[28 June 2007]
McClatchy Newspapers (MCT)
SACRAMENTO, Calif. - At 37, commercial mortgage broker Tony Peric means business, yet he’s considering setting up camp outside an AT&T Wireless store this week in hopes of snagging an iPhone.
“I usually wait six months to a year (when buying a new gadget) to make sure the bugs are worked out,” said the Natomas, Calif., resident. Since late last year, however, when rumors began swirling about a new cell phone/music player/Internet device from Apple Inc., Peric has positioned this gadget atop his technolust list.
The same goes for Cesar Altamirano, a 25-year-old graphic designer in Sacramento. He and three friends plan on setting up lawn chairs Friday outside an Apple store in hopes of buying one of the devices.
“This is the first phone I’ve seen that will fit my lifestyle and integrate everything I want to do,” he said.
Even by Apple’s lofty standards, the buzz surrounding the iPhone is unprecedented. Would-be buyers are already lining up.
A spokesman for AT&T, which has an exclusive deal to be the iPhone’s cellular carrier, reports that more than 1 million people have left requests for further information at the company’s Web site.
And M:Metrics, a Seattle-based company that studies the mobile phone market, found that as many as 17 million U.S. cell phone users would be strongly interested in buying an iPhone.
All this for a device that could cost up to $600, plus at least $60 a month for airtime and Internet use.
“There’s a deep hunger out there for a mobile phone that’s easy to use, stylish and powerful,” said Mark Donovan, a senior analyst with M:Metrics. “That’s the hallmark of Apple products. They have cachet and a reputation for being easy to use.”
That’s what appeals to Hal Hammond, owner of a Sacramento graphics business and a potential iPhone customer. “They have such a sleek, elegant approach of putting all this mobile stuff in one package,” he said.
Most seductive among the iPhone’s features is touch-screen capability, allowing the user to swipe a finger across the 3.5-inch display to switch functions and even type text messages, e-mails or Web addresses on a “virtual” keyboard displayed on the screen.
Other functions include a digital camera, music and video playback, the full Macintosh operating system and Safari Web browser, and Internet connectivity via Wi-Fi or the AT&T wireless data network.
It has more subtle features that could also appeal to users. Among them is a way to view a list of voicemails and choose which ones you want to hear, rather than having to listen to all of them.
Tim Bajarin, a Silicon Valley analyst and longtime Apple watcher, said he’s not surprised by the iPhone frenzy. Wireless phones have become a worldwide consumer and business phenomenon with more than 1 billion sold last year, he said.
So when Apple, which has a reputation for delivering a device that can act as “a computer in your pocket,” enters the market, it’s bound to create a stir, he said.
“Clearly, it’s groundbreaking, and that gets people’s attention,” Bajarin said. “That’s because it’s a known item. Everyone knows what a cell phone is, and this gives it a whole new concept.”
And the iPhone is also part of a larger Apple strategy, Donovan said. “The way the world is going, everything is going to be digitized ... and what is the device that is the most intimate way people access digital stuff? Their cell phone,” he said. “So if Apple is going to be at the center of the digital convergence, they have to have a cell phone,” he said.
There already are a number of high-end phones on the market that perform many of the same tasks as the iPhone, and then some. Nokia’s $750 N95, for example, has Wi-Fi, an MP3 music player, a large display and wireless data capabilities, just like the iPhone. Unlike the iPhone, it also has a GPS receiver and a 5-megapixel digital camera built in. The iPhone’s camera is 2 megapixels.
But experts say Apple’s success with devices ranging from the Macintosh to the iPod gives consumers more reason to be interested. “Anyone with this level of success with innovation is cause for curiosity and interest,” Bajarin said.
Even those with only passing interest in technology are intrigued. Janet Simpson is plugged into her iPod six to eight hours a day during her job as a house cleaner in Sacramento. “But I have to carry my cell phone, too, and I’ll like to check my e-mail, so it would be nice to have all those functions in one unit so I don’t have to carry a lot of gadgets,” she said.
But Simpson said she’s put off by the price and hopes it comes down in a few months to something more affordable. “I already have a $300 iPod,” she said.
Apple CEO Steve Jobs lit the burners under the iPhone kettle in January when he first showed off the device and proclaimed that Apple would “reinvent” the cell phone.
But media interest and the public’s enthusiasm have stoked interest even further, leaving Apple to face extraordinarily high expectations - of their own making and the public’s.
“The media frenzy has taken it well beyond Apple’s original hype machine,” said Bajarin. “The bottom line is that the expectations Apple has officially given will be met. But maybe the expectations the market has given it will not.”
Indeed, it’s possible users, who have grown accustomed to broadband speeds at home, might not be satisfied with AT&T’s “Edge” wireless data network, which moves information at between 130 and 200 kilobits per second, compared with five to 10 times that speed for DSL.
AT&T spokesman Mark Siegel said, however, that speed would not be an issue. “The network is robust enough for people to do what they want to do,” he said.
And the virtual keyboard, which doesn’t provide the tactile feedback of a standard keyboard, might look cool, but could be awkward for to some users.
Some also question the phone’s durability. Cell phones are often dropped out of purses or inadvertently swept off tabletops. Could an iPhone survive such abuse?
Availability might be another issue. Neither Apple nor AT&T is saying how many phones will be in stores on Friday. A shortage could alienate some potential buyers. But analysts dismiss any notion that Apple would hold back phones to create artificial demand.
“Anytime there’s a new product launch, there’s speculation that vendors will hold back product,” said Michael Gartenberg, an analyst with Jupiter Research in New York. “But that is never the case. There’s no reason or logic to holding back product.”
Jobs has predicted Apple will sell 10 million iPhones in the next 18 months, and Piper Jaffray Inc. analyst Gene Munster forecasts some 45 million will be sold in 2009.
But others aren’t so optimistic.
Richard Laermer, a New York-based author and marketing expert, thinks the price is too high and that Apple has limited its opportunities by not partnering with more carriers.
He also said Apple’s inexperience in the cell phone business could result in a flawed product. “I don’t believe that this company can just one day discover telecommunications,” he said. “Americans are more savvy than ever about their gadgets ... and they don’t want to take risks.”
But most think the phone will be a big hit, though not a life-changing experience.
“If you can take it out of the box and it works properly, people will have great fun with it,” said Robert Thompson, who studies popular culture at Syracuse University. “But whether it brings them great joy and a new meaning to life and reinvigorates their soul, of course no product can do that.”