Street Insight: Apple iPhone faces a number of potential obstacles

19 years ago

“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

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