MochaTalk

The buzz around iPhone as we all know is reaching a fever pitch. Steve Jobs has said that they expect to sell 10 million iPhones by end of 2008. Is iPhone going to be a major hit as the industry expects or be a failure (at least compared to the hype and expectations). Clearly, it is risky proposition to bet against Steve Jobs. Steve Jobs has proven time and time again that he knows how to build products that not only are easy to use but also have tremendous sex appeal. The iPhone certainly has many appealing elements to it: a cool looking UI, a large screen and an innovative touch based navigation engine. It will also finally make the marriage of a cell phone and media device a reality — something that the traditional handset providers and carriers have failed to do.

There is no doubt that the iPhone will be sold out for many months to come. But the big question is what happens after 6 months or even a year, when the early iPod enthusiasts have purchased the device. Will the iPhone still be able to maintain its momentum with a broader user base allowing Steve Jobs to hit his goal of selling 10 million unit goal by end of 2008. I personally believe that this is going to be a tough number to reach. Here are some of the key issues that he will face:

Price: Price remains a key factor in the sale of cell phones. Generally 75% of all phones are sold at under $100 and only 5% of phones are sold over $400. At over $499, the iPhone is going to be a very expensive device. People argue that it is not really that expensive if you think of it as a combination BlackBerry and an iPod. However, I would still maintain that $499 is a very expensive price that will make people think twice before shelling out that kind of dough. Remember, most people also like to change their cell phone every 18 months. That’s very hard to do when you pay over $499 for a device. And technology in this industry gets old very quickly.

Battery Life: This is going to be a huge issue for the iPhone especially since there is no removable battery. And battery life is key requirement for a cell phone user. I can deal with a dead battery with an iPod but not with a cell phone. A large screen display is killer on battery life not to mention music and video playback.

Radio Performance: Having spent a number of years at RIM and testing a variety of different handsets with the carriers, I know how important radio performance is to the success of a phone. Typically, a handset manufacturer like Apple (unlike Nokia, Motorola, etc) will license the radio stack from another vendor. This makes it very difficult to deal with coverage, signal issues since you don’t own the code. Since users will be switching from a traditional cell phone device with superior radio performance to an iPhone, they will most certainly notice any coverage issues e.g. my Nokia phone works at home but my iPhone doesn’t.

Lack of keyboard: : I think this is going to be a real issue especially with those users for whom e-mail is a key application. Having to punch out your e-mail on a virtual keyboard is going to get old really fast.

Robustness/reliability: This is especially important for a cell phone which you carry around with you all the time and goes through a fair amount of abuse. My BlackBerry has gone through a washer/dryer cycle and still works. The carriers have a drop test that they use to determine how robustness of a cell phone device. I dread to think what will happen to an iPhone if you drop it on a concrete sidewalk. Having a such a large screen makes the iPhone particularly vulnerable to scratches, cracks etc. And the iPod has not been particularly well known for its reliability.

Low storage: : 4 or 8 GB of storage seems pretty low to me for a serious music lover. As for me, I would rather carry 2 devices - one optimized for voice and messaging and the other optimized for music/video/picture playback (i.e. an iPod with a minimum of 30 GB of storage). I do have a nano as well with lower storage but I am fine with the lower storage there because I use it primarily while working out at the gym — so having a lot less storage is fine because I want to carry a much smaller device with me.

Edge Performance: The iPhone seems to have a terrific browser with a cool UI. But it is going to be pretty significantly handicapped with a slow Edge network which is going to make browsing fairly painful. Many users who have looked at the cool browser demo on Apple’s web site are in for a disappointing experience.

Lack of an Application Platform: This is a sore point for many Apple developers who want to leverage their Mac applications to run on the iPhone. Apparently, Apple is asking its developers to develop Ajax based applications for the iPhone. However, you will still run into the speed issue of the Edge network. Ajax applications work fine on a fast broadband network but may not work as effectively on a slower network.

Let me know what you think. Are you going to camp out at a Cingular store on the 29th to buy an iPhone?

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