Omakase

Tuesday, January 02, 2007

It's gonna be a wi-fiphone (Apple Wi-Fi iPhone)

There's loads of speculation about the upcoming MacWorld and new Apple product releases. Some of the better speculation is compiled here and here. (And don't miss the Cult of Mac article linked in the title.)

I'll chip in my $.02 on a few of the smaller things, but save the best and biggest for last. (Caveat: I'm not a techie, unless you consider biotech tech-y, just a Mac fan, as I'm the proud owner of a G5 iMac and 2 iPods (among other things)). Oh, and Steve, if you'd like me to remove any of these thoughts in advance of MWSF because they're too close to home, just give me a call (or Skype!))

iLife: I'm guessing this won't be updated until Leopard is released (late March?). Everyone seems locked on the MacWorld update schedule, but it's only happened twice, and there's no real reason why a January release does anything special. Won't iLife sell more if it fully leverages all of Leopard? This also makes sense if you believe that the iTV - probably released in late 1Q07 - also warrants updated iApps.

12" laptop: a must-do to trim out the product line. Aren't the lower-power and less hot chips a justification for the change to Intel? I can't imagine the engineering here is very expensive after already building 15"ers and previously offering a 12" versus the possible market returns.

iTV and others: the real story here is the progression to the 'N' wireless standard from 'G.' 'N' will enable better, high bandwidth, multiple streams, and appears fundamental to the iTV. 'N' gear is already showing up for sale (from Netgear and others) even though (I think) the standard hasn't yet been finalized. Still, Apple's adoption of 'N' at this stage is just like their adoption of 'G' (about 3 years ago?)

Robust reliable bandwidth will enable Mac to iTV broadcast, but also probably multiple rich streams of IP traffic, which begs the question: what could you do with more wireless bandwidth (and greater range)?


The immediate answer is: a wifi iPhone.

Apple has been rumored to be working on a mobile phone for years. I can't appreciate the technical challenges, but it seems that any Apple cell phone would face several abrupt strategic challenges:

-ferocious competition from big, established competition (Motorola, Nokia, etc.)

-market power (and control of the end-user) concentrated in the carriers (Cingular, etc.), each with entrenched business models.

-fairly well-established performance (i.e. regardless of how we're all still looking for the 'perfect' phone, you can easily and cheaply find one that satisfies 80% of your needs.)

-fairly tight margins in a fashion-like business.

For all of it's good graces, Apple has not been really great at deep partnerships with large entities (like carriers, or see also the Moto ROCKR). Apple is best when independent, so I can't see them tieing up with a single carrier, nor can I even see them tieing to one communications standard (CDMA or GSM in the US.) It's possible that Apple could innovate by making a phone dual standard (GSM + CDMA) which would be distinctive, or that Apple could go the MVNO route, but both are complex efforts prone to Apple fielding problems from other market players ("I'm not getting reception here - darn iPhone!") Each of these approaches also disintermediates Apple from the end consumer.

For years, the driver for creating an iPhone is to reduce the number of devices carried (and pre-empt cell phones from becoming the device of choice for mobile audio fans), but I think while a noble goal (and one that I'd enjoy), this doesn't seem too important to most. I'm pretty sure that condensing my iPod shuffle and Blackberry wouldn't change my life, like Apple likes to do.

And that's the crux of the issue, or more accurately, opportunity: one reason we love Apple is that among other values (such as design, simplicity, and integration), Apple is an innovator. Because of this, I just can't see Apple following into the cell phone market.

But, I can see a huge opportunity for Apple to innovate and reach a new, growing market: peer-to-peer internet telephony.

As of last April, Skype (the leader in PTP telephony, but by no means the only choice) broke the 100,000,000 user mark. I'm guessing that growth since then puts Skype plus Google Talk (and others) in a market addressing north of 150 million users.

(Please forgive me if this non-techie mixes varying 'net telephony standards - focus on the bigger issue.)

