space taken up by one of those 2 16 GB chips in the iPod Touch is, in the iPhone 3G, taken up by some of the cellular radio chips that make it a phone and not an iPod. There simply isn't room in the iPhone to make it both a cell phone and a 32 GB device. You'll have to wait until the iPod Touch becomes 64 GB for your iPhone 3G Next Generation to get to 32 GB.
i want it, but will not buy iPhone 2.0. i will stick with my 9 year Sprint contract and 8 month old 16gb iPod touch. reason – this 2.0 phone is still not up to par for me. why no 32gb phone? they have 32gb touch, can't be much more difficult or expensive to put a 32gb chip(s) into an iPhone. my 16gb touch is already mostly full and with added sdk's, games, apps, etc — a 16gb phone does nothing for me. also, not keen on ATT only plans, added services fees, lousy 2mp camera, and no video cam. i could ignore all that if only they had a 32gb version.
sadly, i'm forced to wait another 6-12 months in hopes of another added 16gb (and hopefully more features). steve, don't you want my money?
I still consider the iPhone 3G to be "iPhone 1.5", not iPhone 2.0.
Sony Ericsson is coming out with a Cybershot phone that has an 8 megapixel camera with Xenon flash. There's no excuse for a 2 MP camera in the 2nd iPhone.
Basic stuff that every phone has (like MMS) is still missing. I like to go on hikes, take a snap from high up on a trail and send it to my buddies via MMS. Having to use some convoluted e-mail service as a go-between is retarded.
And what about A2DP Stereo BlueTooth audio? Especially given the new July 1st hands-free law? Hello?
What about tethering? I could use my GSM phone as a modem for my Mac a few years ago. Why can't an iPhone 3G do it?
Last but not least, unlocking. I go overseas a few times a year, and there's nothing quite so convenient as getting there and buying a pre-paid SIM card and slapping it into your existing phone. No muss, no fuss. A simple, easy consumer experience – you know, the kind Apple is known for. I shouldn't have to resort to Jailbreaking and tricky unlocking mechanisms that may break in future firmware releases! I just want an unlocked version – like you can get with, oh, just about every other GSM phone out there. Paying AT&T International Roaming charges is ludicrous when there are pre-paid SIM cards out there.
Can anybody name any new product that Apple releases that is complete. Maybe the iPod, I didn't have a first gen.
Can you cite sources that thought that the original iPhone wasn't the "real" iphone?
John Blackburn
ex ped: It's a longstanding topic of discussion among investors on The Mac Observers Apple Finance Board and Investor Village's AAPL Sanity board.
Need some help: It says everywhere that you need a credit card to buy the iPhone, but I have $500 in Apple gift cards saved up specifically to buy the iPhone. Does anyone know if gift cards will fly?
Several points this article makes are incorrect if you're willing to tinker a bit by jailbreaking:
* Third party apps are already available
* Users will not be tied to a specific carrier
* The camera can do video
In addition, "…take advantage of iPhones ability to “push” data down the network when it’s available (rather than when it’s requested)" is badly phrased (and missing an apostrophe somewhere). It should say something like "take advantage of new technology that allows remote systems to push data to the iPhone when new information is available – rather than when the iPhone requests it (on an automatic schedule or when the user guesses there might be something new)"
The reason why iPhone is AT&T only is because its using GSM system, which is the most used in the world. Why AT&T and not T-Mobile, because T-Mobile has no 3G and their system is very weak comparing to AT&T giant. Plus At&T has the most customers. That's why.
And if I recall, Sprint declined Apple with iPhone, saying that it will not lift-off.
P.S. Copy and Paste and new features can be added at anytime via software update. Something that Blackberry can't do.
I may be off, but wasn't 4.00 the number of developers accepted into the first release of the App store? Weren't there something like 25.00 applications actually lodged, which would amount to a pretty long tail, even at this early point.
ex ped: 25,000 applied to be part of the iPhone development program, 4,000 were admitted.
Most of the significant upgrades you're talking about will also be available for the iPhone 1.0 as a firmware upgrade.
When you speak of the "real" iPhone being iPhone 2.0, you're mostly talking about the iPhone 2.0 firmware, not the phone itself.
I get such a kick out of the literary critics' passion, although they nailed a few. I also loved the Sprint/Motorolla add on the right side of the page. Thanks for the entertainment.
As far as the phone goes…not chomping at the bit and more then content to wait and see how Google's OS compares, the hardware alternatives and carrier options before dropping my hard earned $$$.
