iSuppliHotAir

I'd been meaning to rip into iSuppli's ridiculously triumphal ode to Apple from earlier in the week, but I figured it was worth waiting a few more days to make sure all the Apple-related rumours were in fact rubbish, allowing me to squeeze all fruit-related comment into a single post. Sort of like an Apple smoothie.


iSuppli's puff piece contains some real research, buried deep in the lightweight packaging. Almost every article quotes the "1.8% of all handsets in US" figure - only a few print the rest, that 1.8% means 220,000 units. Add on the 240,000 signed up before July and we have a much lower figure than the "700,000 in first weekend" Goldman-Sachs were talking about right after the launch, low enough to be considered a disappointment I would venture - not a triumph at all, and it makes that target of 10m by the end of 2008 look a little less likely without a serious shot in the arm.

The quote that really annoyed me was this one:
"While iSuppli has not collected historical information on this topic, it's likely that the speed of the iPhone's rise to competitive dominance in its segment is unprecedented in the history of the mobile-handset market".
I believe this translates to something like "This sounds pretty good, so if we write a quote laced with hyperbole containing no verifiable truth people will print and believe it, and we get to bask in the reflected glory". Let's ignore the fact that the guy actually admits he has no clue; it is a claim based on the idea that the iPhone is a smartphone. That's a mighty difficult category to define, but I can't see the iPhone fitting in it - for what it is worth, it's a feature phone. Sure it has email - so does almost every feature phone I've seen (quality is variable, but the iPhone isn't actually very good at email either). It has a browser, but so do low-end phones - OK that browser is scriptable, but that doesn't replace the ability to install apps (a common part of the definition of a smartphone). Hacking apps on does not count.

So if we really position the handset in its genuine market category, we see it is not really dominating in an unprecedented way at all - it equalled its largest current rival (the ageing Chocolate), which places it way behind the record of the RAZR which really destroyed the competition and had no peers for some time. Even if we do compare to smartphones, the wording is careful and obfuscating - for example both iPhones together apparently outsold any individual Nokia smartphone. Slightly unfair comparison - Nokia makes hundreds of the buggers which will naturally mean sales are spread across all of them, even in the US where Nokia's smartphone presence is tiny.

iSuppli clearly want to ride the iPhone for all the publicity it is worth. Much as I hate adding to the general cloud of iPhone opinions polluting the web, I think it is worth pointing out what rubbish they are speaking without just reprinting it verbatim.


Over then to Apple themselves - well they rather nicely admitted they had been ripping off the faithful and would continue to do so. Ringtones will now be available for the iPhone, for an additional $0.99 after buying an iTunes track. That's right - you can't just use any MP3, like on a normal phone (that hasn't been operator crippled), you have to buy a shorter version of the same MP3 for the same price as the full track in order to use it as a ringtone. Takes up more of your local storage, already stretched thin between music, video, photos and contacts, and you get ripped off in the process. I anticipate the faithful will be ecstatic with joy at the sheer innovativeness of it all.

The price drop of $200 is a nice admission that anyone who makes purchase decisions purely on hype and expectations of attaining nirvana through acquisition of Apple-branded plastic has already done so, and disappointing sales will only be pepped up with aggressive price cuts. Fair enough.

The introduction of the iTouch is more vexing. On the one hand it's an easy new product - just rebadge something you've got, taking out a few components and cutting the price. Bonus points because that appears to be what most of the customers wanted anyway - you can see a consensus forming that mass interest in the iPhone was about a new iPod form factor (WiFi and browsing are bonus points), and not about the underwhelming phone features at all. On the other hand, by selling these things in bulk across the world before most consumers have even had a chance to buy the expensive phone version, they have pretty much shredded the chances of the iPhone itself when it launches outside the US. What operator will now make huge concessions to Apple for exclusive rights to something customers actually don't seem to want? Which customer will pay a premium on top of their contract to get an iPhone, when they could have a nicer phone for free and pick up the music/video iTouch on the side? The answer to that last rhetorical question will give very good insight into device convergence trends over the short- and medium-term. I personally still carry an MP3 player and a phone and I don't
plan to change until I seem something paradigm-shifting...