Like everyone else, I’ve had the ringing of some mythical Apple cell phone in my ears for months now. I’m not particularly excited about the prospect of such a device, but it’s obvious that some vocal group of people is about to wet their pants over the idea. I’ve written about it here before, and I keep coming back to the same thesis: The cell phone market is saturated already and doesn’t seem like a money maker for Apple. VoIP makes more sense.
On this eve of Macworld, I was talking to my friend Shawn King when I decided to draw out a couple of tables to illustrate why I think VoIP makes more sense than a cell phone. There is a pattern to successful Apple hardware products (two points do make a line) and a cell phone doesn’t fit into that pattern, but VoIP does. Why would Apple deviate from an obviously successful formula to risk their cash and their image for a cell phone product that would be a tough sell?
In all my reading of Apple cell phone proponents, I haven’t seen many (any?) specifics. The phone will be “better”. It will be “easier to use”. It will be integrated with the iPod. That’s all fine and dandy, but what does it mean? Obviously, only some people inside Apple know what’s really happening with their phone efforts (if any), but I haven’t seen any solid ideas proposed as to how Apple will make a cell phone so much “better” that they’ll be able to successfully compete with the myriad of cell phone makers out there and do so in a way that won’t be a PR disaster. Let’s face it, the Mac-Macs in this world have overblown this phone idea so much that, unless this phone balances your checkbook and cleans behind the toilet for you, it’ll be a disappointment. Even if Apple does introduce a great product, it’s impossible to meet expectations now, and that’s equally as poisonous as introducing nothing.
Frankly, I don’t know what features either a cell phone or a VoIP phone would have. I could speculate, but it seems more like fantasy than informed guess. So let’s look at this from a high-level business perspective, using history and the current state of the market as our guides. Apple is, after all, in business to make money for shareholders, not to provide nerds with fun toys.
Mac vs. iPod vs. Cell phone
| Mac | iPod | Cell phone |
|---|---|---|
| At the time of the introduction of the Mac, the personal computer market was just emerging. There were other computers for sale, but the market was immature, and Apple had a truly unique product that was unmatched by competitors. | At the time of the introduction of the iPod, the music player market was just emerging. There were other players for sale, but the market was immature, and Apple had a truly unique product that was unmatched by competitors. | The cell phone market is a mature market that is already saturated with products of every shape and kind. A cell phone exists for almost every need. No speculator yet has offered anything concrete as to features or services an Apple phone will offer that make it unique. |
| Apple’s product caused the personal computer market to grow. | Apple’s product caused the music player market to grow. | Almost everyone who wants a cell phone has one. There is very little room for market growth. |
| The Mac was (is) a self-contained item, requiring no services from other companies to function. | The iPod was (is) a self-contained item, requiring no services from other companies to function. | A cell phone requires service provided by another company to function. |
| Apple provides service and support for the Mac and it’s operating system, the two components required to use the device. | Apple provides service and support for the iPod and the software required for the functioning of the device. | Apple would obviously provide service and support for the phone itself, but it’s extremely unlikely Apple would provide support for what service is provided. Conversely, it’s also unlikely service providers would provide service and support for a phone they don’t sell. |
| When the Mac was introduced, there was an obvious way to make money by selling the machines and providing software. | When the iPod was introduced, there was an obvious way to make money by selling the devices and providing (although not requiring) music for purchase. | Overwhelmingly, cell phones come free or at a significant discount with a service plan from a provider. As of yet, nobody has specified a compelling feature or service set in an Apple phone that would compel prospective customers to give up free / cheap phones for an Apple phone. On the back end, Apple is very unlikely to provide or profit from cell service the same way it provides software and music for the Mac and iPod. |
Mac vs. iPod vs. VoIP
| Mac | iPod | VoIP |
|---|---|---|
| At the time of the introduction of the Mac, the personal computer market was just emerging. There were other computers for sale, but the market was immature, and Apple had a truly unique product that was unmatched by competitors. | At the time of the introduction of the iPod, the music player market was just emerging. There were other players for sale, but the market was immature, and Apple had a truly unique product that was unmatched by competitors. | Currently, the VoIP market is emerging. There are currently VoIP services and devices for sale, but none of them is especially “hot” right now. Apple could create a unique product that integrates VoIP with their existing devices (Mac and iPod) in useful ways (iChat? Voicemail/iPod sync?). Windows compatibility would also be possible. |
| Apple’s product caused the personal computer market to grow. | Apple’s product caused the music player market to grow. | Apple’s product could cause the VoIP handset market to grow. There are few competitors right now, none of which are are dominant or making huge money. |
| The Mac was (is) a self-contained item, requiring no services from other companies to function. | The iPod was (is) a self-contained item, requiring no services from other companies to function. | A VoIP phone would be a self-contained item, requiring no services from other companies to function. Apple is a computer company with experience creating and managing network infrastructure (the Apple site, Developer Connection, Sales Web, iTunes Media Store, .Mac). Such an infrastructure would be needed to route VoIP traffic, and would be totally under Apple’s direct control without the need to rely on agreements or services of third parties. |
| Created, supported, and serviced by Apple with no third-party involvement. | Created, supported, and serviced by Apple with no third-party involvement. | Created, supported, and serviced by Apple with no third-party involvement. |
| When the Mac was introduced, there was an obvious way to make money by selling the machines and providing software. | When the iPod was introduced, there was an obvious way to make money by selling the devices and providing (although not requiring) music for purchase. | If a VoIP phone were to be introduced, there would be an obvious way to make money by selling the hardware and the monthly service. |
To my way of thinking, a VoIP phone fits Apple’s pattern of past successes much better than a cell phone. A VoIP phone obviously wouldn’t be portable like a cell, rather, it would be an extended home phone of sorts. Other companies like Vonage, Lingo, SunRocket, and Skype have started VoIP services because they believe money making potential is there. However, none of these services has grown in a big way. Apple, with it’s ability to design very good hardware, and its past record of substantially growing fledgling markets, seems like a good fit for the VoIP market. Apple has the experience to create and maintain the infrastructure and service, create a phone people will like, control the whole widget, and integrate a VoIP phone into existing products, all of which combine to create revenue (and hopefully profit).
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