"In the end, every successful computing device is ultimately a software “platform,” a vehicle for the programs that give it its true value. This is where the real iPhone will stand out, and judging from the interest among the 4,000 third-party developers who have already signed up to write for it, it’s got a good headstart."
This is EXACTLY right and will be much more influential than the specs of the iPhone 3G, the terms of the carriers, etc. Hope to see more reporting on this phenomenon as it unfolds — because the way people all over the world are going to customize their iPhone experience with added value/functionality via apps is going to make the iPhone even more unique.
I wonder why people think they can post any drivel they come up with and pretend it's journalism.
I'll tell you what – why don't you show us any significant number of 'savvy Apple watchers' who didn't think the 1st generation was a 'real iPhone'?
By that stupid logic, the 2007 Ferrari is not a real Ferrari because a better one will be out in the future. And a 2007 HDTV isn't a real HDTV because there are better ones out today.
Isn't it enough to report the news rather than make up silly arguments? Apple sold something like 6 M of the first iPhones and the second, improved iPhone will presumably sell more.
You seem to be under the incorrect assumption that the first generation iPhones won't have access to the new software, the new App store.
This is incorrect. When friday rolls around, we all get the update. The only difference between the two iPhones is 3G wireless, and GPS. And supposedly louder speakers, tho I think they seem louder because they are pointing downwards, and thus reflecting off whatever surface they are put on, amplifying them. We'll see soon enough.
Please correct or clarify your article.
ex ped: The article says that the new software runs on the old iPhone.
"The built-in camera is the same under-2 megapixel device that can’t do video."
This is not true. My first gen apple iphone does video, the application is called "VideoRecorder" and it has been available for four months. I'm sure when the "official" third party apps are launched, there will be many "Video Recorders" released.
"Trial balloon"? Not hardly. There is a long history of how Apple makes an initial product, establishes it, then builds on it. In recent times that notably includes the ipod and iTunes store. They know there are things they will be able to do once they demonstrate a hit.
@TG
"I’m sticking with my Windows Mobile Pro device -it may not be as “slick” as your “Real iPhone” but it sure does blow it away when it comes to real functionality."
Huh? Real Functionality? Let us know when your phone can usefully browse the internet. Oh, and we'll wait, no rush for your report on your phone's SDK.
Great review and I vindicates my decision to buy apple stock and place my order for the new iPhone (my current ones goes to the wife). See more of my review here : http://www.savingtoinvest.com/2008/06/my-shiny-new-iphone-and-why-i-bought.html
3 days to go!
Just a quick editing FYI – your 'here' link for Rogers appears to lead a WP-admin page instead of the Rogers story.
ex ped: Thanks. Fixed.
"There’s still no way to cut and paste text."
Are you freakin' kidding me?! …sorry Apple, I'm sticking with my Windows Mobile Pro device -it may not be as "slick" as your "Real iPhone" but it sure does blow it away when it comes to real functionality.
I think the real issue here is not the iPhone itself (I find this analysis on-the-mark), but rather the ability of the iPhone to change the cell carriers.
Right now I think the iPhone is somewhat handicapped by its carrier networks, not just in the US, but around the world. There's massive differences in plans, costs, etc. I can understand why Steve Jobs had to work with a single carrier to get the increased level of service/ capability/ integration.
The main thing keeping me from queuing for Friday's release is not the phone itself (although it would need -a lot more storage- to replace my 60gb iPod). Rather it's concerns about the ATT network, both technical performance and costs.
One reason for the iPod's success, as many have noted, is the vertical integration with the iTunes Store. We'll see how well the cell carriers adapt to the -opportunities- the iPhone gives those with the franchise. One concern has to be that the iPhone could swamp the capacity of a 2nd tier wireless carrier (or even a 1st tier, if it ends up being as ubiquitous as the iPod.)
…and yet Apple does it again. Locking the I-Phone to one cellular service in the States thereby excluding most of the American customer base.
Brilliant.
The iphone was never priced at $699!! Where are the fact checkers at Fortune?
ex ped: You are our fact checker! Fixed.
Impressive treatment of the subject matter PED, you're getting better with each Apple-related article posted. Kudo's to you.
"all five continents"
Time to head back to basic geography class. There are seven continents.
ex ped: Aaargh. Make that six of the seven. Thanks for the catch. My second-grade teacher is turning over in her grave.
The Apple – carrier contracts with the first iphone were simple: Apple got the subsidy money that the customer usually got. The carriers forced Apple into exclusive terms in return. Winners: carriers, totally, because they lost nothing if phones were unlocked.
Now, after a year of screwing over customers, we finally get the subsidy instead of Apple.