Bloomberg writer: Apple iPhone won’t make long-term mark; will only appeal to a few gadget freaks

“Few products have been launched with such a blizzard of publicity as Apple Inc.’s iPhone,” Matthew Lynn writes for Bloomberg.

“To its many fans, Apple is more of a religious cult than a company. An iToaster that downloads music while toasting bread would probably get the same kind of worldwide attention.,” Lynn writes.

Lynn writes, “Don’t let that fool you into thinking that it matters. The big competitors in the mobile-phone industry such as Nokia Oyj and Motorola Inc. won’t be whispering nervously into their clamshells over a new threat to their business.”

Lynn writes, “The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks. In terms of its impact on the industry, the iPhone is less relevant.”

Lynn writes, “There are three reasons that Apple is unlikely to make much of an impact on this market — and why it is too early to start dumping your Nokia shares.”

Apple is late to this party: Apple will have to fight hard for every sale.
The mobile-phone industry depends on cooperation with the big networks: Apple has never been good at working with other companies. If it knew how to do that, it would be Microsoft Corp… [also] rivals will be pulling out all the stops to prevent the networks offering iPhones.

MacDailyNews Note: We interject to point out that this seems to be straight out of the “talking points” we described in the article “Microsoft Zune Chief: Apple faces tough hurdles if they launch an iPod phone” (January 9). So, we suspect that Rob Enderle, Microsoft Zune Chief Robbie Bach, and Bloomberg’s Matthew Lynn are all reading from the same memo. If Apple doesn’t work well with other companies, how the heck did they get the entire music industry to join them on iTunes Store digital downloads? Imagine all of the negotiations, agreements, and paperwork required to get all of those partnerships worked out!

Lynn’s third reason that Apple is unlikely to make much of an impact with iPhone:
iPhone is a defensive product: It is mainly designed to protect the iPod, which is coming under attack from mobile manufacturers adding music players to their handsets. Yet defensive products don’t usually work — consumers are interested in new things, not reheated versions of old things.

Lynn writes, “In many ways, that is a shame. The mobile-phone industry is becoming a cozy cartel between the network operators and a limited range of manufacturers. It could certainly use a fresh blast of competition from an industry outsider. It may come — but… it won’t come from the iPhone. Apple will sell a few to its fans, but the iPhone won’t make a long-term mark on the industry.”

Full article here.

[Thanks to MacDailyNews Reader “Ballonknot” for the heads up.]

We have noted Lynn’s comments for future use, whether it be pro or (most-likely) con.

Related articles:
Apple iPhone tops Amazon’s bestselling electronics list in Germany – January 13, 2007
BusinessWeek explores ‘the real genius of Apple’s iPhone’ – January 12, 2007
Wired News: Steve Jobs’ iPhone shows the future – January 12, 2007
Cringely: Apple iPhone will suddenly go 3G, gain features, and be renamed ‘Apple Phone’ – January 12, 2007
Apple’s Phil Schiller gives CBS News hands-on tour of iPhone – January 12, 2007
20 unanswered questions about Apple’s iPhone – January 11, 2007
Report: iPhone could be upgraded to 3G with software update if Apple wishes – January 11, 2007
Report: Rogers Communications to offer Apple iPhone in Canada – January 11, 2007
David Pogue: hands on preview of Apple’s iPhone, ‘gorgeous and so packed with possibilities’ – January 11, 2007
PC Magazine hands-on test of Apple iPhone: multi-touch UI ‘takes the breath away’ – January 11, 2007
Mossberg’s initial take on Apple iPhone: ‘radical and gorgeous’ with ‘brilliant new user interface’ – January 11, 2007
NewsWeek’s Levy interviews Apple CEO Steve Jobs about iPhone – January 11, 2007
Why Apple’s iPhone doesn’t do high-speed mobile phone networks (yet) – January 11, 2007
RealMoney: Apple just blew up the whole damn mobile-phone supply chain with its new iPhone – January 11, 2007
ZDNet: Hands on with Apple’s iPhone: ‘elegant, ravishing, simple, sleek; impeccable & intuitive UI’ – January 11, 2007
Apple iPhone FUD campaign begins – January 10, 2007
Nine ways Apple changed the face of consumer electronics yesterday – January 10, 2007
Analysts and investors applaud arrival of Apple iPhone – January 10, 2007
Top 10 things to love and top 10 things to hate about the Apple iPhone – January 10, 2007
How Apple kept the iPhone top secret for 30 months – January 10, 2007
Hands-on with Apple’s iPhone – January 10, 2007
The only thing really wrong with Apple’s iPhone is its name – January 09, 2007
Is Apple building ‘The Device?’ [revisited] – January 09, 2007
Analyst Bajarin: Apple’s iPhone and Apple TV are industry game changers – January 09, 2007
Time: ‘iPhone could crush cell phone market pitilessly beneath the weight of its own superiority’ – January 09, 2007
Analyst: Apple iPhone should be given its own category – ‘brilliantphone’ – January 09, 2007
Cingular to use Synchronoss Technologies’ platform for Apple iPhone – January 09, 2007
iPhone photos from Apple’s Macworld Expo booth – January 09, 2007
Enderle: Apple’s iPhone is going to do very well – January 09, 2007
Apple debuts iPhone: touchscreen mobile phone + widescreen iPod + Internet communicator – January 09, 2007

Dvorak on Apple iPhone: ‘I think Apple can do wrong and I think this is it’ – January 13, 2007
USA Today writer: Apple iPhone is an ‘ordinary, average product’ at heart – January 12, 2007
FUD Alert: Analyst – I am pretty skeptical Apple’s iPhone can succeed – January 11, 2007
The Register’s Ray: Apple ‘iPhone’ will fail – December 26, 2006
Analyst: Apple iPhone economics aren’t that compelling – December 08, 2006
CNET editor Kanellos: ‘Apple iPhone will largely fail’ – December 07, 2006
Palm CEO laughs off Apple ‘iPhone’ threat – November 20, 2006


  1. “To its many fans, Apple is more of a religious cult than a company.”

