Street Insight: Apple iPhone faces a number of potential obstacles

“My assessment [of Apple’s iPhone] is positive, but with some real reservations about the lack of certain features. It is less optimistic — especially when viewed in the context of the amount of additional market capitalization that has already been attributed to the iPhone — than the near-unanimous optimism expressed by many industry analysts, commentators in the media or, with almost certainty, current holders of shares in Apple common (none of whom have ever used the iPhone in practice). There is no doubt that the phone has numerous innovative features, and time will tell how the product and extensions of the product will fare in the marketplace,” Doug Kass writes for Street Insight.

Kass writes, “My observations are based not only on my own analysis but, more importantly, on actual product reviews in PC Magazine, the New York Times, the Wall Street Journal, Information Week and The Gartner Group, among others.”

“History also shows that it not a great idea to bet against Sir Steven Jobs, the master of innovation. To be sure, the iPod is far from being the next Nehru jacket. According to Walt Mossberg, The Wall Street Journal’s personal technology columnist, the many pixels per inch creates a user interface that is very sophisticated and vivid, serving to make his (and my) ‘Treo look primitive,'” Kass writes. “The iPhone contains many new and innovative features beyond the virtual keyboard, such as its ‘visual voice mail which allows users to go directly to any of their voice messages without listening to any of the prior messages.'”

Kass writes, “Nevertheless, Apple faces a number of potential obstacles to reaching the company’s goal of selling 10 million units next year. (If the company’s sales goal for 2008 is achieved, it will represent twice as many as current BlackBerry unit sales and nearly one-fifth of Cingular’s total handset sales.) Here are some additional concerns raised by the aforementioned industry reviews:”

1. High selling price spells limited marketing potential
2. Why not target the corporate market?
3. Closed systems can be confining
4. The slow Cingular Edge network is like the slow boat to China
5. Lack of keyboard makes typing tedious
6. A June introduction might be challenging
7. Will competitors sit still?

Kass writes, “In summary, notwithstanding the previous successes of the Mac and iPod, there seem to be enough questions regarding the iPhone (is it really differentiated from products already on the market that have advanced features, strong operating systems, have penetrated enterprise and rely on email as their killer application?) — especially in light of the market’s starry-eyed reaction and Apple’s surge in value… As the Wall Street Journal’s Mossberg writes ‘The Apple entry is so full of promise that anyone buying a smartphone in 2007 should at least wait for the full reviews and a chance to try it out…'”

Full article here.
To repeat the most important line in Kass’ piece: As the Wall Street Journal’s Mossberg writes “The Apple entry is so full of promise that anyone buying a smartphone in 2007 should at least wait for the full reviews and a chance to try it out…” In other words: Apple has gone a long way towards freezing the so-called “smartphone” market.

Kass seems concerned about Apple’s recent price appreciation, but he’s forgetting something important: Macintosh.

Also of note: “Apple will announce that Steve Jobs will be taking a leave of absence from the company.” – Doug Kass, January 05, 2007

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
Analyzing Apple’s iPhone market potential – January 15, 2007

IDG News Service: ‘Reality might tarnish iPhone’s shine’ – January 16, 2007
The Times: Apple’s brand of corporate hubris is almost always damaging in the long run – January 16, 2007
Hackers ‘salivating’ over Apple’s iPhone – January 15, 2007
Bloomberg writer: Apple iPhone won’t make long-term mark; will only appeal to a few gadget freaks – January 15, 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 massive FUD campaign against Apple’s iPhone ramps up – January 10, 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

59 Comments

  1. Doug Kass said before MacWorld that Steve Jobs was likely to resign at the event, citing a return of his long-ago cured pancreatic cancer. The guy is a crusty old git with no redeeming features, and only dresses up his doom-mongering analysis of Apple with a few positives so as not to come across too biased, which he is.

    He’s a dirty old bear who likes to wax lyrically about the impending collapse of the US and Global economies, and would be the last one left standing on the deck of the Titanic celebrating its demise if you gave him a chance.

    Ugh, what a character.

  2. if i have the power to make people disappear by just thinking about it, this guy will be one of the first ones to disappear, along with 90% of computer users of the world. Over-population crisis is SOLVED!

  3. The PS3 with the size being much too big, limited features, no rumble, high price, & what did they say? All the features of the PS3 will not reach to full potential until years from now? Lame. But you have to admit that it still sells. There are people out there willing to purchase this items. So what?

    Sure, the iPhone isn’t what we expected but it is what we expected. :/
    There were multiple rumors about it being 4GB & 8GB. We still said, “Bring it on. I still want one.” When the rumors were true, everyone backed off. The price is too high, I definitely agree. But the first iPods were $400, but again like all the intelligent people out there said, the price is going to fall. Plus it’s an iPod with a phone & internet connection. Of course, it’s going to cost more. No one is expecting you to buy the first generation of the iPhone. Why are people freaking out saying, “I’m not going to switch to Cingular [Now AT&T.]!” or “I’m not going to get the iPhone.” like someone is holding them up with a gun to their head.

    Don’t like it, obviously don’t buy it. Truth is that it’ll still sell more than the Zune.

  4. A closed system has many advantages too. You don’t get crappy add-ons that don’t work like there advertised. The iPod is supposedly a closed system and yet it is number 1. I think there are far more advantages then disadvantages with the iPhone.

  5. I predict that whatever Apple makes next no matter how incredible, futuristic, revolutionary,
    mind boggingly amazing ….. is going to be a failure and have lots of things I don’t like about it and by the way Steve Jobs is arrogant and Apple is a confined user experience ..

    Joe Journalist …. pay me now ….

  6. Most of these analysts evaluate iPhone’s potential based on current sales statistics for “smart phones” or “music phones.” Did sales of the original iPod reflect previous sales of existing MP3 players? No, because the device redefined the market and people who previously did not buy such devices bought an iPod. I think the iPhone has similar potential. Apple’s potential market is not limited to current smart phone customers, current music phone customers, or current Cingular customers. For one thing, current iPod customers, regardless of what (if any) type of mobile phone they use now will want one. Assuming most phone contracts are two years, one quarter of them will be expiring during the next six months. Not everyone will be able to afford one, but it’s a safe bet that Apple will be selling iPhones as fast as it can make them.

  7. The fud pieces are interesting. They show the level of the game. The tv box caused a minor disruption in that market when it was introduced. The phone has caused some pretty fair word churn.

    It’s time to call bullsh*t everytime some hack writes “Apple never reveals their roadmap”. They couldn’t broadcast it any more clearly.

    The Apple zen is to produce something concisely meaningful into a confused market with no clear leader. The key is to compare it to nothing, simply evaluate it upon the value of the result.

    The perfection of the Jobs presentation-structure is so simple. Enter a space with no clear monopolist and sieze control of it by defining everyone in it as the same – not good enough to dominate.

    The “Apple can’t partner” pieces are vacuous. Apple’s partners are Intel, every large media company, and the largest phone company. Clearly, Apple partners who they perceive to be the best of class providers.

  8. Why do people keep harping about the price? It’s an iPod nano, a phone and an internet communicator. For me to purchase these products separately would come out to that figure if not more.

    If only the world could see the Macworld Keynote, see how amazing this thing truly is. Such power in a simple package. I’d buy it for the full internet browsing experience alone. Yet if I’m on the web and receive a call while listening to music, everything pauses until my conversation is ended in which case everything resumes as if I’d never been interrupted. Convergence is not impossible so long as Apple is at the helm.

    I didn’t think Apple would do much but they’ve blown away my expectations. The price is more than reasonable. Just wish it had HSDPA.

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