iPhone 3G
June 10, 2008
I’m sure you know that it’s out there. I just watched the WWDC keynote address from yesterday. Let me get this out in the open first - Instinctively, I want the iPhone 3G. There was little doubt in me whether or not Apple was going to deliver a great successor to the iPhone, but I am actually quite intrigued at some of their business decisions they’ve made with iPhone 3G and how it’ll affect the consumers as well as their partners.
On the consumer end, I think Apple has moved their marketing pitch from a genius innovation to a product package that provides simple, easy to use solutions to everyday users that are (most importantly) iPhone exclusive. I’m not a programmer and I’m not sure what programming an app for a BlackBerry or a Palm looks like, but I’m willing to bet that it’s not as easy to build and debug as it would be on the iPhone with the iPhone SDK. And while they’re keeping things easy and clean for the developers, they’re getting them to build iPhone exclusive apps. After seeing the eBay app yesterday, I don’t really want to know what browsing eBay would be like on my BlackBerry. Speaking of iPhone 3G envy, MobileMe (”Exchange for the rest of us”) is absolutely brilliant. Even though my Blackberry syncs with my MacBook Pro with no problem, I can only imagine how nice it would be to have all the updates pushed to all my devices (not to mention the awesome web interface). Simply put, the iPhone 3G will offer a vast array of iPhone exclusive products/services that will make it pretty much impossible for other smartphone makers to compete with Apple’s unique position both in the PC market and the smartphone market.
On the business end is when things start getting real interesting. With the iPhone 3G, AT&T (T) and Apple (AAPL) has reached a new agreement and under the terms T will see “that higher subsidization will negatively impact earnings in 2008 and 2009.” (T) “lowered their 2008 and 2009 EPS ests by $0.11 each due to a higher assumed subsidy loss, though the co. should benefit longer term from the greater associated data rev and device differentiation.” For the year 2008, they have estimated that their subside loss would be around $1bln. While under their new agreement, they have also did away with the revenue sharing model that was used with the original iPhone where Apple shared a portion of the wireless revenue. But even with this model, the company sees that the EBITDA for wireless service margins at 39-40% from 44+% realized in 2007 and prior guidance of 43-45% for 2008. Even with the rumored $10 increase in the price of the monthly data plan, I wonder if this is a price a little bit on the hefty side for T to pay. Also notable under this arrangement, in order to control the “unlocking” of the iPhone 3G, activation will not be at the convenience of your own computer anymore. Synchronoss Technologies (SNCR) confirmed that it won’t participate in on-site, retail store activations associated with the 3G iPhone (SNCR was down 17% in trading today). The good news is that the iPhone 3G launch day happens to be free slurpie day (7/11), so get a slurpie and have fun in line. =)
In the end, I think Apple’s business position will make itself look great while making some of it’s partners (read T) look like an ass. I’m really interested to see what position T takes with the Apple loyalists that own the original iPhone and still have a year left on their contract. Let’s see what happens as July 11th rolls near.
And in case you’re wondering you won’t see me with an iPhone anytime soon. I have no intention of paying the early termination fee on my current contract I signed when I got my BlackBerry. I hope that this pricing will put pressure on RIMM to make the Bold cheaper though. =)
Posted in News/Events
June 14th, 2008 at 1:23 am
really the only big thing this year was mobile me. i have to admit it is a great service, albeit not a free one. however i don’t think its too difficult for a 3rd party to develop something for all the other phones. mobipush already does e-mail. all the other new features (gps, 3g) are just things that any smart phone made in 2008 should have.
i do think your line of saying its pretty much impossible to compete with apple is completely wrong. its not like 3rd party developing for a phone is new. it’s been done…. lots…. its just new for apple, since they were so closed off before, it’s just being made as kind of a big deal in a world where it should be common place.
overall the iphone 3g to me was kind of a let down. gps and 3g should be there, i’m not going to give them props on something that should’ve been there a year ago. mobile me is a definite plus. but this activation crap they have now, along with the contract price increases, negate all of that. (apple fanboys no longer get to complain about windows activation). all activation does is increase the business for the grey-market in iphones. jailbreak will have a workaround 3 months after release, tops.
at first i thought releasing the SDK out there would be good for mobile game developers. but then i realized, ok, not only are they limiting their audience to iphone users, they are limiting themselves to iphone users that want to play games. which to me screams expensive mediocre software/games that look nice.
besides. there’s one big gorilla in the room no one is talking about. its not MS, not RIMM, not PALM, nor AAPL. When GOOG’s Android comes out, i hope it kills everyone. cuz if you think mobileme is cool, what happens if google comes out with a similar thing, pushing out to gmail, gcal, flickr/picasa (hello yahoo negotiations) for FREE (with an option to pay for more space). Of what i’ve seen of Android, Android + Firefox Mobile should pose as quite the challenger.