iPhone Predictions

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Gotta love iPhone Fans. I love the iPhone too, but I don’t own one. I respect the device and its huge contribution to cellular. It changed things dramatically:

  • It reduced the control on hardware that carriers abused
  • It effectively created the current mobile web
  • It spawned a tremendous amount of innovatio

I am not much of an Apple fan because I find their hardware too expensive and too unreliable. Plus it seems 80% of my computing is in the browser. But admittedly, my current MS Phone (about 3 years old now) is largely obsolete – mostly because of Apple. And I agree that the desktop experience is superior on a Mac.

I’ve owned Macbooks and iPods. I loved them all the way until they broke or I tried to play outside the walled garden. They are fine products for other people. But I don’t understand the halo. I notice a large percentage of tweets from Apple Fans are people talking about the Genius Bar or getting their Apple products repaired. They are always happy about it too. Statements like “sure glad I bought that extended warranty” or “the store Genius was great and got me working again”. Go figure.

Anyway, this post is about my near term prediction regarding the iPhone. I don’t think it is very profound. I shared it today with some folks, and they weren’t convinced, so perhaps it isn’t so obvious. I think these events are near term. If I am wrong, I will test the “can’t delete things off the Internet” theorem.

I hereby predict the following 4 events in the near term

1) AT&T loses its exclusive rights to the iPhone.
2) That giant sucking sound you hear will be AT&T customers migrating to Verizon.

Some how, AT&T managed to receive nearly all of the frustration associated with iPhones – partly because they deserve it and partly because of the Apple Halo. Apple’s Sh*t don’t stink:

  • The fact that Apple significantly over priced theiPhoneinitially was quickly forgotten.
  • Apple gave AT&T exclusivity, but frustration about this is directed at AT&T.
  • Apple came out with three models within a year testing the loyalty of their fans. But AT&T had the unreasonable upgrade plans.
  • Apple tightly controls, taxes, and censors all applications. For the good of mankind.

AT&T, on the other hand, gets all the blame:

  • AT&T won’t allow VoIP (nor will any other wireless carrier) over their network.
  • The two year contract is unreasonable (again, fairly common on high end subsidized phones).
  • The fact that new customers get better deals than existing customers under contract is unreasonable (the contract is subsidized by the contract term – pay full price and these restrictions go away).
  • The fact the network capacity isn’t sufficient is the ultimate unforgivable sin.

The network issues are no doubt frustrating, but can at least be explained. The fact is the iPhone was a gamble… Apple never sold cell phones before the iPhone- it was an unproven product and initially offered as the most expensive cell phone ever. The closest prior product was the Apple Newton; a complete failure. The only known thing to bank-on was proven historical trends showing smartphone users (RIM and MS devices) don’t consume much data bandwidth.

Obviously iPhone sales exceeded everyone’s expectations. One major reason the phone was so successful was the non-hobbled mobile Internet (a revolutionary concept). These users were the first group of cellular customers that really consumed bandwidth. The perfect storm, more users than expected using up to 80% more bandwidth than expected.

Users had every right to be upset, they were committed to AT&T for two years. What could make it worse? How about complete denial by AT&T that there was a problem? Enter resentment. AT&T, in a PR disaster, played the denial card hoping no one would notice. Thus, prediction number two – the sucking sound.

3) Apple will release a new model about the same time as Verizon (or other carrier) comes online – and Verizon will offer an attractive upgrade path.

Now here comes the fun part.

AT&T is acting as quickly as it can to upgrade their network. But this isn’t adjusting dials, it involves planning, equipment, upgrades, permits, capital, etc. The network is being upgraded at a pretty decent clip.

This will be accelerated by prediction two also known as The Exodus. Less users means less contention for limited resources. Meanwhile, Verizon’s data network hasn’t really been stressed. Their smartphones are still largely Blackberry’s that find push email impressive (Verizon doesn’t offer any Android phones or the Palm PRE).

4) While the AT&T network improves, the Verizon network will find its stress points. The refugees that sought liberation will discover the new boss is the same as the old boss. It is important to note that a second carrier will certainly increase capacity and bandwidth shortages will be reduced overall.

So my advice to iPhone loyalists stick with AT&T.

Dave Michels