To date, there's a few decent attempts at providing phone hardware (i.e. non-plugged headsets), but you'll notice that there's only one available for Macs (which I ordered a few days ago - d'oh!)

There's also a few neat looking computer-independent wireless phones (Netgear, Linksys, and Belkin). I haven't had one in my hands yet, but they appear to be good first efforts, but something the team at Apple could really improve upon. This echoes the stage the MP3 player market was at when Apple jumped in with the iPod.

Big, new, growing market (think Apple would be happy to sell iPhones to 1% of the world market (=1.5M TODAY) and competitors to be leapfrogged. You've got all the ingredients for an Apple innovation, and that's not even including innovations such as Google city wifi access (only in SF right now, I think) and possible corporate connections between Apple & Google (remember Gooogle Talk?) or just up the road at eBay (owners of Skype).

So, I think the stage is set for an Apple wireless computer-independent net phone (let's continue to call it an iPhone for now). Apple could easily offer a superior product at an iPod like price point ($299?) that would transform how we communicate - and that's not even including possible connections to existing Apple assets. (In other words, even without music, the iPhone could be huge).

It boggles the mind, though, to think what an 'N' enabled iPhone could do today or in the future when combined with other Apple assets. With robust wireless bandwidth, why bother with storing much music on the phone? What if you could stream via your home iTunes hard drive? What if you could convert the phone (when not used as a phone) into a Front Row-type wireless media controller? What if - provided the screen is large enough - you could watch movies on your phone? How about an iSight enabled iPhone for PTP video conferencing?

(I'm drooling right now, so I have to take a short break.)

I don't know about the timing wrt an iPhone and iTV, but there's an amazing combination to be made here, all enhanced by the 'N' bandwidth.

I'll reiterate that I have no connection with Apple, nor any inside information, but I'd bet on the wifi-phone coming from Apple soon. The next question (besides "How can I get one?") is "how can I bet on this (or otherwise make money?)"

If you really believe in the wifiphone, T-Mobile looks good (T-Zones Wifi becomes even more valuable, and Starbucks probably becomes even more popular (well-established T-Zone spots)). Sprint becomes a good investment as they're looking to build a nationwide wifi network. Handset manufacturers like Motorola and Nokia don't look as good. Perhaps a PTP telephony partner (GOOG? eBAY?) gains thru a partnership, or perhaps even a VOIP company like Vonage. Also, don't forget infrastructure plays like Cisco or Juniper.

In short, hang in for a life-changing and VERY profitable innovation from Apple in 9 days (Jan 11). I can't wait!

3 comments:

Anonymous said...

sound reasoning...

Dean Bubley said...

I don't buy it at all, especially not as a global product. The main issue with P2P telephony is "how do you get from here to there" - ie how do you deal with the inevitable 99% (or even 90%) of calls that go from one "P2P island" to conventional cellular, given the interconnect fees.

Also, how do you deal with interoperability with SMS (which 1.2bn people use avidly), or ensure everything works great for the 1.5bn+ people who use prepay mobiles?

Also, I'm willing to bet that margins on WiFi-only phones will drop way lower than mid-to-high end cellphones in the next 2 years, as they're much easier to build and test, with countless ready-to-go reference platform designs from chipset providers. Add a bit of software & cool plastic, and you're done.

Then there's a whole bunch of issues around battery life, configuration management, security, regulation etc. Does Apple really want to get involved in all the nastiness around lawful intercept & emergency service number rules in 100 different countries?

trey4x4 said...

Well a phone would be nice if it was a cell phone because right now there is only pocket pc's and the Treo so it could make a big differece in the market, but yes that would mean battling it out with all the major cell carriers which i dont see happening. Nevertheless if we do see a phone I have noticed a trend that apple has been doing lately and that is not use the I but rather their name so now instead of iphone (which we know has just been taken) it will be called what else but "APPLETALK"

sincerely
trey Kirby
trey4x4 (im)

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