    Why do idiot writers insist on continuing this myth? The term ‘cult’ implies there is no valid reason for people’s admiration of the company. Nothing could be further from the truth.

  2. The iPhone may not make a dent but these sort of arguments never give any reason as to why, for example, non Apple fans won’t buy this. It’s nonsense, people who’d never bought an Apple product before bought iPod’s. Why won’t they buy an iPhone? It’s not as if Apple is aiming to dominate the whole market.

  3. The iPod will only appeal to Apple Fans, it’s too expensive blah-blah… it won’t sell blah-blah…
    Other manufacturers already make cheaper music players blah-blah…

    Won’t these guys ever learn? Or does their MS-Paycheck make these lessons less relevant?


    MW: reached: these guys have all reached a conclusion straight from Microsoft’s brief.

  4. There are about 21 million OS X users in the world.

    Apple have (proabably, as of the results pending release) sold over 100 million iPods.

    Therefore there are more iPod customers who use Windows than use Mac OS X.

    I’d argue that Matthew Lynn is a cult, but then I’m dysnexic.

  5. In his article, Lynn says that Apple will have a hard time getting into the UK because network companies will not want to upset a firm like Nokia by taking on board a rival phone but hang on……

    So far, the naysayers have been saying that Apple will suffer because it’s actually the other way round – networks hold the whip hand whilst phone manufactures have to dance to their tune on product features, marketing, etc.

    The doom mongers can’t have it both ways when it comes to holding back Apple so which is it to be?

  6. I for one am excited that in six months I will purchase an Apple iphone for myself and maybe a second one for my wife. (She is more anti-technlogy than most) That being said, I also think that a company that sits around on past laurels goes the way of microstinks. These idiot naysayers like Lynn should understand that you either lead the way or get shoved out of the way in a rude manner. Let the pushing begin.

  7. Could it be in part because Matthew Lynn is British?

    Could it be that he reads the Brit Apple-hating press?

    Is he part of a culture that hates Apple?

    Is it because Bloomberg is a 100% Windows company?

    Is he trying to please the owner of his company, Mayor Bloomberg?

    Remember that Mike Bloomberg said in 1995 that the Internet was a fad similar to the truckers’ CB Radio fad of the 1970’s.

    Could it be that the technical illiterates feel more savvy if they dump some trash on Apple?

    Is it because Bloomberg is a news service for business and 99.9% of businesses are totally bound to Windows?

    Is Matthewe Lynn trying to make his business readers feel good that they use Windows instead of Apple products?

    Could Matthew Lynn have an agenda? Trying to get Microsoft to include him in their inner circle of friendly journalists? invited for an exclusive interview with Bill Gates? Get a free Windows laptop?

    Could Matthew Lynn be some dishonest journalist?

  8. They’re all valid points, but in isolation. I am genuinely confused why analysts or columnists can’t see where this is heading. I think the iPhone has more chance of genuine penetration than TV in the home.

    The only genuine risk Apple runs with the iPhone is mobile data input via it’s digital keypad. If this is accepted by the population, then then we have an absolute no brainer as to where this industry is heading. Apple’s patents largely revolve around the touch-screen technology and from initial accounts, they intend not to licence it but stop others using the tech. As a Nokia, Motorola, Microsoft et al how can you possibly fight a full screen device that’s infinitely flexible with greater viewing real estate? Arguing on power specs, GSM, price etc. are ultimately stallers. Apple will match and beat anything out there in releases 3 and 4 when economies of scale come to the fore.

    The frontline of the war will be fought on the mobile input of data. Look for FUD articles upon release stating this (“I couldn’t type on the iPhone – it kept getting it wrong”). If Apple get through this barrier, it will be the connectivity to Outlook and other MS standards, here’s where Google starts to pick up the slack. Look for Google’s apps to start syncing with the iPhone (calendar, email, word app) in releases 3 and 4. Apple’s iWork apps should integrate earlier than that though.

    Apple are very very confident about the keypad, otherwise they wouldn’t have taken it this far. No wonder Mr Jobs couldn’t sleep. With notoriously low loyalty in the mobile market, 2 year upgrade rate and no killer apps annexed off any existing platform, there’s a very real possibility that this pull in annual revenues of 20-40B, in 3-4 years time with little resistance.

    iPod Halo – christ we haven’t seen anything yet.

  9. He is right! Face it, most people just want a TELEPHONE for God’s sake. I probably should have said most working people. Who has time for all these features? The people who will buy this phone WILL be fanboys and gadget geeks and Apple probably will sell a bunch of them. But, not to everyday users.

  10. “To its many fans, Apple is more of a religious cult than a company. An iToaster that downloads music while toasting bread would probably get the same kind of worldwide attention.,” Lynn writes. This old – just old – tired – overused, and has, so far, always been wrong. Yes there are lots of Apple loyalists, but its loyalty with eyes wide open.

    As a Mac fan boy, and one of the biggest early skeptics of Apple’s entry into the cell phone market, I can tell you that on first and second look at the iPhone, this is going to be at least as big as the iPod, and that’s before they come out with a 3G version. If Apple comes offers a 3G version when the “phone” is actually released, Apple is going to clean up the cell market inside of five years.

    As for me, I’m waiting for the annual spring time stock slump and I’m going to start buying and buying and buying, then some reinvesting, then some more buying. See you on the beach in about 15 years.

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