An iPhone Worth Talking About

The iPod Phone Myth took apart the idea that mobile phones are a threat to Apple's iPod. Why Mobile Phones Make Bad iPods presented why mobile phones and music players are not the obvious match many analysts like to imagine. iPod, Therefore, iPhone? examined how unlikely it is that Apple will turn their iPod into a phone. Here, I’ll look at the options and challenges Apple will face in delivering a mobile phone of their own.

Apple could apply a number of the iPod's outstanding design features in a new phone that would make a good, competitive phone, and then sell customers both a good phone, and a good music player. Some of the potential risks in trying to sell their own phone might be mitigated now that Apple has a strong retail store presence, but other challenges are still out there.

First, imagine an Apple branded phone with these iPod and Mac features:

•a simple, coherent user interface;
•an iPod dock connector, for easy interoperation with existing chargers, cables, and docks;
•automatic and flawless setup of Bluetooth features like sync and file exchange;
•easy support for dial up networking (using the phone for Internet);
•easy support network gateway (using local Internet on the phone);
•a good quality video and photo camera for capturing iLife content;
•tight phone integration with Mac OS X sync features, Address Book, iCal, and Mail;
•an integrated web browser based Nokia’s mobile contributions to Safari;
•tight Mac integration with iLife for photos, movies and ringtones;
•tight Mac integration with phone SMS and Bluetooth remote control features.

A Phone To Call Their Own

To build their own phone, Apple could buy a lot of components right off the shelf. Rather than trying to create and maintain an embedded version of Mac OS X, Apple is more likely to base their phone on the existing, functional, and road tested Symbian, the leader in smartphone operating systems.

Apple similarly used Pixo, an existing OS, to quickly deliver the iPod. That strategy would leave Apple to focus on sharp industrial design, a snappy user interface, and excellent integration with the Mac.

Microsoft, on the other hand, has been struggling for a decade in trying to find applications for WinCE, their embedded version of Windows. It's a huge project with little payoff. Unlike the PC market, Microsoft can't charge a large license fee for the OS on small devices, so they are left with a huge development effort and face stiff competition from market leader Symbian as well as emerging, free options like Linux, which destroy any hope for software based licensing.

That’s a huge warning sign for anyone who thinks that investing in an embedded version of Mac OS X would be a great idea. Apple should focus its resources on making Mac OS X a great desktop and server product, not try to stretch it into impractical directions where more appropriate alternatives already exist.

Certainly, an Apple phone wouldn't just be an iPod with phone features, but first and foremost a phone. I can't imagine an iPhone not being able to play Quicktime 3GPP and iPod videos and iTMS AAC music, but I'd prefer to have a light, small phone that could optionally connect to a larger iPod for storage.

Leave long playback features to the better suited iPod, and build an iPhone that works well as a phone. Users are just inconvenienced when their iPod battery runs out, but they are stranded when their phone’s battery dies.

Challenges to an Apple iPhone

It's fun to imagine Apple building a phone, given their unparalleled prowess in building functional user interfaces and in integrating features in ways that make them usable for mere mortals. Apple also has a growing market of fans willing to buy pretty much anything they release, so there is some assurance that money spent on developing a phone wouldn't ever be a catastrophic failure, even if it was a smaller hit than the iPod. Apple does face some significant challenges however.

For starters, Apple's global business is based on shipping universal products: a single box that can be sold in various markets. This simplifies manufacturing, design, shipping and marketing issues. The global mobile phone market, however, is fractured both regionally and by different wireless technologies and radio spectrums.

Most of the world uses the GSM standard, but in the US, which represents half of Apple's market, mobiles are split among four major players (Cingular, Verizon, Sprint Nextel and T-Mobile) who are each made up of different networks using different technologies. It is impossible to create one product that works on every system.

Apple would either have to release a variety of different phones, with each model tied to a particular type of network or vendor, or pick a single provider and technology, and limit phone sales to the availability of that select service.

Apple would also be selling hardware in a very competitive market, where existing vendors ship low margin units at high volume. The majority of mobile phone sets are also paid for initially by service providers, who effectively rent the equipment to end users over the term of a contract.

That business model resulted from a competitive service industry weary of lowering prices; it serves to lock users to a provider for at least a year to minimize the costs involved in finding and retaining customers.

Apple doesn’t yet have to deal with service providers; an iPhone would be a whole different ball game. A potential problem is related to the mobile phone service providers' purely evil core. Wireless service providers are all desperate to find new ways of getting money out of a finite pool of customers.

For example, Verizon has chosen to build a business model around locking users to "Buy It Now" applets tied to Qualcomm's BREW (think: toxic Java) and trying to sell overpriced subscriptions to music and sports clips under the brand V Cast. They cite this feature junk as the reason for disabling the features on user's phones and selling them junk network services that are consumer unfriendly.

Apple has worked with evil partners before (Microsoft and the RIAA spring to mind), but how deep will Apple sink into the predatory world of Verizon's anti-consumerism before they lose what makes them interesting and innovative, and drives their current success?

Possible Roads to a Successful Apple iPhone

One way to sidestep both the fractured nature of wireless networks, and the evil of certain providers: leave Verizon alone and partner with Cingular, TMobile, and MetroPCS using GSM technology. That would enable Apple to release a worldwide phone that could also work across most of the US. Apple recently worked with the 3GPP, the consortium behind GSM, to integrate their mobile video codecs into QuickTime, so they are no stranger to the technology.

GSM phones use SIM cards, which enable a number of useful features that would help Apple iPhone adoption. Unlike other mobile phones, which are tied to the owner's account by the service provider, GSM is based on a SIM smart chip that stores the user's account.

Users can pop the SIM card out of their existing GSM phone and insert it directly into a new Apple iPhone, without even dealing with their provider. Users can also buy prepaid SIM cards that activate service on whatever GSM phone they want to use, making GSM an attractive option for travelers.

A second way Apple could parlay their design savvy into the mobile phone world would be to create a portfolio of features, and then brand and license those features to existing phone makers.

Just as Apple now runs a "Made for iPod" program, they could create a brand and logo for an "Apple iPhone" that included their iPod dock connector, a specific user interface design, minimum interoperability standards for Bluetooth connectivity, and support for QuickTime and other file formats.

That would deliver Apple's core strengths to the phone manufacturers, who could then innovate and compete at delivering the best Apple Phone branded designs.

A third option: leave mobile phones to other manufacturers altogether, and target a new, emerging market with more applications and less entrenched competition: VoIP telephony. Apple already has their foot partially in the door with iChat AV, but there's far more Apple can do.

It's a market ripe for Apple's picking. I'll describe why in my next phone article, and along the way, tie this thread of phone articles into the Fixing .Mac feature series.

The Road to VoIP: Phone Wars

This Series

Tech: Mobile Phones and VoIP Telephony

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