This past week Apple made its long-anticipated announcement of a 3G version of the iPhone. The new model looks much like the first, but with some minor cosmetic differences and two important functional improvements. The new model has a plastic back instead of aluminum to allow the additional radio signals to be transmitted.
Its major functional improvements are, first, its faster 3G data speed that accesses the Internet much more quickly than its first model. That's important because although it has the best Web browser of any pocket device, the slow speed makes the current model painful to use at times. The new model should work 3-5 times as fast, so that a site that takes 30 seconds to open will open in 6-10 seconds.
Second, the new model has built in GPS, with which additional software can provide turn-by-turn directions just like a stand-alone GPS device.
The iPhone will still work only on AT&T's network in the United States. But its price will drop to $199 for an 8GB memory version and $299 for 16GB and will require signing up for a new two-year plan. For those already in the middle of an iPhone plan, the phone costs are the same. For new users and those that upgrade, the monthly plan will increase by $10 for the faster 3G data service. It will be available in Apple and AT&T stores beginning July 11.
But along with this product announcement there's something even more significant than just another new phone. It's the expansion of the iPhone "economy," or new business unit, that goes well beyond a piece of hardware, in much the same way that Apple built a huge music business around the iPod.
Announced along with the iPhone is a new 2.0 version of the software, which will run applications developed by third parties. (The new software will also work with first-generation iPhones and be provided at no charge to current users). There are already numerous applications announced and several thousand developers actively working on more. Several were demoed at their Worldwide Developers Conference.
Examples include an application to manage your eBay auctions and the "Mobile News Network" that lets you download local news from wherever you are, using the GPS to identify your location. "At Bat" is a program that shows live baseball games, provides scores, who's on base, who's batting and real-time video highlights from games in progress.
"Modality" is a learning application to help medical students learn anatomical information, replacing paper flash cards. In addition, numerous entertainment programs and games were shown that take advantage of the iPhone's large, colorful screen.
Just as it did with iTunes, Apple has created an online store in which iPhone users can purchase these applications through their computers or from their phone over the air. Apple takes a 30 percent commission, although many applications will be free.
Apple should see an uptick in Mac sales from iPhone users, just as it has with iPod users. The strategy is working. Mac sales grew 51 percent in units and 54 percent in revenues over the past quarter.
Apple has also added capabilities to its 2.0 software to work with businesses running Windows servers. And business enterprises can develop, manage and distribute their own software to their employees.
One of the other significant announcements is Apple's new service called "MobileMe." A few weeks ago I wrote about the need for a service that can sync many devices, including a PC and a Mac. "MobileMe" is just that product. It's your own Web site that you can visit to access online versions of Apple applications, such as iCal, Contacts, iPhoto and email. But it also serves as a way to sync data among multiple computers and the iPhone. It even works with Outlook running on a PC.
The information is kept up to date on "MobileMe" and when you make a change on one device, it automatically updates your Macs, PCs and iPhone, all wirelessly. "MobileMe" also provides 20GB of storage and costs $99 per year.
The impact of the $199 price likely caught competitors by surprise. Some, including Verizon and Sprint are just introducing new models such as the Instinct and Glyde, which cost the same or more. But they offer far fewer features and will lack the huge availability of 3rd party applications. The only reason to consider them is if you don't want to use AT&T as your cellular provider or you happen to like one of the paid services they offer that Apple doesn't such as live TV. But for the most part, while these products look like the iPhone, they certainly don't work like it.
Who else will be affected? Companies such as Garmin, TomTom and Magellan. Their stand-alone GPS devices suddenly look outdated. Remember, the iPhone can be updated in real time providing all sorts of new features in their GPS, including real-time traffic and location-based services.
So in one quick move Apple has taken the iPhone from a premium product to one that's affordable for nearly anyone looking for a new phone, yet offers many more features. Looks like a winning formula to me.
re: The iPhone "will still only work on AT&T's network in the United States": well, I've been enjoying mine on T-Mobile's network for the past ten months, as have countless thousands of other folks.
Posted by: Steven | June 20, 2008 at 05:54 AM
Yup- Apple does it again.
Posted by: moo | June 20, 2008 at 06:46 AM