Aaron Adams’s Blowhard Blog

Here’s a comment from LKM over at the Macalope:

>It’s really more the idea of the iPhone - an
>elegant cell phone that doesn’t suck - and
>the movement of the market toward music
>phones that make a compelling business case.

I don’t think so. Let’s look at the facts here:

1) Cell phones are extremely diverse. There’s no single model that could satisfy even 10% of all cell phone owners. Some people want simple, some want music, some want a PDA, some want a good camera, some want a keyboard to write SMS, some want something as small as possible… The fact that there is no single ruling cell phone is not due to cell phones being crap (although that may play a role, too), but due to people having very different needs.

2) Cell phones aren’t sold to consumers. They’re sold to telcoms. That means that most cell phones are sold with almost no profit. Telcoms then sell them at a loss and make it up with the subscriptions to their service. Basically, this means that there is not a lot of money in the cell phone business. The money is in the subscriptions.

So, tell me again:
1) What exactly can Apple offer to this market?
2) Why exactly should Apple enter that market?

An iPhone only seems like a “compelling business case” if you don’t like the current situation. It’s not that it would make a compelling business case *to Apple,* it’s just that *you* want Apple to improve *your* situation, so it’s a compelling business case *from your standpoint.* That’s probably not due to sucky hardware, but due to sucky American telcoms. Apple can’t fix that problem. Go to Japan or even Europe, and you get a different picture.

I agree with the sentiment that people wish for an iPhone not because they think it’s a compelling business case for Apple, but because they think it’s a compelling business case for themselves. It should go without saying, but Apple doesn’t sell products because it gets a warm fuzzy by pleasing you. It sells products to make money for stockholders, period. Plus, this commenter raises some good points that come sequentially before any of mine. Apple has to get telecom companies to buy the phones (LKM’s points) before the telecoms sell the phones and services to consumers (my points). There seems to be a whole lot of things that have to happen perfectly, in order, before Apple can sell the first phone to what would likely be a very small segment of a market where the needs of individual users are widely diverse. It’s a money losing proposition.