It’s presto, change-o as new iPhone is unveiled
LOS ANGELES ó Wouldn’t it be cool if you could use your cellphone to monitor activities in your home, say, to zoom in for an audio/video check of the baby’s room while you were at work, or even adjust the heat?
Or how about going to a theme park and checking your phone to discover if other friends are there, and arrange a meeting place?
Consumers and reviewers alike gushed about its compact, futuristic design and sensitive touch-screen. But even its biggest fans have had one persistent chief complaint: The iPhone’s Internet network from partner AT&T was too slow.
So get ready for iPhone 2.0: On Monday Apple (AAPL) is widely expected to introduce a zippier version that will operate on both a faster AT&T network, and speedier networks internationally. The price also will rock: $199, according to people with knowledge of the matter, down from the current $399 and $499.
Sources declined to be cited by name or affiliation because Apple and AT&T haven’t authorized anybody to speak publicly about pricing until after Monday’s announcement. The $199 price is being subsidized, though USA TODAY could not confirm details.
According to sources, the new Apple device will be available in Apple and AT&T stores beginning this summer.
For consumers, the shift to 3G will be akin to going “from dial-up to broadband,” says Gene Munster, an analyst at Piper Jaffray.
A new iPhone could go a long way toward fulfilling Apple CEO Steve Jobs’ prediction that he’d sell 10 million iPhones in its first 18 months. So far, Apple has sold just over 5 million phones. Analysts who follow the company think a lower price and new international markets make it a sure bet that another 5 million will be snapped up this year.
Apple stopped taking orders for the iPhone in May, presumably to make way for the new model. Sales could substantially beef up Apple’s bottom line, Munster says. Apple reported revenue of $24.0 billion in 2007. Munster sees sales growing to $34 billion this year, and $46.9 billion in 2009, thanks to the iPhone.
Beyond the new hardware, the biggest buzz around the iPhone this week will be the new uses being dreamed up for it. The software add-ons have the potential to turn the iPhone into the pocket computer of the future, as essential, Apple hopes, as the keys in your pocket or purse.
The iPhone economy
Apple’s sold-out Worldwide Developer’s Conference in San Francisco is the setting for Monday’s iPhone lovefest, where software developers will convene to hear about the new iPhone. They’re eager to hear CEO Jobs talk about how they can participate in what independent analyst Richard Doherty calls the “iPhone economy.”
Earlier this year, instead of controlling everything that went on the iPhone, Apple released what’s called an SDK ó for “software developer’s kit” ó a road map that allows programmers to create applications for the iPhone. The first of those outside programs is expected to be released Monday, and made available on the iPhone and iPod Touch ó the iPod that’s just like the iPhone, except without a phone.
“Opening the pot of gold to developers is as important as the iPhone itself,” Doherty says.
Once Apple approves a piece of software from an independent developer, it provides distribution ó via a new “App” store on the iPhone and iPod Touch ó and takes a 30% cut of revenue. “This means that anyone, whether you’re 14 years old or 40, if you’re a large company with 300 employees or a guy in a garage, has access to Apple’s customers,” Doherty says. “You don’t have to make a presentation to a series of different handset manufacturers or wireless carriers. This is unheard of in software.”
Access to the iPhone App store means that “we have a way to reach millions of consumers,” says Darren Vengroff, the co-founder of Pelago, which developed Whrrl, a social network application.
Whrrl takes the online review phenomenon and marries it to the iPhone. The idea is that if you’re searching for a restaurant, with a few clicks you can see which ones your friends ó who are also Whrrl members ó recommend. Whrrl is currently available for two BlackBerry phones and the Nokia N95.
The iPhone App store will “get so much traffic,” adds Paul Dawes, CEO of iControl Networks, another iPhone developer. “It’s not random traffic, but consumers who are actively looking for our types of applications.”
The iControl application is the aforementioned home-monitoring system, or as Dawes calls it, “next-generation home security.” With iControl, a device is plugged into your home network and connects to security panels, webcams and home-automation devices, allowing the homeowner control away from home. You can keep up with the action while at work on your desktop, or with the iPhone out in the field.
The iControl monitoring system is sold via home-security companies and a monthly subscription, but the iPhone application will be available for free.
Video game company Sega, best known for the old Sonic the Hedgehog video game, wowed attendees at a March meeting for developers when it showed off the Super Monkey Ball game for the iPhone.
There’s no joystick controller for the iPhone to move the characters from left to right, so developer Ethan Einhorn came up with a novel idea: Just move the phone up or down, left or right, and the characters respond to the movement.
“What’s great for a company like ours is that Apple has already defined the iPhone as a place to acquire and enjoy entertainment,” Sega’s Einhorn says. “Video games are the next natural step.”
Earlier this year, legendary Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers (which had a role in funding Google, Amazon and AOL) started what it calls the “iFund,” a $100 million pot looking to invest in iPhone application start-ups.
Kleiner Perkins invested in both iControl and Pelago, and is actively looking at 50 other start-ups, partner Matt Murphy says.
“We received about 2,000 proposals so far, and that’s more than a factor of 20 of what we would have received from the general mobile sector,” Murphy says. “What Apple has done is brought a lot of entrepreneurs off the sidelines. They feel ‘open mobile’ is here.”
Historically, if you had an idea you wanted to sell to the mobile industry, you had to pay a visit to Sprint, T-Mobile, AT&T and Verizon. All have huge customer bases, but their phones work on different wireless systems. This requires a programmer to construct the program in different ways.
Apple isn’t the only company pushing open mobile. To great fanfare earlier this year, Google introduced “Android,” which it describes as a new wireless operating system that can be used with multiple carriers.
Google has been shy about releasing much Android information, but says we’ll see phones in the second half of the year.
Unlike Apple, which produces its phone and has AT&T as the wireless network customers have to work with in the USA, Google is reaching out to many. Wireless manufacturers HTC, LG, Motorola and Samsung are all participating in Google’s “Open Handset Alliance,” along with carriers Sprint, T-Mobile and Japan’s NTT DoCoMo.
A home run?
When the iPhone was released last year, eager consumers waited on line for days to get a crack at buying one of the first ones. A year later, Apple says it’s sold over 5 million iPhones.
That pales in comparison with competitors. Windows Mobile, which provides software for phones from HTC, Samsung, Palm and others, says it will sell 20 million phones this year.
About 1 billion cellphones are sold every year. No. 1 manufacturer Nokia, for instance, sells more cellphones in a week than Apple has shipped to date. According to researcher Gartner, Nokia sold 435 million cellphones in 2007. Munster says the “real verdict” on the iPhone’s success hasn’t been reached. “The numbers are too small to call a home run.”
Charles Golvin, an analyst at market tracker Forrester Research, says iPhone’s impact has been felt by the entire wireless industry, which has been trying in vain for several years to sell lucrative add-on data plans.
“They have done a very poor job marketing these services,” he says. “What Apple and the iPhone did was really communicate in a very simple way what the data plan could do for you. It’s the Internet, but on your phone.”
With a data plan, consumers pay an additional monthly charge ó usually $15 to $25 ó for access to the Internet on their phones, adding greatly to the carrier’s bottom line.
Golvin says handset competitors such as LG, Sony Ericsson and Nokia are “really blatant” about how their new phones are clones of the iPhone. “The iPhone has raised awareness of what’s possible.”
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